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ARK Calls Smart Contracts the ‘Foundation of the Internet Financial System’ – Here are the Leading Networks



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Smart Contracts

Smart contracts are at the core of decentralization, enabling blockchain-based transactions that are intermediary-free. These digital contracts, stored on a blockchain, get automatically executed when predetermined terms and conditions are met. It is the smart contract networks that provide the foundation for building these contracts.

Ethereum is the largest and most popular among these networks. However, as the world of blockchain develops fast and steady, many new smart contract-oriented chains and networks are emerging. This shift in the landscape has caught the attention of researchers, including those at Ark Invest. 

According to the summary findings of Ark Invest's report, the top six smart contract networks amassed US$3.7 billion in transaction fees in 2023, with Ethereum leading the pack, followed by Tron, BNB Chain, Avalanche, and Solana. The report also ranked the smart contract networks by their 2023 expected market value, where Ethereum occupied the top spot with US$274 billion, followed by BNB chain at US$49 billion, Solana at US$44 billion, and Avalanche at US$14 billion. The fifth spot went to two networks, Tron and Polygon PoS, both of which registered a market value of US$9 billion. 

In the following segments, we will look into each of these networks in greater detail. 

#1. Ethereum

Ethereum: the World Computer

Scripting smart contracts on Ethereum is simple, thanks to its open-source distributed blockchain network that assists developers in creating decentralized applications seamlessly with a variety of features and functionalities.

This simplicity and range of options provide multiple reasons why building smart contracts on Ethereum has become so popular. The foremost reason for that is Ethereum's sophisticated support and compatibility features for multiple coding languages, facilitated by the Ethereum Virtual Machines (EVM)

EVMs, virtual stacks embedded within each full Ethereum node that help build decentralized applications, can utilize multiple coding languages, including C++, Java, Java Script, Python, Ruby, and more. Ethereum also has Solidity, an object-oriented, high-level language for implementing smart contracts. 

Ethereum's ERC protocols further enhance the ease of creating smart contracts, which empower even those without advanced development skills to create well-functioning, safe cryptocurrencies on the ETH network. 

Such accessibility has enabled decentralized finance to thrive on Ethereum, with its smart contracts playing a key role in driving its presence. Ethereum's smart contracts have proved their worth in multiple use cases, such as the creation of stablecoins, unique digital asset distribution, automatic currency exchanges, decentralized gaming, and beyond.

However, the advantages of Ethereum as a smart contract-enabling network extend beyond just automatic execution and predictable outcomes. Being present on a public blockchain, these contracts are useful for audits and tracking, allowing anyone present on the chain to instantly track asset transfers and other related information. 

Furthermore, Ethereum, a pseudonymous network, helps protect privacy as transactions are tied publicly to a unique cryptographic address and not the user's identity. Despite being accessible for public audit, users or parties involved in the contract can safeguard their privacy from observers. 

The Ethereum smart contracts are also versatile, as they can carry out a range of tasks, making them conducive for a host of purposes, including computing, currency creation, data storage, NFT minting, sending communications, and generating graphics. This versatility is exemplified in the creation of stablecoins like Dai and USDC, which owe their stability and ease of transactions to Ethereum-powered smart contracts. These global currencies show Ethereum's flexibility and ability to offer reliable and straightforward financial operations.

Moreover, the Ethereum smart contracts also help represent anything unique as an Ethereum-based asset, most notably through NFTs or non-fungible tokens. The creators of the NFTs enjoy immense benefits from these Ethereum smart contracts as they can program into the contract the royalties they deserve to be paid. 

Buyers of these NFTs can conveniently prove the authenticity of their holdings because their wallet address is associated with a token in the smart contract. The NFT smart contracts, which follow protocols like the ERC-721 or ERC-1155, can assign ownership and help keep track of who owns which NFTs by linking them to specific Ethereum addresses. 

Such comprehensive benefits underscore why Ethereum and its smart contracts have the pinnacle of market value. From helping create automatic, open currency exchanges to decentralized gaming, from helping devise insurance policies that pay out automatically to helping create a standard that lets users design customized, interoperable currencies, Ethereum smart contracts have helped blockchain explore the notion of decentralization in the truest sense possible. This has cemented Ethereum's position at the top of the market value chart with US$274 billion, complemented by its impressive 90% price appreciation in 2023.  

Click here to learn all about investing in Ethereum.

