Cardano, Crypto.org To Launch Ethereum Virtual Machine Sidechains

Why EVM is Becoming a Standard

It is worth understanding why the Ethereum Virtual Machine is becoming a standard amongst competing blockchains.

Intuitively you might think that it makes more sense for each blockchain to develop its own smart contract system, rather than adopt the smart contract system invented and maintained by its competitor.

The truth of the matter is that the EVM has been the benefactor of a lot of development since its first release in 2015. The majority of smart contracts are currently written in Solidity, a smart contract programming language with decades of research and development behind it.

Interoperability Amongst Competitors

Rather than develop an entirely new way of executing smart contracts, competitors can actually just copy and paste much of the work achieved by Ethereum developers.

This ends up giving Ethereum competitors a leg up, rather than bolstering Ethereum’s dominant position in the market. The reason is that chains like Binance, Polkadot, Cardano, and Crypto.org can focus on the underlying architecture of the base chain, in an effort to improve the quality of the EVM running alongside it.

The end result however is interoperability and collaboration between layer-1 blockchains. Smart contracts can be built, copied, and pasted between chains seamlessly without having to duplicate much effort.

First to Market

Much like Bitcoin was first to market with cryptocurrency in general, Ethereum is first to market with smart contracts and everything that comes with it.

That includes NFTs, DEXs, and AMMs. The momentum that being first to market carries cannot be understated. Even if competitors have superior technology, it takes a lot to dethrone the original innovator in the space.

Just take a look at Blackberry and the iPhone. Apple had to completely reinvent the idea of the smartphone in order to capture enough market share to accelerate away from Blackberry’s hold on the market. All this being said, it is not impossible for Ethereum’s competitors to outperform it, and continually take market share away from it.

The Issue of Fees on EVM

One of the big problems that has plagued Ethereum since its monolithic rise in 2017 is its high transaction fees. The other chains adopting the EVM do not have this same problem, at least not yet. They are able to run a cheaper, and faster version of the EVM by making tweaks to the system before its launch. Ideally, these tweaks will go on to fix high transaction costs on their version of the EVM.

In reality, no chain will find out whether or not their version of EVM has remedied the problem until their processing a similar scale of transactions as Ethereum. The problem is not just the underlying blockchain, but the sheer volume of transactions that the blockchain is being requested to process. This begs the question, can the EVM itself scale?

Fortunately, we can point to Binance Smart Chain in order to answer this question. According to Binance Academy, Ethereum has rarely if ever processed more than 1.75 million transactions in a single day. Binance Smart Chain on the other hand processed 12 million transactions daily at its peak in May 2021.

When we compare fees, Binance Smart Chain topped out at $68 USD, whereas Ethereum fees regularly visit levels above $200 per transaction. Still, $68 per transaction is way too much if we want to take seriously the notion that these blockchains are going to bank the unbanked. Both chains are not suitable for the average individual. Despite the tweaks made to Binance Smart Chain, they were still not able to keep fees below $5.00 for complex transactions. It appears that the EVM does not scale, no matter which chain it is deployed upon.

Cardano and Crypto.org are Wildcards

Crypto.org and Cardano are both following a similar trajectory. Implement an EVM in the short term, and build their own smart contract language in the long term.

This is the same path as Cosmos (ATOM), Solana (SOL), and Polkadot (DOT). These are all big players and they’ve seemed to recognize what I’ve already pointed out in this article. Implementing an EVM is a quick win, and an easy way to take market share away from Ethereum. It will give each of them the time they need to do the hard work, and develop their own smart contract systems. All the while, they will continue to grow their user base by appealing to the crowd that is priced out of using Ethereum.

The reason why I believe Cardano and Crypto.org are wildcards amongst the rest is because of their userbase. Cardano is going after the African market, which is the fastest-growing set of economies in the world. Additionally, Cardano is making important partnerships and appears to be one of the best-architected blockchains on the market.

Crypto.org on the other hand is tied to the growth of Crypto.com, one of the fastest-growing companies in the world. They are connected to the Cosmos blockchain and get to piggyback on top of the growth and development taking place on that blockchain as well.

Watch These Chains in the Coming Months

Each of these projects, not just Cardano and Crypto.org are on my watchlist for the coming months. As each of them implements their own version of the EVM, I am eager to see if any of them have solved the scalability problem seemingly inherent to the EVM itself.

We also get tot to see whether or not the hypothesis that these coins pump after the launch of the EVM holds true. One thing is for certain, the entire cryptocurrency ecosystem is expanding at a staggering rate. The possibility of stagnation for any of these chains is unlikely. What we are much more likely to see is an integrated system of interoperability between each of the major chains. A true internet of blockchains.