Blog: Smart contract platforms and their differences
Smart contracts have revolutionized the way we use and utilize digital technology. They offer a unique level of automation and security, enabling complex financial operations to be carried out without centralized intermediaries. This blog post examines the most popular smart contract platforms and their differences.
Smart contracts are programs that automatically perform pre-defined actions when certain conditions are met. They play a central role in decentralized finance (DeFi) and decentralized applications (DApps), as they provide automation and security that traditional systems cannot provide as effectively.
In practice, a smart contract is a program code stored in the blockchain. This code contains predefined rules and conditions based on which certain actions are performed automatically. When the conditions defined in the contract are met, the smart contract performs an action, such as transferring funds, updating data, or any other task related to the contract.
The smart contract can include, for example, the following functionalities:
Condition: If the payment arrives at a certain address.
Action: Transfer the funds or update the database.
When the conditions defined in the contract are met, the smart contract stored in the blockchain performs these functions without human or third party intervention. This automation reduces the risk of human error and improves operational efficiency.
Smart contracts offer several advantages compared to traditional contracts and systems. These benefits include, for example:
Automation: Smart contracts perform actions automatically, reducing the need for manual work.
Transparency: All functions and conditions of smart contracts are publicly visible on the blockchain, which increases their reliability and transparency.
Security: Smart contracts are stored on the blockchain, making them immutable and highly secure.
Efficiency: Automatic operation speeds up processes and reduces costs because there is no need for intermediaries.
Ethereum is the largest and best-known smart contract platform on the market, which enables the construction of various smart contracts. It allows developers to create and execute complex smart contracts securely and efficiently. Over the past few years, Ethereum has been joined by other smart contract platforms, the most famous of which can be considered Solana. Solana is particularly known for its speed and low transaction costs.
Smart contracts have revolutionized the way we use and utilize digital technology. They offer a unique level of automation and security, enabling complex financial operations to be carried out without centralized intermediaries. This is especially significant in the case of DeFi services.
In the future, the role of smart contracts will probably grow even more, and their uses will expand to new areas, offering innovative solutions to a wide range of challenges. Smart contract platforms that enable their operation can be considered to play a central role in the preparation of smart contracts. Next, let's go through the most significant smart contract platforms on the market and their differences.
Ethereum
Ethereum is currently the second largest cryptocurrency in the world in terms of market capitalization. Ethereum is best known for its smart contracts, which allow complex functionality to be programmed into the blockchain. Ethereum can best be seen as an entire ecosystem that provides a platform for decentralized applications (DApps) and smart contracts. Unlike Bitcoin, which focuses on digital exchange, Ethereum acts as a programming platform that allows complex applications and contracts to be created and executed on the blockchain.
Over the past few years, Ethereum has made significant technological advances. In the fall of 2022, Ethereum switched from the Proof of Work (PoW) model to the Proof of Stake (PoS) model, which significantly reduced Ethereum's energy consumption and improved the network's scalability. Next, let's go through Ethereum's key features from the point of view of smart contracts:
Solidity (Smart contract programming language):
Solidity is a programming language designed for Ethereum that enables the writing and execution of complex smart contracts. It offers a wide range of different functions that can be used to create versatile and secure smart contracts.
Distributed infrastructure:
Ethereum operates on a decentralized peer-to-peer network, which improves the security and reliability of smart contracts compared to centralized systems. The extremely high security and reliability offered by Ethereum are also its strongest competitive advantages compared to other smart contract platforms.
Layer 2 solutions:
Various Layer2 solutions are constantly being developed in the Ethereum ecosystem, which improve the performance and scalability of smart contracts by reducing transaction costs and congestion in the main chain. These solutions enable faster and cheaper transactions.
Developer community and continuous innovation:
Ethereum has a large and active developer community that is constantly working on new innovations and improvements. This community is a key asset that drives the development and use of the Ethereum network.
Solana
Solana is the second largest smart contract platform on the market after Ethereum. Solana differs from its competitors with its unique architecture, which combines the Proof of Stake consensus algorithm with the innovative Proof of History technology. This makes Solana very fast and scalable, enabling the processing of thousands of transactions per second at very low costs. Solana's features make it an attractive option for both users and developers.
Solana stands out from its competitors especially with its speed and efficiency. Its Proof of History technology enables fast processing of transactions without the need to wait for confirmations from other validators. This allows Solana to process up to 65,000 transactions per second. Compared to Ethereum, Solana currently offers significantly better scalability and lower transaction costs.
Solana's ability to support large transaction volumes and offer cost-effective solutions has increased its popularity significantly in recent years. This makes it a potential competitor to Ethereum in the field of smart contract platforms and creates a solid foundation for its future growth and development.
Solana's key features from the point of view of smart contracts:
Rust (Smart contract programming language):
Solana uses a programming language called Rust in its own operations. Rust is a modern and safe programming language that is very well suited for the development of smart contracts. In addition to this, Rust is also a programming language outside of cryptocurrencies and is used by almost all the world's largest technology companies in their daily operations.
Proof of History (PoH) technology:
Solana's PoH is a unique timestamp model that improves the scalability and efficiency of the network. It also enables fast and efficient processing of transactions.
