- What are smart contracts
- Top 5 smart contract tokens 2021
- Summing it up!
Every other transaction that you carry out today is pinned by contracts and agreements. Whether it be the employer’s contract or a mortgage contract, everything must be agreed upon by both parties before the deal is signed.
Similarly, in the world of blockchain, to avoid third-party intervention Smart contracts were developed. These are the agreements that are codified and set to work automatically when both parties agree to transact in the blockchain world. Smart contracts are the set of rules that must be followed by the lender and the borrower while the transaction takes place. This enhances the transparency of the entire system without the intervention of any third party.
As cryptocurrencies are gaining popularity with each passing day, the world’s second-largest cryptocurrency by market capitalization Ethereum runs on smart contracts. Investors and crypto enthusiasts have started to gain a lot of interest in smart contract-based tokens. Before we deep dive into the top 5 smart contract tokens in 2021 that are invested in India and across the globe, let us understand what is a smart contract and what are its advantages.
What are Smart Contracts?
A smart contract is a self-executing contract containing the terms of the agreement between the seller as well as the buyer. These terms of the agreement are directly written in the form of lines of code. These codes and agreements are distributed across the entire blockchain network. This code has the authority to control the transactions and executions that are trackable and irreversible.
Trusted transactions take place through smart contracts and can be carried out among anonymous and disparate parties without the intervention of any central authority.
Read in detail about the top cryptocurrencies of 2021.
Top 5 Smart contract tokens 2021
|Rank||Token||Price (October 2021)||Market Capitalization||Circulating supply|
|#2||Ethereum (ETH)||$4,140.33||$487,116,425,469||118,068,284 ETH|
|#4||Cardano (ADA)||$2.15||$70,953,191,188||32,924,776,301 ADA|
|#14||Avalanche (AVAX)||$66.49||$14,596,862,851||220,286,577 AVAX|
|#15||Chainlink (LINK)||$31.40||$14,432,861,357||461,009,554 LINK|
|#20||Algorand (ALGO)||$1.87||$11,524,391,811||6,156,126,874 ALGO|
Ethereum is the second-largest cryptocurrency protocol by Market capitalization. It is a decentralized open-source blockchain system featuring its cryptocurrency, Ether (ETH). It also serves as a cryptocurrency platform for various other cryptocurrencies helping them to execute smart contracts.
It first received its description in a white paper in 2013 by Vitalik Buterin. The project came into fruition in the year 2014. With various updates with every passing year, the latest London Hardfork update of Ethereum has helped ethereum gain more popularity.
The concept of smart contracts was pioneered by Ethereum. It has since then helped a lot of cryptocurrency projects. Various crypto projects are backed by the ERC20 protocols. Learn more about what is ERC20 and its various use cases.
The principal innovation that ethereum brought with itself was designing a platform that allowed the execution of smart contracts with the help of blockchain. Ethereum’s blockchain is also able to host other cryptocurrencies called tokens via its ERC-20 compatibility standards. It is rather one of the most common uses of the Ethereum platform.
With the primary aim to help innovators, visionaries, and changemakers bring about a positive change, Cardano is a proof-of-stake blockchain platform. It’s an open-source project that focuses on redistributing the power from structures that are unaccountable to individuals. The idea is to create a better, fair, and transparent society. The native token of this platform is ADA, deriving its name from the 19th-century mathematician Ada Lovelace.
This token ensures that the owners have the right to participate in the operations of the network. The holders of this cryptocurrency are given governance rights and voting rights across the platform. It is one of the biggest blockchains to have successfully integrated a proof-of-stake consensus mechanism that requires less energy as compared to the proof-of-work algorithm. The entire development in the technology undergoes a peer-reviewed process to ensure that bold ideas face adequate challenges internally before getting validated. This academic rigor helps the blockchain system to become stable and durable and thus helping the company to analyze the loopholes in advance. \
The Shelley upgrade of Cardano that took place in 2020 made it 50 to 100 times more decentralized. It was anticipated by experts that this upgrade of Cardano will pave the way for hundreds of assets to run on their networks.
Avalanche is a layer one blockchain system functioning as the platform for decentralized applications as well as custom blockchain networks. It gives direct competition to Ethereum which is the most popular smart contract blockchain. The main advantage of Avalanche over Ethereum is producing a higher transaction output of more than 6500 transactions within a second. Although it provides great output speed but never compromises on scalability.
The unique architecture of avalanche has made everything possible for it. There are three individual networks within the blockchains the P-chain, X-chain, and C-chain. Each chain has its purpose which is completely different from the Ethereum and Bitcoin approach wherein each node validates every transaction. There are different consensus mechanisms used by Avalanche.
The blockchain trilemma, the three issues plaguing blockchain namely security, scalability, and decentralization. Avalanche has been working on creating its ecosystem of DeFi and Dapps. Different projects backed by Ethereum such as TrueUSD and SushiSwap have been integrated into Avalanche. It has also put in constant effort in improving the interoperability between Ethereum and its ecosystem.
Chainlink came into existence in 2017 and is a blockchain abstraction layer allowing universal smart contracts to connect. The blockchains can securely interact with each other and external data feeds with the help of decentralized oracles. This makes the critical off-chain information required by the complex smart contracts become the dominant form of digital agreement.
The network is driven by an open-source community consisting of node operators, data providers, researchers, smart contract developers, and security auditors. The company ensures that decentralized participation is guaranteed among all the node operators as well as the users looking ahead to participate.
Chainlink is one of the pioneers of allowing integration between off-chain data and smart contracts. Chainlink has become one of the big players in the field of data processing. It has garnered the attention of several trusted data providers such as Alpha Vantage, Brave New Coin, and Huobi. The information can be easily monetized by the data providers by selling the data access directly to ChainLink.
A self-sustaining, decentralized blockchain-based network, Algorand supports a variety of applications. These systems are extremely scalable, efficient, and secure. Algorand provides all the critical properties required for an efficient real-world application. It creates a new form of trust by supporting computations requiring a performance guarantee.
The main advantage of Algorand was speedy transactions and highly improved efficiency. It gave direct competition to the older blockchain systems such as Bitcoin in terms of transaction speed. The transaction fees of Algorand are also super low given to its design and architecture. It allows no mining as it is based on a permissionless consensus of proof-of-stake.
Summing it up!
Smart contracts play an essential role in the day-to-day transactions revolving around blockchain. Learning about what is a smart contract is not enough. Every crypto enthusiast and investor must have a clear understanding of how to leverage that knowledge. The top smart contract tokens in 2021 have gained popularity not just in India but across the globe. It is evident from the fact that Ethereum, a smart contract token is the world’s second-largest cryptocurrency by market capitalization. The top 5 smart contract tokens that people are investing in 2021 have been studied in detail in this blog. One must consider these top 5 smart contract tokens before planning out their next investment move.
Stay updated with the latest crypto news and alerts with CoinDCX. Learn about the world of blockchain and cryptocurrencies with DCXLearn, a complete and free blockchain, and cryptocurrency course. Start your investment journey today with CoinDCX, India’s simplest and easiest investment app.
Disclaimer: It is advisable to dive into an investment after conducting thorough research. The article is not aimed at any financial advice. *All prices are as of October 25th, 2021.