In 2022, Ethereum (CRYPTO: ETH) was one of the biggest stories in the crypto world due to The Merge. While the token never saw any boost in its price in The Merge's immediate aftermath, it remains the second-largest crypto in terms of market capitalization, and has been one of the most successful cryptos ever since its launch in 2015. So it's only natural that newer rival blockchains have tried to position themselves as "the next Ethereum" in the hopes of attracting investor attention.
One of these rival projects is Aptos (CRYPTO: APT), which only started trading on cryptocurrency exchanges in mid-October. Aptos was arguably one of the most-hyped blockchain projects ever, having raised over $350 million from venture capital investors. Despite its recent debut, Aptos is already one of the top 60 cryptos by market cap. So is it possible that Aptos could ever become the next Ethereum?
The case for Aptos
The bullish argument for Aptos is clear: It's a layer 1 proof-of-stake blockchain just like Ethereum that theoretically can do everything Ethereum can do, only cheaper and faster. For example, consider transaction processing speeds: Aptos can theoretically process 150,000 transactions per second. Before The Merge, Ethereum was processing only 10 to 15 transactions per second.
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Moreover, Aptos comes with a first-rate pedigree. The founding team of Aptos comes from Meta Platforms (NASDAQ: META), and the entire Aptos blockchain project is actually based on the Diem blockchain originally built by Meta (then Facebook). So there is a high likelihood that it's using best-in-class technology. Moreover, Aptos has a huge war chest of funding to build out its ecosystem. In March and July -- in the middle of a crypto market meltdown -- Aptos raised a reported $350 million from venture capital investors.
The case against Aptos
Unfortunately, that venture funding could turn out to be a huge liability for Aptos. The $150 million Series A round in July 2022 was led by none other than Sam Bankman-Fried and FTX (CRYPTO: FTT) Ventures. Understandably, investors in the marketplace are now extremely concerned about how this relationship might impact Aptos. At the very least, people are asking questions about the valuation of Aptos, which at one point had been given a sky-high $4 billion valuation from its investors.
Another big point of concern involves the controversial launch of Aptos. This was arguably the most chaotic launch ever for a major crypto. For one, there were questions about how much Aptos insiders were enriching themselves from the deal. And secondly, there were serious questions about how well all of that first-rate technology actually worked. At one point, Aptos was only processing 18 transactions per second. In its first week of trading, Aptos became an internet meme for how much the crypto over-promised and under-delivered.
Still too new to assess?
It might still be too early to assess whether Aptos can become the next Ethereum. After all, we only have two months of trading data to consider, and Aptos regrettably launched just weeks before the whole FTX saga began. So, yes, you can say that Aptos is down 31.75% over the past 30 days and argue that Aptos has been a total bust out of the gate. But, to be fair, you have to provide context. Ethereum is also down 22% over the past 30 days, so it's hard to say just how much of an impact the FTX contagion has had on Aptos.
The big picture story for Aptos is that it is arguably much better suited for the next era of Web3 innovation than Ethereum. Whereas Ethereum spent tremendous effort converting itself into a proof-of-stake blockchain via The Merge, Aptos came straight out of the box as a proof-of-stake blockchain. Moreover, Aptos uses a different smart contract programming language than Ethereum. As a result, it could be much better equipped to handle Web3 innovations related to apps, games, and the metaverse.
For now, though, I can not recommend Aptos. While this blockchain project certainly has a lot of promise and comes with a distinguished pedigree, I don't think the world needs another Ethereum right now. Unfortunately, Aptos could end up joining the ranks of all the other "Ethereum-killers" that have fizzled out in 2022. Heading into the new year, if you are looking to make a long-term investment, I still think Ethereum is a superior play.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Dominic Basulto has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum and Meta Platforms. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