High performance and low transaction costs:
Solana can handle up to 65,000 transactions per second (TPS), which is significantly higher than many other blockchains, including Ethereum. Solana's network has very low transaction costs, usually less than 0.01 USD per transaction, making it a cost-effective platform for users and developers.
Solana SDK:
Solana offers a comprehensive developer toolkit (SDK) that facilitates the development and deployment of distributed applications (DApps) on Solana's blockchain environment. The SDK allows developers to create smart contracts, implement transactions, and build complex distributed applications.
Solana Cluster architecture:
Solana's network consists of clusters that enable scalability and performance improvement. In the case of Solana, "clusters" refer to groups formed by blockchain validators who together maintain Solana's blockchain. Clusters work together to ensure the integrity and security of the blockchain, by processing transactions and generating new blocks for the blockchain. This decentralized approach is integral to Solana's ability to provide fast and efficient transactions.
Solana offers very high performance and low transaction costs thanks to its PoH mechanism. Thanks to Solana's technical features, it can be considered an attractive option, especially for applications that require large transaction volumes. Ethereum, on the other hand, offers a wider ecosystem, a stronger developer community and a more established infrastructure for smart contracts and decentralized applications than Solana. The choice between these platforms largely depends on the purpose of use, scalability needs and developer resources.
Polygon
Polygon is one of the most popular scalability solutions in the cryptocurrency market. Polygon's main goal is to offer faster and cheaper transactions for Ethereum and other platforms enabling the construction of distributed applications and smart contracts. This is achieved by using sidechains running alongside the main blockchain, which enable more efficient processing of transactions and lower costs.
Polygon can be described as an ecosystem compatible with several different blockchains, on which it is possible to build your own applications or, alternatively, transfer applications from Ethereum or other platforms to utilize faster and cheaper transactions. Polygon's own cryptocurrency, MATIC, serves as the management token of the ecosystem and as a means of payment for transaction costs.
Polygon's key features include its full compatibility with the Ethereum Virtual Machine (EVM). This means that Ethereum-based applications and smart contracts can be easily ported to Polygon's network as well. This compatibility has made it possible for many applications built on top of Ethereum, such as decentralized finance (DeFi) services, to take advantage of the scalability solutions offered by Polygon for faster and cheaper transactions.
Polygon's key features from the point of view of smart contracts:
Scalability:
Polygon's scalability is one of its most important features from a smart contract perspective. It offers a significant improvement in the performance of the Ethereum main chain, enabling significantly faster transactions.
Low transaction costs:
Smart contract transactions on Polygon's network are significantly cheaper compared to Ethereum's main chain, making the use of smart contracts more economically viable for developers and users.
Fast transactions:
Polygon's faster transaction times enable faster execution of smart contracts, which improves the user experience and also enables the development of different types of applications.
Ethereum Compatibility:
Polygon is fully compatible with the Ethereum Virtual Machine (EVM), allowing existing Ethereum smart contracts to be easily migrated to Polygon's network without significant code changes.
Security:
Polygon's Layer 2 solutions utilize Ethereum's decentralized information security model, which guarantees high security and reliability of smart contracts.
Sidechains:
Polygon's sidechains improve network performance by sharing the load and enabling the simultaneous processing of multiple smart contracts without congestion.
Polygon differs significantly from Ethereum and Solana through its scalability solutions and the versatility of its ecosystem. Over the years, Ethereum has suffered from scalability issues such as high transaction fees and slow transaction times. Polygon offers a powerful solution to this problem, improving Ethereum's scalability and reducing transaction costs. Polygon is also fully compatible with the Ethereum Virtual Machine (EVM), allowing Ethereum-based smart contracts to be easily migrated to Polygon's network without significant code changes. This makes Polygon an attractive option for developers who want to take advantage of the security offered by the Ethereum ecosystem and Polygon's scalability.
Summary
Smart contracts are programs that automatically perform specified actions when conditions are met, enabling secure and efficient decentralized applications (DApps) and financial systems (DeFi). Ethereum offers a large ecosystem and established infrastructure. In 2022, Ethereum moved from Proof of Work (PoW) to Proof of Stake (PoS), improving its scalability and energy consumption. Ethereum uses the Solidity programming language and Layer 2 solutions that reduce transaction costs and improve performance. Its strong developer community promotes continuous innovation and the continuous development of the ecosystem. Ethereum's biggest competitive advantage can be considered the high security and reliability due to its decentralized infrastructure.
Along with Ethereum, Solana and Polygon are popular smart contract solutions. Solana combines the Proof of Stake consensus with the unique Proof of History technology, which enables very fast and affordable transactions. It supports large transaction volumes and uses the popular Rust programming language. Polygon, on the other hand, focuses on improving the scalability of Ethereum with sidechains that enable faster and cheaper transactions. Polygon is fully compatible with the Ethereum Virtual Machine (EVM), making it easy to port Ethereum-based applications to Polygon's network.
In summary, smart contract platforms such as Ethereum, Solana, and Polygon offer different approaches to developing distributed applications and improving scalability using blockchain technology.
Mikko Soon
Head of Northcrypto Private
Last updated: 10.07.2024 14:00
