April 1, 2021
Top 6 smart contract platforms: a deep dive
In this article, we dive even deeper into this matter, trying to figure out what features to look for when selecting a smart contract platform for your use case.
Before getting into the platform comparison, let’s revise the essentials of blockchain and smart contracts.
Blockchain is a type of a distributed ledger technology that records transactions using cryptographic signatures and shares copies of the ledger on a peer-to-peer network of nodes (computers). Before a transaction is added to the blockchain, it must be approved by the majority of the nodes. Transactions are combined into blocks, which are kept in order and connected by hashes. This is what makes blockchain a disruptive technology, as it can securely store information without the need for a central authority.
A smart contract is a self-executing computer program that utilizes blockchain to store the contract’s terms. When the conditions embedded in the contract are met, the program executes itself, which effectively eliminates intermediaries. Moreover, with smart contracts in place, transaction costs are significantly decreased, while the transaction speed is dramatically increased.
Since the advent of this technology, organizations have been continuously exploring smart contract applications and their potential for building Dapps (decentralized applications). From trade finance to insurance to construction, smart contracts can streamline operations in many industries that rely on contractual relationships.
While enterprises commonly prefer to experiment with new technologies in pilot projects launched from scratch, it’s more practical to use existing blockchain platforms that support smart contracts. The vendors of these platforms charge fees based on the amount of power required for executing deployed smart contracts.
These are the most popular smart contract platforms we are going to discuss along with their pros and cons.
Ethereum is the world’s first smart contract platform, which remains the most popular choice among developers to this day. The platform went live in 2015 and now facilitates the deployment of applications ranging from ICOs to smart-contract-based insurance.
Interestingly enough, the founder of the platform, Vitalik Buterin, decided to create Ethereum because Bitcoin developers rejected Vitalik’s idea of introducing application development capabilities to the platform. Given Ethereum’s first mover advantage, the platform has managed to attract significant investments and gain traction among well-known enterprises, including Intel and Samsung.
The most apparent advantages of Ethereum’s smart contract platform are standardization, security, and support. With eloquently written rules, clearly defined development guidelines, and its own coding language called Solidity, deploying smart contracts and Dapps on the platform has proven to be comparatively easy. Ethereum is also superior to any other smart contract platform in terms of developer count (~200,000), making its development community one of the most flourishing and responsive.
Due to the enormous developer count of Ethereum, the idea to manually conduct an audit of every smart contract on the platform is simply not feasible. In individual cases, organizations turn to smart contract consultants like Itransition to ensure the program is secure and performs as intended. Additionally, with the proliferation of AI and deep learning, new innovative solutions for autonomous audits have emerged.
Paradoxically, the utter popularity of Ethereum is both its strength and weakness. The Ethereum founders underestimated the growth potential of the platform, which led to scalability issues. The platform has been notoriously suffering from network overload, frequently running at a 100% capacity. This, in turn, causes slow transaction speed and extremely high transaction processing fees (so called gas fees).
Many experts also portray Ethereum as a potentially insecure smart contract platform due to a few highly publicized events, when hackers managed to crack some smart contracts and steal six-figure sums. However, it’s critical to understand that code vulnerabilities have almost nothing to do with the platform itself. For example, the famous DAO incident in 2015, when the wrongdoers managed to steal $50 million worth of ETH, has happened because developers of that particular smart contract have failed to write a secure code. At the same time, Ethereum has always been quick to address any emerging vulnerabilities in its own code, proactively realizing token updates over the years.
Polkadot was created by Ethereum co-founder and Solidity creator Gavin Wood. It is more of a blockchain ecosystem where various platforms are connected to each other, rather than a blockchain in the traditional sense.
The integral component of this system is Relay Chain, which is responsible for the network interoperability of parachains and parathreads. Parachains make Polkadot particularly attractive, as they allow developers to create their own blockchains with custom governance models and tokens. Most importantly, Polkadot uses parachains as shards, which enables never-seen-before scalability due to parallel processing of transactions. Moreover, the Polkadot network also includes bridge chains for connecting parachains to external blockchains like Ethereum.
For example, Moonbeam is an Ethereum-compatible smart contract platform that runs on Polkadot. Essentially, it allows developers to deploy existing Solidity-based smart contracts and associated Dapps to Moonbeam without major changes. Depending on blockchain use cases, such solutions can be especially useful for applications that suffer from Ethereum-native drawbacks like slow processing.
Undeniably, with blockchain interoperability built in and a rich ecosystem of various protocols, parachains, and bridges, Polkadot is yet to achieve its full potential. It’s safe to say that Moonbeam alone will attract many Ethereum developers. We believe that Polkadot is one of the strongest competitors to Ethereum, and its interoperable framework may become a key enabler of mass smart contract adoption.
Hyperledger was founded by Linux Foundation in 2015, with 30 co-founding corporate members including industry giants like IBM, J.P. Morgan, Cisco, Intel, and others.
