Smart contracts are small pieces of self-executing code that has the potential to change the world. The web’s next avatar relies on these smart contracts’ success. Imagine a world where trust is a given feature of a transaction. Find it hard to believe someone? You don’t have to anymore. Feeling unsure about involving a third party? Let’s decentralize. Smart contracts are a set of ‘if this then that’ conditions that intend to automate key tasks that are often put on hold due to trust issues.
The year 2023 marks the beginning of the race to glory. Every smart contract platform is trying its best to woo developers and users. But what does it take to be an efficient smart contract platform? And how do you decide which one’s the best? Can you also be a part of their success and earn some moolah in the process? Well, that’s exactly what we have in store for you today. Let’s talk smart contract platforms!
What Are Smart Contract Platforms?
Now, this may sound trivial to someone from a software background, but for the uninitiated, what comes to your mind when someone says they are writing code? Do they write it in Microsoft Word? How is it translated to software eventually? Is there any rule governing how the code is written?
Well, it turns out that there are tools to enable this mighty development. One cannot go about writing code anywhere. They need to follow a specific syntax, set of rules, test it out and then execute it. In a crude sense, the journey from the text to apk (the application format supported by your Android phone) has to go through multiple steps within this tool.
Smart contract platforms are that set of tools for smart contracts. They simply enable, analyze and execute smart contracts. You can expect a smart contract platform to provide you with a framework to develop smart contracts, a developing environment, testing and hosting services, and execution.
In addition to the aforementioned tools, smart contract platforms provide the input data for these blockchains. For example, a smart contract platform enabling agricultural insurance-based smart contracts will make sure that data related to rainfall is fed to the blockchain.
Main Features of Smart Contract Platforms to Look Into
How do we pick the best smart contract platforms? Depending on your use case, there are a few features that can be evaluated to conclude. Let us discover these features in detail:
1. Smart contract creation, implementation, and execution
This is pretty basic. Something that a platform exists for. Compromising this feature defeats the entire purpose of a smart contract platform.
What makes smart contracts extremely valuable and powerful is the fact that they are decentralized. A smart contract platform should enable this feature in a way that, while developing or executing, there aren’t any centralization risks associated with the smart contracts.
3. Global execution and access
Another key feature offered by blockchains is inclusion. Anyone with internet access should be able to run the smart contract.
Is it really a smart contract if it requires human intervention to go through? Every element of the contract should be self-executing with no blockers due to intervention.
Opacity is the biggest enemy of any blockchain-based product. Therefore, a smart contract platform should make sure that transparency is taken care of.
Smart contracts stand for speed and real-time settlement. That’s what separates them from traditional contracts that often take days.
This platform should offer immense security to smart contracts. This is even more important in the current scenario, where smart contract hacks are becoming common.
8. Data backup
Finally, the platform should allow you to back that data up.
Top 10 List of Smart Contract Platforms in 2023
Smart contract platform players are all over the market. Therefore, it is important to understand each one of them and find out which one suits your cause. For example, if you plan to set up a token that has to be decentralized and community-driven, opting for Hyperledger (a permissioned blockchain designed by IBM) is futile. Why? Because Hyperledger has been known for being home to enterprise use cases of blockchain rather than an open-source, public blockchain.
Let us look at the top 10 list of smart contract platforms.
Ethereum is the OG smart contract platform. In fact, the biggest innovation in the blockchain space after Bitcoin was EVM or Ethereum Virtual Machine. EVM is a virtual environment that enables smart contracts. The platform went live in 2015 with the help of a novel way to raise money called ICO. ICO, or Initial Coin Offering, was IPO (Initial Public Offering) on steroids. Vitalik and the team sold $7 million worth of Ether in exchange for Bitcoin within the first 7 hours of the launch.
Being a first mover in this space, Ethereum enjoys the largest user and developer base in the industry. However, due to its sheer size, it is practically impossible to audit all the smart contracts being deployed on Ethereum. As a result, services that audit these contracts and stamp them as safe for the users have popped up.
Well, they say, the bigger you are, the stronger you fall. With the adoption growing multifold, Ethereum has been under the radar for its scalability issues. Users often have to pay insane gas fees and deal with slow transactions.
