4 Unstoppable Cryptos That Have Left Ethereum in the Dust

These cryptos all outperformed Ethereum last year and have earned a place on your watchlist.

Ethereum (ETH) is the second-biggest cryptocurrency in the world, and some describe it as silver to Bitcoin's (BTC) gold. That's not so surprising when you consider that together Ethereum and Bitcoin make up 60% of the total cryptocurrency market cap.

As the first cryptocurrency to use smart contracts, Ethereum has a considerable first-mover advantage and still hosts the majority of decentralized applications. (Smart contracts are pieces of self-executing code that live on the blockchain and allow applications to be built on its network.)

However, Ethereum struggles with high gas fees and network congestion. As a result, various newer, faster, more scalable blockchains have taken market share. Moreover, because Ethereum's price has already grown over 200,000% since it was first traded in 2015, there's less space for the kind of dramatic gains that smaller cryptos might generate.

That said, those higher potential rewards come with a trade off: increased risk. Cryptocurrencies are already high-risk investments, but more established projects like Ethereum and Bitcoin carry less risk, especially for long-term investors.

Here are four cryptos that left Ethereum in the dust last year and could continue to outperform in 2022.

1. The Sandbox (SAND)

The Sandbox is one of several metaverse tokens that took off last year, fueled in part by Facebook's Meta rebrand and increased interest in virtual worlds. The Sandbox is a virtual world where players can build, own, and make money from non-fungible tokens (NFTs). It has its own in-game economy that uses SAND tokens.

Ark Invest's Cathie Wood believes the metaverse will eventually be worth trillions, and various other industry experts agree. However, it isn't yet clear what shape the metaverse will take and which projects will come out on top. Right now, Sandbox is one of the leading projects -- in part because it has secured partnerships with big names such as Snoop Dogg, Warner Music, and The Walking Dead. Most recently it did a deal to establish itself as a K-pop hub in the metaverse.

2. Chromia (CHR)

Chromia is a smart contract platform focused on decentralized applications (dApps). Unlike other coins on this list, it's not available from many top U.S. cryptocurrency exchanges, but it is listed on Crypto.com and KuCoin.

Chromia can function as both a layer 1 blockchain (an underlying network like Ethereum), and a layer 2 blockchain (one that sits on top of an existing network to improve performance). As a result, it works well with Ethereum and can also act as a standalone system.

Chromia is one of Ethereum's competitors that has benefited from the shift toward faster and cheaper blockchains. According to its website, Chromia makes it easy for people to build dApps in the real world. Interestingly, it has gained traction in the virtual world too, as several blockchain games are hosted on its platform. This is at least part of the reason for its increase of over 3,500% last year.

3. Livepeer (LPT)

Livepeer is one of several decentralized networks that uses blockchain technology to solve real-world problems. These systems use networks of interconnected computers to replace expensive computer infrastructure -- often at a fraction of the cost.

For example, Livepeer uses the spare processing power on people's computers to transcode videos. Transcoding is essentially formatting video content for different bandwidths and devices. Network participants get LPT rewards and companies can create high-quality video for a lot less money. This is one aspect of Web 3 that's likely to grow in the coming years.

4. Enjin (ENJ)

Enjin is all about NFTs, a type of digital certificate of ownership that took off in 2021. There are various types of NFTs, including art, music, collectibles, and in-game items. Enjin has solutions for each sector and already partners with several big businesses, such as Microsoft and Bancor, on NFTs.

The NFT industry is still in its infancy, and we don't know how it will change yet. What we do know is that NFTs are crucial for several evolving aspects of the blockchain, such as metaverses and gaming. Enjin is already an established player that's well positioned to capitalize on the growth of this new tech.

Read more: 5 Top Metaverse Tokens to Watch

Bottom line

The recent slump in cryptocurrency prices is a good reminder that these are high-risk investments. As such, it's important to only invest money you can afford to lose and ensure your crypto investments are balanced out by safer assets such as stocks, cash, or real estate.

It can be exciting to explore lesser-known cryptos, but it's also important to mitigate risks. This is why many financial experts advise keeping a sizable chunk of your crypto portfolio in Bitcoin and Ethereum. While the cryptos above could generate better gains, Ethereum is still a good long-term choice.