Hyperledger Fabric is a permissioned blockchain, implying that authentication is required and participants’ identities are known. This makes Hyperledger especially attractive for companies that deal with sensitive data and need to comply with data protection laws like the GDPR.
It’s worth noting that Hyperledger Fabric was originally created for enterprise use with trust, confidentiality, and security being central to its vision. The platform users can create private channels for particular network members, meaning that only selected participants can access transaction data. The platform ensures the highest level of enterprise cybersecurity by providing an additional hardware-based security model for identity management.
Hyperledger’s distinctive feature is that it has a modular architecture, so organizations can develop solutions for a wide array of industrial use cases. Similar to Ethereum, Hyperledger offers a wide array of tools, such as Hyperledger Composer, that streamline smart contract creation and deployment.
Tezos was founded by Arthur Breitman in 2017, whose initial idea was to create a blockchain that would solve first-generation blockchain issues, such as with protocol forks. For example, the reason why Bitcoin has multiple forks including Bitcoin Cash and Bitcoin SV is that the platform stakeholders can’t agree on certain protocol upgrades and decide to create a new chain instead.
To avoid hard forks, Tezos combines on-chain governance with self-amendments. This means that protocols can be automatically upgraded if the majority of stakeholders approve a certain improvement proposed by a developer. Such an architecture enables the platform to grow organically as developers are incentivized to contribute to it.
Another distinctive feature of Tezos is that it uses the Proof of Stake mechanism instead of Proof of Work to achieve a distributed consensus. This means that instead of miners who use inordinate amounts of power to publish a new block to the chain, Tezos uses delegates. Delegates are divided into two groups: those who consolidate nodes into blocks and those who validate the blocks. The platform randomly selects network members from the pool of those who have at least 10,000 XTZ. In short, such a consensus mechanism requires much less computing power than mining and allows for a higher transaction throughput.
Tezos’ smart contracts are considered among the most secure ones in the industry because of the platform’s support of formal verification, which guarantees that smart contracts will execute exactly as intended. In a nutshell, every smart contract is audited before deployment. Such a large-scale audit is possible because the code is written in Michelson, Tezos’ own programming language, and can be easily mathematically proven. This makes Tezos smart contracts especially useful for industries that demand exceptional accuracy in smart contract execution, including aeronautics and healthcare.
Stellar was launched by Jed McCaleb, who also happens to be one of the Ripple founders, in 2014. This is the only non-Turing complete platform on this list, meaning that it’s suitable only for basic smart contract use cases such as ICOs or simple escrow contracts. However, Stellar’s narrow scope makes it one of the best platforms for money exchange. In terms of speed, cost-effectiveness and security of transactions, Stellar is superior to any other smart contract platform in this regard. This is why IBM has chosen Stellar to create World Wire, a global payment system set to streamline cross-border money transfers.
Unlike Ethereum or Tezos, Stellar doesn’t have its own smart contract language or virtual machine to run the code. The platform’s smart contracts can be written using any of the most popular programming languages, making it usable for the majority of developers.
Stellar’s smart contracts are connected and executed using various constraints including multi-signature, batching, time bounds, and more. In a nutshell, in case an organization needs to come up with a simple yet effective smart contract solution, Stellar can be the right choice.
Solana was created by A-list software engineers from Intel, Dropbox, and Qualcomm in 2017.
Similar to other new-generation smart contract platforms, Solana aims to solve scalability issues. Indeed, Solana has managed to achieve record-high 65,000 transactions per second. The key enabler of such a high throughput is the Proof of History (PoH) consensus mechanism. In other words, instead of transactions being grouped together in blocks, every transaction resides inside its own block and becomes an input for the next transaction.
This way, it’s possible to identify which transactions were the first or last within a particular block. Moreover, with Solana’s innovative technologies like Sealevel, smart contracts can be processed in parallel. This makes Solana one of the fastest platforms on the market, making it attractive for Dapps that require instant outputs.
Given its unprecedented scalability and transaction speed, Solana would be a perfect choice for a massive decentralized exchange or any other project that needs consistent performance regardless of the network load.
Given that blockchain and smart contract application development are relatively new areas, there is still a high degree of uncertainty and confusion regarding them. This is why many organizations choose a smart contract platform based on its reputation and the maturity of the developer community.
Given Ethereum’s first mover advantage, the platform ticks all of those boxes, making it the most popular smart contract platform at the moment. However, while Ethereum definitely has its certain perks and advantages over its less popular rivals, there is almost always a better choice for enterprise app development.
The selection of such a platform mostly depends on the use case. Building a complex IoT-connected insurance Dapp on Stellar would be as ineffective as trying to deploy a public cryptocurrency exchange on Hyperledger Fabric. To ensure platform suitability and squeeze the most out of Dapp and smart contract development, expert consulting is paramount.
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