Ethereum vs. NEAR: first 95 days - why NEAR will hit a $100b market cap
I dive into the first 95 days of Ethereum and NEAR to provide an overview of the early growth of both layer ones, their similarities, and differences on their path to a $100b market cap.
disclaimer: this is not financial advice, do your own research. I have a position in $NEAR.
In this quick research piece, I will analyze the first 95 days of growth on the NEAR blockchain and how it compares to Ethereum, the most successful layer one for smart contract development.
TL;DR
NEAR outperformed Ethereum in its first 95 days
on the market cap by 7.5x
on total transactions by 150x
and are roughly equal with unique accounts with
Ethereum at 33,157
NEAR at 28,998
Overview
For those not familiar with NEAR protocol yet, NEAR is a highly scalable layer one optimized for developers and users. They are backed by a handful of some of the smartest investors of our generation including Naval, a16z, Electric Capital, Coinbase, and more.
Why I’m bullish on NEAR Protocol:
Rainbow Bridge — enables any Ethereum user or protocol to interact with any protocol or app built on NEAR and any protocol on NEAR to interact with liquidity from DeFi on Ethereum.
Scalable — NEAR is a sharded blockchain that allows for horizontal scaling, providing developers access to speeds between 100 and 80,000 transactions per second.
Gas Fees — NEAR is an order of magnitude cheaper for transactions. It costs between $150-300 to make transactions on Augur. On Flux, a protocol for open markets with similar features built on NEAR, gas fees are less than $0.01 per transaction - or 15,000 to 30,000 times cheaper than its counterpart on Ethereum.
NEAR EVM — the NEAR team launched the Ethereum Virtual Machine on one of the NEAR Shards allowing any Ethereum developer to copy and paste any smart contract written in solidity in seconds and benefit from NEAR’s scalability and lower gas fees.
NEAR’s goal isn’t to replace Ethereum, but rather serve as a layer for scalability, powering decentralized finance, markets, and more. As more developers, users, and institutional liquidity providers enter web3, a large part of this value will drive the NEAR ecosystem.
Market Cap
Looking back at the Ethereum ICO in 2015, the performance isn’t anything to turn heads when compared to some of the skyrocketing valuations in 2020/1, like $UNI, $1inch, etc. However the ecosystem was smaller in 2015 with the core community fitting into a small conference room, now new protocols have access to multiple liquidity sources.
This being said, the fundamentals for NEAR are strong when comparing the performance of the two public launches. I’m not much of a short-term speculation guy, but when mapping out the improvements NEAR provides to Ethereum developers and users, this initial price-performance points to a bull case for the $NEAR token and ecosystem. When looking at the initial performance the fundamentals point to NEAR being undervalued on a long-term horizon.
Transactions
Activity is one metric to measure a blockchain’s initial interaction. On NEAR, the majority of current transaction history is relating to staking, and interacting with first protocols like Flux, Paras, Berry Club, and Banana Swap.
I discount, this transaction metric a bit because a lot of this activity can likely be attributed to speculatory use cases within staking or automatic actions, and not attributed to users. Regardless, this is a great early indicator of adoption.
As more protocols and apps launch on NEAR, I believe NEAR will experience a similar transaction trend as Ethereum, but at an accelerated rate because the DeFi ecosystem is more established now than in 2015.
Here we can see NEAR has processed 1,188,332 transactions since Genesis.
Accounts
When comparing accounts in the first 95 days, we see that NEAR and Ethereum are neck and neck, with Ethreum only having a few thousand more unique addresses than NEAR.
Ethereum had 33,157 unique addresses
NEAR has 28,988 unique addresses
There is one huge difference though here - there was no cost to set up an Ethereum wallet, so having more than one Ethereum address was not only common but came at no extra cost — this is not the case on NEAR. To create an account with a specific name address like 100b.near, you must have a minimum balance of 3 NEAR (recently reduced to 1.1 NEAR because of price increases). This means that these 28,988 accounts represent an economic value which means one address has a higher likelihood of being one user, or at least an economic purpose for multiple accounts.
These 28,988 accounts on NEAR represent an aggregate value of $239,151 in ‘onboarding value’ which is a bullish indicator showing users are willing to inject liquidity to have NEAR wallets and interact with apps built on NEAR.
Conclusion
As a founder in crypto, I’m incredibly excited to see more tools that will help entrepreneurs scale and onboard users/value faster. Anyone that is bearish on NEAR because they are an Ethereum Maxi doesn’t really want mainstream adoption.
NEAR will serve as a proxy to help Ethereum and the crypto ecosystem as a whole. I don’t think NEAR will kill Ethereum, only making it stronger and more liquid. With the rainbow bridge, applications and users that want scalability and lower costs can easily swap right over to NEAR and get the best of both worlds with full security.
It’s my forecast that for the reasons listed above NEAR will easily breach a $100b valuation by the end of 2022. This valuation would mean $100 per NEAR token. We are currently trading at $2.75, will you get on the rocket 🚀 with me, or be a salty Bear? See you at the moon 🌚 🌝
enjoyed this analysis? buy me a coffee, send $NEAR to 100b.near
That was incredibly enlightening, but avoided the harsh realities of attaining use, utility and wide scale/widespread adoption. Near must forge its own path. Simply “making ETH better” isn’t a business model for anyone other than Ethereum.