- Popular: If you wish to tap into the immense popularity of Ethereum to leverage network effects, this is the place to be. Having the first mover advantage, Ethereum has been a go-to platform for most decentralized applications.
- Defined roadmap: Ethereum foundation is run by some of the smartest minds in the world. These folks have a well-defined roadmap that includes a few key milestones like Merge, Surge, Verge, Purge, and Splurge panning over the next five years. Therefore, building on Ethereum ensures you always get the latest technology and the network is not abandoned.
- Slow and expensive: As mentioned above, Ethereum has had its fair share of criticism regarding scaling the blockchain. While the ‘Merge’ update does not change anything fundamental, it is a great step in this direction.
The Linux Foundation created Hyperledger. Later, 30 top industry giants, including IBM and JP Morgan, launched it in 2015. Unlike Ethereum, Hyperledger is a permissioned blockchain. This means that not everyone can tap into the network just like that. They need to log in to access the blockchain.
This makes it really lucrative for enterprise use cases and helps it become GDPR compliant.
Apart from that, trust, secrecy, and security have been core to the foundation of Hyperledger. Users of the platform can create custom channels to ensure that only selected participants are allowed. Sounds like building access control on top of blockchain, right? That’s exactly what it is.
- Business blockchain: Because of its features like security and access control, Hyperledger has become a go-to blockchain for businesses across the globe. It is, in fact, the best way to gain exposure to blockchain technology while keeping the regulatory uncertainty around crypto at bay.
- Scalable and high performance: Once again, Hyperledger has been built to be scalable by design. This gives it another edge compared to Ethereum.
- This blockchain sways away from the ethos of decentralization for being compliant. This does not fare well with the core web3 enthusiasts.
- It has a complicated architecture for the reasons mentioned above.
- Despite its corporate friendliness, there aren’t many use cases built on top of it.
Arthur Breitman designed Tezos in 2017. It is considered a second-generation blockchain that has scalability and upgrades at its heart. Blockchains like Bitcoin underwent a lot of forks like BSV, Bitcoin Cash, etc. Forking happens when a group of nodes do not comply with the vision of a blockchain and decide to move away.
Tezos uses on-chain administration to avoid hard forks. Simply put, developers can suggest modifications to the protocol and implement them on the go if the stakeholders approve it. Since the developers are being heard, it is assumed that hard forks won’t be required.
Tezos also run on a proof-of-stake consensus algorithm. This is yet another way for nodes (computers maintaining the blockchain) to agree on the current status of the network. It also makes Tezos a green blockchain that consumes far less energy than proof-of-work blockchains.
- Security: Tezos puts special emphasis on security. It says they are ready for mission-critical use cases like defense, aerospace, nuclear, etc., due to its strong and secure network.
- Simple: Native language for writing smart contracts on Tezos is Michelson. This language has a straightforward verification process.
- Vulnerability: Although Tezos focuses on security, smart contract platforms are generally vulnerable to hacks. And Tezos is no exception.
EOS blockchain was released in January 2018. It has been an extremely popular smart contract platform owing to its near-zero transaction fee and extremely scalable TPS (Transaction per second).
There is no fee associated with sending EOS. Instead, the protocol incentivizes the companies that administer the network with additional EOS. Therefore, the fee is replaced with inflation for EOS.
- Quick and inexpensive: EOS uses dPOS or delegated proof-of-stake consensus mechanism. As per EOS, they can process millions of transactions per second due to its straightforward mechanism. The platform’s scalability is further boosted by choosing C++ as the language for coding smart contracts.
- Centralization: The way EOS works is rather unique. Every participant is given access to the resources depending on the EOS they hold. While this speeds up the network and de-complicates it, it also exposes the network to a centralization risk.
Even the launch of EOS was accompanied by a $4.1 billion ICO. And to prove the centralization risks, one of the participants of this ICO, EOS Tribe, withdrew its stake. Even the founder of the EOS tribe went on record to claim that the EOS model cannot be sustained without the existence of whales (large holders).
Jed McCaleb developed stellar in 2014. Since then, Stellar has created ripples in the smart contract market for being the fastest and cheapest mode to transfer money from one person to another. However, there’s a catch. Stellar is not Turing complete. In simpler words, it can run only basic smart contracts involving ICOs or escrow accounts.
