This article analyzes the major changes in the L1 blockchain from 2021 to the present, exploring technological innovations, market performance, and their position in the cryptocurrency community, and evaluating the fundamental factors behind their value growth. It also mentions some potential new projects. This article is sourced from THOR HARTVIGSEN and translated and compiled by Mars Finance.
Table of Contents:
Solana (SOL)
Avalanche (AVAX)
Near (NEAR)
Injective (INJ)
Polygon (MATIC)
THORChain (RUNE)
Fantom (FTM)
Cardano (ADA)
In the last bull market, Alt-L1s such as Solana, Avalanche, Fantom, and Polygon outperformed the market in terms of price appreciation and risk investment. Some might argue that this dominance of infrastructure is a characteristic of an industry that is still in its early stages.
So, what significant changes have occurred from 2021 to now? Looking at the price performance below, it seems like the situation has not changed.
This raises the question of whether the outstanding price performance is related to fundamental improvements or simply the same old narrative we saw in the previous cycle. This report analyzes the top 8 performing alt-L1s to answer this question.
Solana stands out from most L1s with its use of parallel processing to validate and execute transactions, eliminating the need for additional scaling layers. This makes it a cost-effective and capital-efficient platform for user interactions.
In terms of user activity, Solana is currently one of the most popular blockchains in the field, mainly due to the airdrop of tokens to early users by emerging protocols. There is also growing interest in utilizing Solana’s virtual machine capabilities, with projects like Eclipse using it to extend Ethereum’s capabilities. As SOL inflation rate decreases over the years, the decreasing supply of native tokens is a catalyst for Solana.
Here are some test versions that may perform well if the ecosystem continues to grow:
Jito (JTO – $3.0b FDV)
Solana’s leading Liquid Stake protocol has gained popularity in the cryptocurrency community after a generous airdrop to over 10,000 users.
Bonk (BONK – $1.4b FDV)
Bonk has a large market cap and is the most popular community token on the Solana blockchain. Its price has soared by about 400% in the past 30 days, and more people are using the network and participating in it.
marginfi (MRGN – N/A)
A decentralized lending protocol with a TVL of over $240 million, currently rewarding users with points for interacting with its platform. These points will be used for airdrops of upcoming tokens.
If you are interested in the potential effects of airdrops, you can check out the recently released calculator.
Avalanche is a fast and scalable platform that allows developers to build custom blockchains or use existing subnets (divisions of blockchains). Avalanche’s mainnet actively utilizes three blockchains.
Most of us are familiar with the C-Chain, as that’s where DeFi applications reside. Avalanche’s mainnet itself is a special subnet. So far, several projects have deployed their own subnets on the system, and some notable projects are:
Beam (Gaming) – Aims to shape the future of gaming through a community-driven approach and provide a solid platform for developers.
UPTN (web3) – Piloted in South Korea, integrates blockchain technology into real-world business.
DFK (Gaming) – gameFi platform and home to the DeFi Kingdom.
Due to breaking out of a long-term price range and a significant increase in TVL, “red coins, gud coins” have recently received attention. However, it is important to note that these gains are due to the appreciation of AVAX rather than additional token inflows.
The optimistic outlook for Avalanche is that the number of subnets deployed by platforms with specific application requirements continues to increase, choosing the subnet over one of the L2 solutions currently available on the market.
If the ecosystem shows a sustained upward trend, some test versions may perform well:
Trader Joe (JOE – $307.81m FDV)
The top DEX of the chain and the main product in the ecosystem has been actively rolling out updates and generating significant fees in the case of increased trading volumes.
Benqi (QI – $182.74m FDV)
Benqi offers a range of DeFi products such as lending, liquidity staking, and validator leasing. With a significant increase in TVL in the liquidity staking sector, QI’s price has risen by about 250% in the past two weeks.
Near is a blockchain that also refers to itself as an operating system, providing interoperability across any blockchain. Its core focus is on scalability achieved through sharding, dividing the network into smaller parts to process transactions more efficiently while maintaining speed, low costs, and decentralization.
Through a partnership with EigenLayer, Near’s upcoming “Fast Finality Layer” will provide faster and cheaper transactions for Ethereum aggregators. The testnet is said to launch in Q1 2024. In addition, real-time market data provider Pyth has entered Near with its oracle solution, allowing on-chain applications to easily access equity, commodity, and market data.
If the ecosystem continues to grow, some test versions may perform well:
Meta Pool (META – $2.27m FDV)
A multi-chain liquidity-based ecosystem with a suite of products, offering LST, liquidity provisioning, launchpad, and bonds. Meta Pool has a cumulative TVL of $42.56 million, with 97% of the value coming from Near.
Ref Finance (REF – $9.39m FDV)
Ref has a TVL of $16.87 million and is the largest AMM on Near, where users can trade spot or perpetual contracts at lower transaction costs.
