Ethereum, the second largest cryptocurrency, has just surpassed 200,000 ERC20 smart contracts deployed on its mainnet as of August 5, 2019. At the time of writing this article, there are 204,303 ERC20 tokens on Ethereum’s network. The blockchain network hit this milestone months after Vitalik Buterin, co-founder of Ethereum, announced that Ethereum 2.0 would fix the platform’s inability to handle increasing transaction volumes.
Smart Contract Count Hit a New High
The ERC20 token standard utilizes the Ethereum platform’s smart contract capabilities to implement third-party tokens on the blockchain. ERC20 tokens don’t have their own dedicated blockchain, reducing the development overhead and technical complexity for smaller scale businesses and teams. These tokens can then be traded, bought or sold on any cryptocurrency exchange that lists them.
Tokens such as Binance Coin (BNB), Basic Attention Token (BAT), and Maker (MKR) are popular examples of ERC20 tokens that make use of the Ethereum blockchain. BNB has the highest market cap of any ERC20 token at $4.34 billion. ERC20 tokens exploded in popularity alongside Initial Coin Offerings (ICO) as an alternative fundraising method for many blockchain startups. Brave Browser’s BAT, for instance, raised $35 million by issuing a billion tokens on the Ethereum blockchain. Similarly, Binance was able to attract $15 million worth of investor capital in 2017.
Ethereum’s Scalability Issues
In the past, Ethereum has been criticized for its lack of scalability. However, the Ethereum 2.0 release aims to fix these problems by moving to a proof of stake consensus mechanism instead of the current proof of work algorithm. The Ethereum blockchain can currently only support a maximum of 15 transactions per second.
Another problem faced by the Ethereum blockchain relates to the storage requirements for participants. In most blockchain networks, nodes store important data for each and every wallet owner, including transaction history, current state of balances, and contract data. With sharding, however, nodes only need to data for a defined address range instead of every single participant
Ethereum 2.0 will be rolled out in three phases. The proof-of-stake chain called the Beacon Chain will run parallel to Ethereum’s proof-of-work chain in phase 0, while sharding will be implemented in phase 1. eWASM, which is a rebuilt Ethereum virtual machine, will be introduced in phase 2. Ethereum is currently among the biggest blockchain-based platforms used to deploy smart contracts and DApps, with a market cap of over $25 billion.
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