Is Aptos the next Ethereum?

In 2022, Ethereum (ETH 1.51%) was one of the biggest stories in the crypto world because of The Merge. Although the token never saw a boost in price in the immediate aftermath of The Merge, it remains the second largest crypto by market cap and has been one of the most successful cryptos ever since its launch in 2015. So it’s only natural that newer rivals blockchains have attempted to position themselves as “the next Ethereum” in hopes of attracting investors’ attention.

One of these rival projects is Aptos (APT -0.60%), which first began 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 can theoretically 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 merger, Ethereum only processed 10 to 15 transactions per second.

Image source: Getty Images.

Moreover, Aptos comes with a first class pedigree. The founding team of Aptos comes from Meta platforms (META -0.17%), and the entire Aptos blockchain project is actually based on the Diem blockchain originally built by Meta (then Facebook). So it is highly likely to use best-in-class technology. Also, Aptos has a huge war chest of funding to build out its ecosystem. In March and July — amid a crypto market meltdown — Aptos raised a reported $350 million from venture capital investors.

The case against Aptos

Unfortunately, this risk financing may turn out to be a big liability for Aptos. The $150 million Series A round in July 2022 was led by none other than Sam Bankman-Fried and FTX (FTT -3.18%) Ventures. Understandably, investors in the market are now extremely concerned about how this relationship could affect Aptos. At the very least, people are questioning the valuation of Aptos, which at one point had received a sky-high $4 billion valuation from its investors.

Another major point of concern is the controversial launch of Aptos. This was arguably the most chaotic launch ever for a major crypto. First, there were questions about how much Aptos insiders enriched themselves from the deal. And second, there were serious questions about how well all that top-notch 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 overpromised and underdelivered.

Still too new to review?

It may still be too early to assess whether Aptos could be the next Ethereum. After all, we only have two months of trading data to consider, and unfortunately Aptos launched just weeks before the whole FTX saga began. So, yes, you could say that Aptos is down 31.75% over the last 30 days and argue that Aptos has been a total bust out of the gate. But to be fair, you need to provide context. Ethereum is also down 22% in the last 30 days, so it’s hard to tell how much of an impact the FTX contagion has had on Aptos.

The big picture for Aptos is that it is arguably much better suited for the next era of Web3 innovation than Ethereum. While Ethereum spent enormous effort converting itself to a proof-of-stake blockchain via The Merge, Aptos came straight out of the box as a proof-of-stake blockchain. Also, Aptos uses a different smart contract programming language than Ethereum. As a result, it can be much better equipped to handle Web3 innovations related to apps, games, and the metaverse.

For now, however, I cannot recommend Aptos. While this blockchain project certainly has a lot of promise and comes with an excellent pedigree, I don’t think the world needs a new Ethereum right now. Unfortunately, Aptos may end up joining the ranks of all the other “Ethereum killers” that have fallen out in 2022. Heading into the new year, if you’re looking to make a long-term investment, I still think Ethereum is a superior play.