Top 5 assets held by crypto funds; smart contract platforms dominate the list
An analysis by research firm Messari analyzed the top assets held by crypto funds at the end of the fourth quarter of 2021:
- Polkadot ($DOT) — a smart contract platform competing against Ethereum.
- Oasis Network ($ROSE) — a smart contract platform focused on privacy.
- Near Protocol ($NEAR) — (another) smart contract platform.
- Terra ($LUNA) — a stablecoin platform.
- Tied for fifth place: dYdX ($DYDX) — a decentralized crypto exchange and Mina ($MINA) — a smart contracts platform.
With 4 of the 6 names being smart contract platforms, what exactly are they and why do crypto funds love them?
- Smart contracts are coded virtual contracts that executes based on predefined conditions — the building blocks behind the blockchain.
- Smart contract platforms a.k.a the operating systems for blockchains, hosts and executes contracts, and allows developers to build applications on top of these blockchains.
These platforms earn transaction fees — the more developers and users on their platform, the more valuable the platform.
Ethereum is the first and largest smart contract platform — generating nearly 7x more transaction fees than the next largest — Binance Smart Chain ($BNB).
- 14x more than Avalanche ($AVAX), 132x more than Solana ($SOL), 268x more than Cardano ($ADA).
- What makes them different: Tech, security, cost, degree of decentralization, speed, ease of use/development, etc.
For many, Ethereum — valued at $337B — has become the benchmark for competing platforms’ growth. But here’s the trillion$ question: Will one, few or many platforms dominate in the future?
If one or a few dominate, many of these 100s of platforms with billion$ valuations going bust is highly possible.
Boomer talk: Remember operating systems Amiga, Inferno or Arthur? Of course not, since Microsoft, Android and Apple killed them and dozens of others.
In history, operating systems tend to consolidate to a few giants — and there are reasons to believe the same will happen for blockchain platforms.