That said, Stellar has managed to make this weakness their strength. They have carved out a niche for themselves by being the simplest and most cost-effective money transfer platform. Because of this, IBM has picked Stellar to develop world wire, a platform designed to facilitate cross-border payments.
Stellar smart contracts are equipped with key features required for their niche, like multi-signature payments, batching, etc.
- Simplicity: Stellar is by far the simplest and most cost-effective way to deploy and run basic smart contracts that facilitate cross-border payments. This single-use case has led Stellar to join hands with six global institutions to create a stablecoin of its own.
- Limited functionality: While it has the potential to generate good revenues from its cross-border payment platform, that is pretty much it.
Algorand has managed to grow exponentially in the past. It has become a go-to platform for DeFi enthusiasts and has $200 million+ of value locked in its protocol. In terms of partnerships, it has joined hands with Circle to deploy its infamous stablecoin, USDC, on the blockchain.
Furthermore, Algorand offers scalable, low-cost, fast and secure means of creating a smart contract.
- Scalable: Algorand claims to have solved for scalability trilemma. Scalability trilemma means that out of the three key features of blockchain: Security, Scale, and Decentralization, only two could be achieved.
- Cheap: Smart contracting is done using the ‘clarity’ language. Due to its simplicity, it allows the developer to save on time, money, and effort.
- Fast: Algorand has deployed the Pure Proof of Stake or PPoS consensus mechanism. This allows for maximum performance regardless of the number of transactions.
- Ethereum and other competitors: Algorand came into the picture in 2019. By this time, Ethereum already had massive community support due to its first-mover advantage. Similarly, many other blockchains featured in this list have made some mark for themselves. Algorand being a little late to the party might hinder its adoption.
Touted as the Ethereum killer, Solana was founded by Anatoly Yakavenko in 2017. The blockchain claims to be able to process 65,000 TPS or transactions per second, which is the fastest in the industry. This feat is achieved by reinventing the consensus algorithm to create proof-of-history that allows for the nodes to reach consensus much faster.
Besides that, Solana enables smart contracts that allow applications with a better UI/UX. This is a big void in the web3 puzzle.
- Fast: This is hands down the top-notch feature of Solana. It is meant to process transactions at lightning-fast speed and does exactly that.
- Cheap: The icing on the top is that it can achieve that speed at a fraction of the cost. A transaction on Solana would be 99% cheaper as compared to Ethereum.
- Vulnerability: In the past 6 months, the Solana blockchain has gone down about five times. This is risky for someone who wishes to build a smart contract-based decentralized application on this platform. The Solana team claims to be working on this, and hopefully, it should be sorted out soon.
Polkadot is the brainchild of Gavin Woods, who also co-founded Ethereum. It is a layer-zero blockchain. Think of it as a base layer that runs multiple different blockchains on top of it. The best part about these parallel blockchains is that they are interoperable. If you have Ether on the Ethereum blockchain, you can’t just move it to the Solana blockchain. It is like trying to run a windows application on a Macbook. However, this is a possibility for all blockchains within the Polkadot ecosystem.
- Fast: Polkadot is a reasonably fast blockchain. It can handle up to 1000 transactions per second.
- Interoperability: It has solved the interoperability puzzle with the help of its innovative architecture.
- Lack of use cases: Despite its strong proposition, it has failed to lure strong use cases on Polkadot. As a result, we have seen an epic rise in its competing blockchain- Cosmos, which also enables interoperability.
The Cosmos ecosystem has risen tremendously in the past year. This is mainly because of its innovative approach to achieving interoperability with security and speed. Each new blockchain on Cosmos is tethered to the Cosmos hub (the first blockchain to be launched on the Cosmos network), just like a hub and spoke model. Cosmos is home to key blockchains like Osmosis, Akash, Persistence, etc. Due to its immense popularity, many blockchains are creating bridges that allow the outside world to interact with Cosmos.
- Sovereignty: The launch of any feature on the smart contract must be enabled at a blockchain level. For example, if you wish to introduce an escrow feature in your smart contract, the blockchain should allow it.
On the other hand, Cosmos enables its software development kit so that individual blockchains can create customized features for its developer base.
