Decentralized finance is making headlines for releasing secure and efficient smart contracts while improving their protocols with every update. Yet, the Ethereum blockchain remains the number one platform in the market. But many users are complaining about the high gas fee of the layer-one smart contract.
So, competitors stepped up their game by providing many investment opportunities for cryptocurrency enthusiasts.
What are smart contracts?
Smart contracts are agreements between buyers and sellers. These coded contracts define the limitations for executing and tracking transactions. They are unchangeable and transparent, which makes them an excellent replacement for traditional banking.
The smart contracts on various blockchain platforms represent the distribution of node networks. They store data about all transactions executed following the conditions of the agreement.
For example, you can send, refund, borrow, lend, and much more within the limitations of the smart contract. A set of conditions are met before a transaction is permitted.
How does a smart contract work?
Nick Szabo coined the term smart contracts in 1994 after creating the first virtual currency, Bit Gold. It was first implemented on Bitcoin and its blockchain. This is a fundamental technology represented as computer protocols or in other words as codes.
They are tamper-resistant agreements between transaction parties on a specific blockchain. The transaction is automatically executed after fulfilling the limits. It reduces any intermediaries and excessive paperwork involved in traditional banking.
Smart contracts rely upon public ledgers that are visible to all interested parties. A suitable programming language is used to code the agreement terms.
For instance, you want to start a smart contract. It requires you to download special software, such as an exchange (Binance). A public key will be generated in the blockchain and a message should be received by the node. Once all the terms are fulfilled, the code is executed.
Let’s take a close look at the top 5 smart contract platforms for 2022.
Ethereum (ETH)
Ethereum is the most loved choice because of its ecosystem and coding language, Solidity. It has a lot of room for customization due to the support of advanced coding and processing for Dapp development.
This is the leading smart contract platform in the blockchain industry because of complete decentralization. Ethereum has given cryptographers, investors, and developers more than just a peer-to-peer operation. It allowed them to run apps on its Ethereum Virtual Machine (EVM).
This robust system is a powerhouse of 256-bit software that supports ERC20, ERC721, and ERC1400 smart contracts. The global accessibility of the public blockchain network sets it apart from other traditional finances.
It is a secure network that enables developers to create high-functioning Dapps. The reason behind Ethereum being crowned the king of smart contracts is companies investing money in it. This is because the blockchain platform is planning on shifting from proof of work to proof of stake.
If the move is successful, then it will result in improved protocol economics and easier implementation as well. Moreover, the top blockchain platform’s operational speed and efficiency will improve with Ethereum 2.0.
Solana (SOL)
Solana has proved to be the top smart contract platform for 2022. It is a scalable network that is unlike any other blockchain. It enables users to run the smart contract simultaneously within its single-layer system.
Many say it is better than Ethereum due to its low transaction fees of $0.00025 and speedy transfers. Even though it is a fairly new project, Solana has created a lot of hype. This is because the smart contract platform has the ability to process thousands of transactions per second.
So, Solana requires only 400 milliseconds to mine a block, which puts it ahead of other smart contract platforms. It can easily handle up to 65,000 TPS. Moreover, Solana doesn’t have a mempool problem like Ethereum. So, transactions are executed immediately.
The blockchain network is built on C++, C, and Rust programming languages. Rust is most commonly used for game development. It ensures a speedy growth of the smart contract ecosystem.
Developers are deploying Dapps on the Solana blockchain due to low cost and quick speed. Moreover, they are taking advantage of their Turbine protocol. It has solved bandwidth problems that slow down the transmission of information among users.
Tezos (XTZ)
Tezos is known as the Ethereum Killer because of its self-amendment protocol which attracts a lot of investors. This innovative smart contract technology reduces running costs that result in lower gas fees.
Moreover, the on-chain governance allows independent developers to suggest protocol updates and even submit their proposals. If it is approved by Tezos’ development team, then the individual is compensated for their efforts.
The project successfully collaborated with the gaming company, Ubisoft to expand its NFT ecosystem. It will allow individuals playing Ghost Recon: Breakpoint to buy and sell game-related NFTs. The company is using the Tezos blockchain to enter the ecosystem.
It is more likely to be successful compared to Rarible’s Ether-based because it’s much more affordable. The smart contract has great potential after their partnering with Arab Bank Switzerland to begin the following services using XTZ token:
- Staking
- Trading
- Custody
The blockchain is trying to aim for environmental sustainability by reducing its carbon footprint in 2021 by 70%. The annual energy consumption report showed how power consumed was equal to 17 people’s quota.
Polkadot (DOT)
Polkadot relies on the relay chain system, as it isn’t a smart contract platform. They recently launched Moonbeam that allowed developers to build DApps. So, Polkadot acts as a substrate.
The framework enables developers to experiment because they have complete control of everything. This includes transaction history, consensus mechanism, finances, etc. The creators of the Polkadot smart contract have taken a shortcut by implementing EVM.
It reduces the load on parachain builders because of Ethereum support. It further allows safe and instant communication between interested parties. This interoperability promises the growth of the smart contract.
Moreover, they use a proof of stake system for the verification of transactions. In this ledger, the person receives block rewards after a successful transaction.
Stellar (XLM)
Stellar has the potential to become the top smart contract platform in 2022. It has excellent speed and is cost-effective.
The interesting part of this smart agreement is that it can be coded in any programming language.
Unlike others, there is no set language or virtual machine. It attracts developers from different backgrounds due to tons of functionality. The infinite amount of languages reduces the number of errors and security threats.
Many developers have come up with creative ways to incorporate the smart contract in daily life. This includes escrow contracts, crowdfunding, lightning channels, and much more.
Final Thought!
Choosing the right smart contract in 2022 is going to be difficult with numerous options. But, educating oneself about it can help you make the right choice. Compare what different platforms provide and how long it took them to reach this place.
This is important to note because each blockchain is different from the next. You might notice how some use technologies like Pos, PoW, or PoH. So, you got to narrow your choices before making a decision!
