L1 continues to innovate and specialize, but L2 is now busy attracting fork protocols and lacks innovation and diversification. The following article summarizes the current progress of L1. This article is sourced from Ignas’ X Research, compiled and organized by Foresight News.
(Background Information:
No one claims to be the “Ethereum killer” in Layer1 anymore? Looking at the ambition of new public chains through data)
(Supplementary Background:
Layer2 players fill the track, did they really scale Ethereum?)
The more L2, the more I favor competitive L1. The previous bull market was the beta phase of non-Ethereum L1: Alt-L1 competed for eager Degen’s yield by providing liquidity mining incentives on fork protocols such as Aave and Uniswap V2. There is little innovation in the application layer outside of Ethereum.
Even non-EVM chains have launched EVM sidechains: NEAR’s Aurora, Polkadot’s Moonbeam, Cosmos’s Kava. EOS EVM and Solana’s Neon failed to catch up with this trend.
The only difference between these chains is:
Lower gas fees;
Speed;
Branding;
How much liquidity mining rewards they can provide.
However, with the start of the bear market, liquidity mining rewards have decreased, and TVL has returned to the safer Ethereum.
What’s worse is that new narrative fields of Ethereum L2 have emerged, such as Optimism and Arbitrum, promising scalability for Ethereum without compromising security. Additionally, they attract users with the expectation of potential airdrops.
L1 needs to reshape, and I am glad to see that they have done so.
Avalanche: Doubles scalability through subnets; focuses on asset tokenization; introduces more stablecoins, etc.
Polygon: Becomes the central L2 for any specific application; collaborates with OKX to launch a new chain.
Further reading:
OKX collaborates with Polygon to release zkEVM L2 network “X1”, OKB surges over 35% in a month, reaching a new all-time high.
NEAR: Builds itself as a monolithic and modular blockchain; collaborates with Polygon to scale Ethereum at the DA layer; NEAR also provides chain abstraction to L2 through unified UI (BOS) and L2 account aggregation.
Solana: Leading the wave of monolithic blockchain scalability, enabling fast transactions without the cumbersome modular user experience. I will share more about the Ethereum vs. Solana debate in subsequent articles.
Fantom: Improves monolithic blockchain design through the Sonic upgrade, achieving 2000 TPS without sharding or L2, with the goal of attracting the new generation of DApps.
BNB Chain: Launched opBNB L2 to reduce costs, but the more important upgrade is BNB Greenfield, which focuses on data and IP monetization in data finance, as well as decentralized AI (LLM training with privacy protection).
Cosmos: ATOM itself seems to have lost its direction in terms of value proposition, but with the progress of Osmosis, Injective, and Kuji, the Cosmos Hub is thriving.
L1 continues to innovate and specialize, while L2 becomes the new L1. Today’s L2 is busy attracting fork protocols but lacks innovation and diversification.
Unfortunately, the token economics of many L2 tokens are poor, as can be seen from the controversial “staking” proposal of ARB.
It is not surprising that tokens from established L1s are gaining popularity. Compared to the previous bull market, they now offer more attractive value propositions.
Or is this just short-term rotation? I hope not.
Related Reports:
How far has Bitcoin Layer2 innovated after 6 years?
Bitcoin Layer2 that surpasses the impossible triangle
How important are “forced withdrawals” and “escape functions” on Layer2?
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