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Once considered as Bitcoin successor (and by some, still does), Ethereum brought the new concepts of smart contracts and dApps that made it quite popular among developers and programmers as it allowed them to create the applications that could execute transactions automatically.
Bitcoin was definitely a revolutionary concept of digital means of exchange value but Ethereum founder Vitalik Buterin went a step ahead with additional functionalities and capabilities that helped startups and many established businesses to kick start their journey in the world of decentralization. Soon Ethereum became the second most popular cryptocurrency after Bitcoin.
However, after five years since its official launch, the Ethereum network seems like losing its charm and its market share. The arrival of rival blockchain-based platforms such as Stellar and EOS can be considered as the main reason behind the slowdown of Ethereum. That’s not it. EOS and Stellar are offering several long-awaited services effectively and efficiently, which make many startups shift to them and use their respective native currencies to raise funds through ICOs despite lingering regulatory concerns about the sales.
According to Kyle Samani, co-founder of hedge fund Multicoin Capital Management in Austin, Texas, the Ethereum network was growing faster until the last six-to-nine months because there were no rivals and startups had no other options.
Similarly, Travis Kling, founder of the Los Angeles-based crypto hedge fund Ikigai, stated the following:
“To the extent that Ethereum competitor projects get traction with developers, with users, with dapps built on top of the platform, that will be viewed by the market as being detrimental to the overall value of Ethereum, and that can have a negative price impact on Ether.”
Ethereum has already lost the majority of its market share for development of dApps. According to tracker DappRadar, ‘only 28 percent of dapps users were on the Ethereum network as of January, compared with 100 percent a year earlier.’ EOS has acquired the lion shares of active dApps users with currently 48 percent, followed by TRON that has grabbed 24 percent. However, Ethereum was still leading the race of launching dApps as 40% of total dApps were released on Ethereum followed by EOS and TRON that stands at about 30 percent each.
Patrick Barile, chief operating officer of DappRadar said:
“The reason why they got so much adoption, those new protocols, is that they offer considerably better speed, transactions per second. The volume of transactions they can do is considerably higher. That means if you have a dApp, then you have a much better user experience.”
Ethereum’s slow transaction confirmation time (about 13 secs) and higher transactions fees could be also other reasons behind the startups shifting to other networks. “Ethereum’s scaling plan is a multiyear process and exceptionally difficult to execute, so developers are trying out other options,” Kling said.
Being aware of the his cryptocurrency’s market share decline, Ethereum co-founder Vitalik Buterin shrugged off the concerns regarding the loss and said that it’s not something to worry about.