#2. BNB Chain

How BNB Chain Pioneered the Future of Web3 In 2023

BNB Chain came second in the rankings with an estimated market value of US$49 billion. The chain registered an appraisal of 23% in its price performance in 2023. 

The case of the BNB chain is of particular interest to the crypto and blockchain community at large because it developed its smart chain or smart contract-oriented network after starting with its base on the Ethereum blockchain. The transition from Ethereum helped Binance go beyond the transactional utility of its coin and contribute more to the world of decentralization and decentralized applications. 

The Binance Smart Chain has a dual-chain architecture that empowers users with high transaction capacity as well as smart contract functionalities. The chain is compatible with Ethereum Virtual Machine, which ensures high throughput and low transaction fees and offers a conducive environment for DApps. This has enabled the Binance Smart Chain to become a platform of choice for developers who are keen to deploy high-performance DeFi and NFT applications. 

Binance smart contract-enabled dAPPs claim to empower users with greater privacy, security, and transparency. And since the Binance Smart Chain is fully compatible with Ethereum, developers can use the same programming language, tools, and resources as applicable for Ethereum smart contract development. One can seamlessly migrate existing Ethereum-based smart contracts to the Binance Smart Chain. 

Binance smart chain utilizes a Byzantine Fault Tolerance consensus mechanism, ensuring a high level of protection and attack resistance. It runs on a unique consensus model known as Proof of Staked Authority (PoSA). 

Characteristically, the consensus protocol combines the elements of Proof of Stake (PoS) and Delegated Proof of Stake (DPoS). In PoSA, BNB holders can become validators by staking their coins. However, since the network keeps the number of active validators within a limit, there is a high level of competition among potential validators. This competition results in high commitment levels and investment in the network's well-being. 

Binance Smart Chain can achieve a block time of approximately three seconds. To achieve this level of efficiency, the smart chain has kept the ability of a validator to propose a new block proportional to its staking power. Moreover, the validators have a vested interest in the integrity of the network for their staked BNB. It results in increased levels of security for the chain and network. 

Overall, the BNB chain's efficiency, cost-optimization capabilities, interoperability with Ethereum, and high-grade security features make it fit for steady growth in the world of decentralization and smart contracts. 

Click here to learn all about investing in Binance (BNB).

#3. Solana

Solana: The World's Fastest Blockchain (elevator pitch at Xoogler Demo Day)

Solana is third on the list, with a market value of US$44 billion. What is particularly interesting is its growth numbers. As a new entrant, Solana has seen phenomenal growth in a short span, with its price performance in 2023 witnessing a more than 900% rise. 

The most noteworthy feature in Solana – as a smart contract-oriented network – has been Sealevel, the world's first parallel smart contracts runtime. Sealevel allows for the simultaneous processing of smart contracts, significantly increasing the computational capacity of the network. Resultantly, Solana smart contracts can efficiently handle tens of thousands of contracts at the same time. 

Solana smart contracts are developer-friendly. It supports multiple programming languages, with Rust and C being the primary languages for smart contract and DApp development. 

Smart contracts on the Solana blockchain are often referred to as Solana Programs. These programs are deployable directly into the core of the network as native programs or can be published by anyone as on-chain programs. Sealevel is compatible with both of these types. 

The Solana programs are capable of handling a range of tasks, including sending tokens between wallets, accepting votes of a DAO, and tracking the ownership of NFTs. Once a program is deployed onto the Solana network, it is marked ‘executable' by the BPF Loader Program, which deploys, upgrades, and executes programs on the chain. 

The marking allows the Solana runtime to execute the compiled program code efficiently and properly. Moreover, the Solana programs are upgradable after they're deployed to the network, unlike other blockchains. In fact, both native and on-chain programs are upgradable. 

Click here to learn all about investing in Solana (SOL).

#4. Avalanche

Avalanche: Enabling Web3 Devs and Businesses to Create Without Limits

After Solana comes Avalanche, a smart contract-oriented network with a market value of US$14 billion. It witnessed more than 250% appreciation in its price performance in 2023. 

Avalanche positions itself as a market-leading smart contract platform with a focus on achieving high throughput, low latency, scalability, and enhanced levels of integrity. It consists of three primary, built-in blockchains: the x-chain, p-chain, and the c-chain. 

The presence of C-Chain makes Avalanche smart contracts interoperable and inclusive by supporting the Ethereum Virtual Machine. This compatibility with the EVM helps developers port existing Ethereum applications to Avalanche easily so that they can also benefit from the features of high throughput and low fees. Specifically, it is the C-Chain that works as the deployment ground for decentralized applications and complex financial protocols. 

