Fire Before Growth: The Likely Fate of Ethereum Killers by Chris Burniske

A slew of high-profile, venture-backed Ethereum ($ETH) competitors, labeled as “Ethereum Killers” (EK) by Chris Burniske, plans to launch in the near future. We alluded to this in one of our recent Pro Research reports on Incentivizing Testnet Participation.

Burniske expects most EKs to face downward pressure from their private market valuations as they transition to public markets. The price action for Algorand’s $ALGO and Hedera Hashgraph’s $HBAR provide a snapshot into the coming reckoning new entrants may face.

EKs raised “significant amounts of capital based on the premise” their technology is superior to Ethereum’s. Thus, investors readily invested at inflated valuations believing these more advanced platforms could exceed Ethereum’s multi-billion-dollar marketcap. Burniske argues that supplementary tools (apps, developer tools, etc.) and forms of distribution outweigh better technology, and high-throughput networks create weak fee markets, which increases reliance on asset inflation and cripples long-term network security.

On the flip side, Ethereum had time on its side to acquire a diverse set of stakeholders beyond a small group of profit-seeking investors, relieving downward price pressure. Burniske also said Proof-of-Work (PoW) and associated miner costs help provide a price floor for ETH. Ethreum’s transition to Proof-of-Stake (PoS) is a move into uncharted territory and its impact on price is less predictable.