Injective, built on Cosmos SDK, is a blockchain focused on financial applications, providing fast transaction processing, low gas fees, and powerful interoperability with various other chains such as Ethereum and Solana.
The project is well-funded and supported by numerous well-known investors in the tech industry and cryptocurrency field. Although there hasn’t been much on-chain activity beyond staking despite its high market capitalization, significant onboarding efforts are underway to invite developers to join the platform.
Earlier this year, a $150 million ecosystem fund was created to accelerate the adoption of interoperable infrastructure and DeFi. While daily trading volumes have been on the rise in the past few months, $5-7 million is not significant for a chain with a market cap of $3 billion.
Polygon (PoS) is an EVM-compatible sidechain designed for low-cost and fast transactions.
Polygon DEX trading volumes have seen slight growth in the past few months, but the growth rate is different from chains like Solana or Avalanche.
In a blog post released in July this year, Polygon announced the 2.0 upgrade. Polygon is building a modular stack that includes “Supernets” (application-specific chains), privacy aggregators, and recently launched Polygon zkEVM components.
The general highlights of this update are:
Redesigned protocol architecture
MATIC token rebranding to POL
Ecosystem benefits:
Enhanced security
Improved scalability
These could be catalysts for the MATIC token in 2024. If MATIC rebounds, some test versions worth noting are:
Quickswap (QUICK – $45.02m FDV)
Deployed on multiple Polygon layers, with the majority of the $1.2565 billion TVL residing on the PoS chain, allowing users to access a wide range of products and services beyond DeFi. QuickSwap has generated $10.3 million in fees this year and approximately $11.1 billion in cumulative trading volume.
THORChain serves as an independent L1 cross-chain AMM, allowing users to exchange native assets across multiple chains without the need for wrapping or pegging assets.
From the trading volume indicators, it is evident that the underlying technology of this protocol is being effectively used for on-chain transactions. THORChain’s endorsed lending protocols are actively burning a large portion of RUNE supply. Its lending model allows users to borrow BTC or ETH with various collateral options, zero interest, and no liquidation. However, these loans require higher minimum collateral ratios ranging from 200% to 500% depending on market conditions.
If the ecosystem continues to grow, some test versions may perform well:
THORSwap (THOR – $129.54m FDV)
A DEX aggregator that provides token swaps across 10 chains and over 5,000 assets with just one click, and offers 75% revenue share to token stakers. The protocol currently conducts token burns monthly based on trading volume and recently reached a TVL of $1 billion.
Maya (CACAO – $73.03m FDV)
A THORChain fork and cross-chain DEX aiming to compete directly with centralized exchanges by reducing the risks associated with such entities while providing deep liquidity and low fees.
Fantom was a high-performance blockchain from the previous cycle and hosted one of the largest DeFi ecosystems. However, its activity has significantly declined since the collapse of Terra, Tomb’s detachment, and the multi-chain bridge exploit.
Despite going through a challenging period, the team is actively planning to launch a brand new blockchain technology soon to stay competitive. With the use of a new virtual machine and improved storage capabilities, their upcoming iteration called “Sonic” is expected to achieve over 2000 TPS. The upgrade is scheduled to launch in spring 2024.
If the ecosystem continues to grow, here are some test versions that may perform well:
SpookySwap (BOO – $11.33m FDV)
The leading DEX on Fantom, offering token swaps both natively and across chains, and providing 75% of fees generated to token stakers.
BeethovenX (BEETS – $4.43m FDV)
Derived from Balancer V2, BeethovenX is an AMM that offers users optimal swap rates, minimal slippage, and stable earning opportunities. Token holders receive a certain percentage of the exchange fees generated by the platform.
WigoSwap (WIGO – $14.12m)
Wigo offers a range of products from trading to gaming and aims to be at the core of the Fantom ecosystem.
Cardano is a PoS blockchain that emerged in the previous cycle and has gained popularity in the retail sector. Although Cardano is not known for its DeFi scene, its loyal community has led to the growth of on-chain value and activities, which is impressive. To further increase adoption and network efficiency, pain points around scalability are being addressed through the L2 solution called “Hydra” released earlier this year. Hydra is defined as a homogenous L2 for off-chain processing, with each Hydra “head” capable of handling 1,000 TPS.
Some Cardano test versions are:
Indigo (INDY – $114.91m FDV)
Cardano’s preferred CDP platform that allows users to create fully collateralized synthetic assets such as BTC, ETH, and USD.
Minswap (MIN – $174.28m FDV)
Despite the security incident earlier this year affecting TVL and trading volume, community-centered protocol Minswap remains at the forefront of DEX in the ecosystem.
In summary, it is evident that some L1s have experienced growth in fundamental indicators such as daily active users, TVL, and trading volume. However, it is even more apparent that the recent price appreciation of many of these tokens far exceeds the fundamental growth. We believe these tokens should be viewed more as narrative-driven trades rather than long-term fundamental investments.