As a state-of-the-art smart contract platform, Avalanche also equips developers with the tools necessary to build solidity-compatible dApps, launch custom blockchains, and quickly trade digital assets. 

Overall, its growth in recent times as a competitor to Ethereum has been fueled by its efficient consensus mechanism, focus on energy efficiency and the presence of a vibrant global developer community and ecosystem. From insurance payouts to concert ticket sales, Avalanche smart contracts cater to a range of use case scenarios and application areas. 

Click here to learn all about investing in Avalanche (AVAX).

#5. Tron

Tron and Polygon PoS each registered an estimated market value of US$9 billion in 2023, jointly occupying the fifth position. However, Tron's price performance in 2023 showcased a significant 120% growth, in contrast to Polygon's 28%.

Tron works as a decentralized virtual machine aimed at facilitating a decentralized internet. Like Ethereum, Tron empowers DApp developers with the provision of creating and utilizing complex protocols via smart contracts.

Tron network sees its smart contracts as application programs that run on the network. Being a collection of code and data, these smart contracts reside at a specific account address on the network. Consequently, these smart contracts can also be seen as types of Tron accounts. 

In this framework, user accounts can interact with these accounts by submitting transactions that execute a function defined on the smart contract. As a result of this setup, the interactions between the two accounts are irreversible.

As a developer-friendly smart contract development language, Tron supports Solidity, which is regarded as a superior language in this field. It is object-oriented, statically typed, and supports inheritance, libraries, and complex user-defined types. 

Under the umbrella of TRONZ-shielded smart contracts, the network has achieved token-shielded transactions powered by zk-SNARKS, ensuring that its security features are superior, as are the integrity levels.

Click here to learn all about investing in Tron (TRX).

#5. Polygon PoS

Earlier known as Matic, Polygon appeared in the blockchain scene as a framework to build Ethereum-compatible blockchain networks. The promoters positioned it as something that is: 

“Built by developers, for developers.”

Polygon boasts of a multi-layered structure, where:

  • The first layer is responsible for handling communication with various Polygon chains, transaction finality, and staking. 
  • The next layer, the security layer, offers validators as a service. 
  • The final one – the execution layer – carries out the job of interpretation and transaction execution within the blockchains present in the network. The execution logic is written in Ethereum smart contracts for Polygon's networks. 

As a network, Polygon PoS claims to be one of the most used protocols in the world, hosting tens of thousands of dApps and facilitating over three million average daily transactions, with US$5 billion in secured assets. Impressively, the network has crossed a million in deployed smart contracts to date.

Developers prefer Polygon PoS as a smart contract-oriented network for multiple reasons:

  • First of all, it is a low-cost solution, with average cost per transaction as minimal as US$0.015. 
  • It has a highly active and engaged developer community that supports the network. 
  • It is EVM-compatible and deploys easily from Ethereum for faster development. 
  • Most importantly, Polygon is a carbon-neutral blockchain that is capable of reducing project emissions. 

Click here to learn all about investing in Polygon (MATIC).

Smart Contracts: The Most Progressive Aspect of Decentralization

In the future, more and more smart contract-oriented networks will emerge, leading to the dilution of Ethereum's market share as other competitive and innovative players appear on the scene. This proliferation of smart contracts is expected to facilitate the development of exciting and useful dApps, thereby expanding the operational reach of blockchain technology.

The advent of new and more useful solutions is likely to result in reduced transaction costs. However, achieving optimal efficiency will require networks to focus more on enhancing their scalability features, energy efficiency, and security. Furthermore, attaining interoperability and creating a conducive atmosphere for validators will be essential components of this evolution. Decentralization's success is inherently tied to the presence of an engaged and active community, underscoring the importance of building such communities.

Summarily, the overarching goal is to realize a system that operates securely and autonomously, eliminating the need for cost-bearing intermediaries. Envisioning an ideally decentralized world powered by efficient smart contracts suggests a future with the lowest possible barriers to entry, characterized by more inclusivity, democracy, and equity.

Gaurav started trading cryptocurrencies in 2017 and has fallen in love with the crypto space ever since. His interest in everything crypto turned him into a writer specializing in cryptocurrencies and blockchain. Soon he found himself working with crypto companies and media outlets. He is also a big-time Batman fan.