How to Assess Smart Contract Platforms

With DeFi growing exponentially, more businesses are looking at smart contract platforms as a base for new opportunities.

What you will learn

    • Smart contract platforms provide a distributed ledger, such as a blockchain or directed acyclic graph, where smart contracts and dApps can function.

    • Choosing the right smart contract platform depends on the demands that you will place on a given system.

    • The most common criteria are speed, cost, scalability, security, and carbon footprint.

What you will learn

    • Smart contract platforms provide a distributed ledger, such as a blockchain or directed acyclic graph, where smart contracts and dApps can function.

    • Choosing the right smart contract platform depends on the demands that you will place on a given system.

    • The most common criteria are speed, cost, scalability, security, and carbon footprint.

Thanks to the permissionless, autonomous, transparent, and decentralized nature of blockchain, it’s becoming a centerpiece of the innovation strategy for many brands. About $130 billion of total value was locked into DeFi (TVL) near the end of 2024, according to CoinGecko.

As decentralized finance continues to grow, the demand for and importance of smart contract platforms grows, too. These platforms are an indispensable part of DeFi, giving users the digital space they need to interact with the smart contracts at the heart of things.

Developing a proprietary system to host and maintain smart contracts and dApps is beyond the scope of most organizations. That means people who want to take part in DeFi must find the right smart contract platforms for their activities. The ground is always shifting in this field. Let's take a look at the terrain and what features one should look for in a smart contract platform.

What is a smart contract platform?

To quickly grasp the role of smart contract platforms, it’s best to compare them to a familiar concept. Modern computers and smartphones require a base layer in the form of an operating system that enables all the functions and applications to run and work together. Smart contract platforms are that base for DeFi. They are the operating systems that:

  • Incorporate and enable smart contracts, allowing them to execute agreements.

  • Record transactions.

  • Provide access for smart contract developers.

  • Manage transaction fees.

  • Maintain security.

  • Connect users to smart contracts through decentralized applications (dApps).

In other words, smart contract platforms provide a distributed ledger, such as a blockchain or directed acyclic graph, where smart contracts can function and dApps can be manipulated as users desire.

Basic functions of smart contract platforms

The primary functions of a platform include enabling and facilitating smart contract development, deployment, and execution.

Part of the appeal of smart contracts is that they are trustless. The parties involved don't need to trust a third party to make sure that the contract conditions have been met. The execution of the contract is written into the coding of the smart contract, so they are self executing. A centralized agency is neither required nor desired.

A dApp is a decentralized application — a computer program that runs on a peer-to-peer network.

Instead of having a central bank or government agency in control of keeping records and fulfilling contracts, distributed ledger technology uses a consensus mechanism. As blocks of data are added to the chain, nodes on the blockchain network lock in the data and, in Hedera’s case, quickly give it a consensus timestamp. Once consensus is reached, the data is immutable. It can't be changed. The ledger is fixed and secure.

Blockchain smart contract platforms also support the native tokens, or cryptocurrency, used to make secure payments in a network. Smart contracts can bring automation to financial markets because they are self-executing. Once the terms of the contract are satisfied, the agreement is carried out.

Distributed ledger transactions must be validated before they're included on the ledger. Users pay a transaction fee — called gas — each time they transact. Proof-of-work blockchains use these fees to compensate miners, and proof-of-stake blockchains use them to compensate those staking their tokens.

Ethereum uses ETHER, or ETH. The Hedera native currency is HBAR.

What is the best smart contract platform?

Choosing the right smart contract platform depends on the demands that you will place on a given system. Let's look at the five key criteria worth considering during the search.

1. Speed

When it comes to running smart contracts, transaction speeds matter. For instance, Ethereum is known for having a relatively slow transaction speed. The Ethereum Virtual Machine was the first smart contract platform out of the gate and it dominates the market. The burden of that popularity can slow it down. With its limited capacity of processing about 12-15 transactions per second, transactions can huddle up in a long queue.

A second type of speed also factors in — how fast new blocks are added to the Ethereum blockchain. Ethereum's block time is about 13 seconds. In contrast, Bitcoin's block time is 10 minutes. Another smart platform, Solana, can add a new block every 0.4 seconds. Solana also claims a theoretical TPS of 50,000, although some measures have shown it operating at 2,000 TPS.

