Blockchain/Level VII · Evolution/7.2 The alt menagerie/Lesson 4
The ‘Ethereum killers’
The era of the Ethereum killer
MaterialsThe SEC settlement order with Block.one (September 2019)Technical documentation for Cardano, Polkadot, and Avalanche consensus mechanismsOn-chain analytics reports comparing transaction volume to market capitalization for major L1s in 2021
Wonder
- Why did a single year attract billions to dozens of competing chains?
- What structural features distinguished these new networks from Bitcoin’s open mining model?
- How can an evaluation framework separate genuine utility from speculative allocation?
Explore
- From 2017 through 2021, a surge of Initial Coin Offerings (ICOs) promised to solve Ethereum’s scalability constraints. Projects like Cardano, Polkadot, Avalanche, Tezos, and EOS raised substantial capital by positioning themselves as superior alternatives. The market was driven by the belief that a faster or more ‘scientific’ chain would inevitably capture the value that Ethereum held.
- EOS exemplified this trend, raising approximately four billion dollars in a year-long ICO spanning 2017 and 2018. This massive capital raise established a precedent for large-scale insider allocations and venture funding structures. The sheer volume of funds attracted both serious developers and speculators who anticipated high returns from the token’s initial listing.
- A common pattern emerged across these networks: foundations controlled development, roadmaps were ambitious but frequently delayed, and usage metrics often lagged far behind market valuations. Insider allocations to venture capital firms created significant sell pressure as tokens unlocked. The technical architectures varied, but the economic models shared a reliance on pre-mined supply rather than decentralized issuance.
- In September 2019, Block.one, the issuer of EOS, settled with the US Securities and Exchange Commission for twenty-four million dollars. The SEC found that the sale was an unregistered securities offering; Block.one neither admitted nor denied the findings.
- Despite the hype, some chains developed genuine user bases and technical innovations. However, the evaluation tool remains consistent across all networks: analyzing the distribution of supply, the governance structure, and actual transaction volume versus token valuation. The blockchain trilemma—balancing decentralization, security, and scalability—dictates that no chain can optimize all three perfectly without trade-offs.
- The 2017–2021 era demonstrated that market capitalization does not always correlate with utility or network health. Many chains launched with high valuations but struggled to retain users once the speculative fervor subsided. The distinction between a functional settlement layer and a speculative asset became clearer as the cycle matured, revealing which projects had sustainable economic models.
Key facts
- EOS raised approximately $4 billion in its year-long ICO from 2017 to 2018.
- Block.one settled with the SEC for $24 million in September 2019.
- Cardano, Polkadot, Avalanche, Tezos, and EOS were prominent ‘Ethereum killer’ projects during this period.
- Foundations often controlled development and held significant insider allocations on these networks.
- Usage metrics for many of these chains remained far below their market valuations during the 2017–2021 cycle.
- The blockchain trilemma posits that decentralization, security, and scalability cannot be simultaneously optimized.
Exercise nine, six, three, one
9CollectList 9 distinct ‘Ethereum killer’ or high-performance chain projects launched between 2017 and 2021. For each, note the consensus mechanism (PoS, DPoS, etc.) and the primary value proposition claimed by its founders.
6ClusterGroup these 9 projects into 6 categories based on their governance structure: foundation-controlled, community-governed, hybrid, or other models of development control. Note which groups faced regulatory scrutiny from the SEC or other bodies.
3DistillReduce the 6 categories to 3 core trade-offs between decentralization, scalability, and capital efficiency that define the design choices of these networks compared to Bitcoin.
1CrystallizeWrite one sentence explaining how large insider allocations in an ICO affect the long-term price discovery mechanism of a token compared to open mining rewards.
Fact check
Dates, figures and claims checked against the published sources listed below.
- SEC, In the Matter of Block.one, Securities Act Release No. 10714 (30 September 2019)
- Cardano Foundation Technical Documentation
- G. Wood, 'Polkadot: Vision for a Heterogeneous Multi-Chain Framework' (2016)
- Team Rocket, 'Scalable and Probabilistic Leaderless BFT Consensus through Metastability' (2018)