Cardano was founded in 2015 by Ethereum co-founder Charles Hoskinson. It works on Proof-of-stake consensus algorithm from its genesis. This makes it an energy-efficient blockchain.
Cardano recently enabled the smart contract functionality in September 2021 in its Alonzo fork. These smart contracts are fit to be used in industries and use cases like mortgage, gaming, legal, and cross-border payments.
- Marlowe contracts: Marlowe programming language is a special-purpose financial contracts language that allows smart contracts to be written in financial terms instead of any general-purpose coding language. Due to this, it is extremely easy to read, write and understand Cardano smart contracts.
- Security: Nearly 70% of the entire ADA (the native currency of Cardano) is staked. In other words, there is significant decentralization. This makes it an excellent choice for brands seeking a secure network.
- Slow development speed: Historically, Cardano has been relatively slow in rolling out updates. It was also quite late to the smart contract party.
Types of Smart Contracts in Blockchain
Smart contracts can be of different types depending on the legality and use case. Let us look at them in detail:
1. Smart legal contracts
Smart legal contracts are legally enforceable contracts. These contracts are protected by law, and one can face legal action for violating them. Smart legal contracts can save the authorities a lot of time and money by automating conventional paper-based contracts.
For example, a land registry in court could take days to transfer. However, using smart contracts, this could be done in minutes. You simply tokenize the registry and put it on a blockchain. Create a smart contract that would transfer the registry as soon as payment is made. This way, it’s a win-win for both parties involved.
2. Decentralized Autonomous Organization (DAO)
DAOs, or Decentralized Autonomous Organizations, is a blockchain spinoff of traditional organizations. In traditional organizations, you would face problems like a lack of transparency and accountability, centralized decision-making, etc. DAOs use smart contracts to solve these problems.
For example, employee promotions and reputation are subjective in a traditional organization. The overall roadmap to progress is opaque. In a DAO, there are clear pre-defined rules to boost your status, and once you achieve those steps, you are automatically promoted through smart contracts.
3. Application Logic Contracts (ALC)
ALCs allow devices to leverage smart contracts to become autonomous and secure. ALCs ensure better automation, cheaper transactions, and higher security. These smart contracts are run based on data being fed from other smart contracts.
To visualize it, let us think of a thermostat that regulates the temperature of a shipment containing fish. It constantly records temperature changes (external and internal). Let us assume that the fish goes bad on the journey. Eventually, an insurance company can use that data to decide if the premium needs to be paid for rotten fish. Because this ALC was transparent and immutable, it acts as a legitimate record.
If smart contracts are the backbone of a blockchain, smart contract platforms are its spinal cord. They are the base layer that decides the robustness of a smart contract that will ever exist. Do you believe in smart contracts? At the same time, do you find it hard to pick smart contract platforms to invest in? Well, you are in luck. Smart Contracts Coin Sets from Mudrex allows you to invest in themes instead of individual cryptos. And one such theme, ‘smart contracts,’ is up for grabs. It contains hand-picked, well-researched platforms to kickstart your journey.
1. How many smart contract platforms are there?
There are multiple smart contracts platforms out there. Smart contracts form the backbone of any blockchain. They automate the processes using the core functionalities of blockchain, like decentralization, immutability, etc. This makes them indispensable for a successful blockchain. Some examples of smart contract platforms are Ethereum, Solana, Cardano, etc.
2. Who has the best smart contract platform?
Given the nascency of the industry, it is hard to pick the best smart contract platform. Furthermore, it is subject to your individual use case. For example, if you plan to leverage community effects, Ethereum is the best option. If your use case is as critical as defense, Tezos is a better choice.
3. Which blockchains have smart contracts?
All key blockchains have smart contracts these days. Some of the key examples are Cardano, Ethereum, Solana, Polkadot, Avalanche, Algorand, Cosmos, Stellar, etc. You can also explore Smart Contracts Coin Sets to know who are the top smart contracts platforms.
4. What kinds of problems cannot be solved by smart contracts?
Smart contracts can solve the problems related to centralization and automation. However, they are very objective and can’t be trusted for matters that require subjective judgment and actions. For example, matters of court cannot be automated using smart contracts.