Hedera offers 10,000 TPS (throttled) for its native services, with finality of those transactions in 3-5 seconds. Hedera can process up to 15 million gas per second, the same as what Ethereum aims to achieve in an entire block.

2. Cost

The cost efficiency of smart contract platforms typically correlates with speed. During times of heavy network use, Ethereum gas fees can climb rather high.

The type of transaction affects the speed, and thus the cost. Complex contracts, such as certain token swaps, cost more than a basic transaction. For example, Ethereum transaction fees averaged around $50 in 2021. The average near the end of 2024 was about $6. That said, we should note that fees swing up and down routinely. In comparing platforms, it's best to take a long-range view.

An example of a platform that provides a nice mix of cutting-edge speed and fixed, predictable costs is Hedera. The network launched in 2018 with HBAR as its native currency. It claims a speed of 10,000 TPS. For confirming that a transaction is final and immutable, Hedera clocks in at 3-5 seconds. And the average price per transaction with Hedera is $0.0001, and always fixed. Due to its scalability, the fees do not fluctuate based on network usage.

3. Scalability

Scalability goes beyond speed, although you often see them lumped together. It means that a blockchain platform can maintain its effectiveness and speed as it adds new users and traffic grows.

With the explosive growth of dApps and digital assets, it's worth considering a smart contract platform that offers greater scalability. Hedera is a smart contract network that uses an optimized version of the EVM to take advantage of the scalability offered by its unique hashgraph consensus architecture.

Polygon, which originally was called Matic Network, is a strong contender in this category. It is software that operates on top of the Ethereum blockchain, which is why it's called a layer 2 solution. Polygon brings scalability to Ethereum and is faster and less expensive than Ethereum.

Popularity is nothing to sneeze at when you are as popular as Ethereum. A software development framework has risen up around it. Programmers create innovative solutions that work with current industry standards. They use the programming language Solidity, which was designed for the EVM. It would not be a stretch to call Solidity the smart contract language. Other contract platforms and layer 2 solutions build themselves to be compatible with Ethereum, so that contracts written for that platform will work on theirs.

4. Security

Many hackers exploit safety oversights by dApp creators, and security of the underlying network is still a crucial aspect.

Algorand has still made a name for itself by offering some of the most secure smart contracts. It uses a pure proof of stake consensus mechanism. Algorand combines a three-chain subnet architecture with a security measure that its creator, Silvio Macali, calls “cryptographic sortition.”

One of the standard attributes for security is practical Byzantine fault tolerance. Hedara offers the strongest possible security for a public distributed ledger: asynchronous Byzantine fault tolerance.

5. Carbon footprint

One of the mainstream narratives around cryptocurrencies revolves around its impact on energy use and the environment. It all boils down to the Proof of Work consensus mechanism.

PoW networks like Bitcoin reward nodes for solving increasingly difficult cryptographic puzzles for the rights to verify transactions and maintain network integrity. For perspective, Bitcoin has been estimated to consume more electricity than some European nations.

Rival platforms gain an edge by using consensus algorithms that do not require the same type of massive computing power. Hedera, for example, uses 0.000003 kWh per transaction, on average, which is 3,300 times less energy per transaction than Ethereum. When compared to competing networks, such as Algorand, Polkadot, Cardano, Solana, and even the VISA network, Hedera comes out on top as the most energy efficient network.

Making the call

The very nature of blockchain technology makes it difficult to recommend a particular smart contract platform — change is the only constant in this space.

Comparisons of smart contract platforms also depend on who is making the comparison. Someone who wants to invest in NFTs and tokenization wants one thing. A FinTech dApp developer appreciates other factors. A business looking for the best platform for its first smart contract has its own needs.

A smart contract platform like Hedera offers functions and services that cover a wide range. Its hashgraph virtual voting algorithm sets it apart from other options. At the same time, Hedera’s investment in an optimized version of the EVM that takes advantage of hashgraph consensus offers numerous benefits for developers, including:

  • Low gas fees

  • Fast transaction finality

  • Carbon-negative operations

  • Leaderless architecture

Additionally, because new blockchain developers use the EVM so frequently, Hedera’s EVM compatibility will give entry-level Solidity developers a less expensive option for developing and deploying dApps.