Data Shows Layer-1 Price Growth Reflects Unique Address Proliferation
January 05 2022 - 12:00PM
NEWSBTC
Is that time of the year again, Bitcoin seems stuck in a never
ending range while Layer-1 coins and other cryptocurrencies rally.
The crypto market ended 2021 with important profits, but not with
the bang everyone seemed to have been expecting. Related Reading |
TA: Why Ethereum Bulls Aim Fresh Rally Above $4K Arcane Research
recorded important growth in Layer-1 coins, such as Fantom (FTM),
and Avalanche (AVAX) as a result of a 2021 full of adoption. These
cryptocurrencies experienced rallies over 15x against Ethereum
(ETH) and took a portion of its market share. Arcane Research
claims the growing popularity in decentralized finances (DeFi),
non-fungible tokens (NFTs), and the transaction fee increase on the
Ethereum network. The latter phenomenon started in 2020 with the
“Summer of DeFi”, the period that saw the biggest boom in DeFi
users leading to an increase in network usage. The proliferation of
NFTs contributed with that issue and let layer-1 coins such as
Binance Smart Chain (BSC), Solana (SOL), and others to onboard
those users that were priced out of Ethereum. The same seems to be
happening with Fantom and Avalanche. Arcane Research claimed the
following: As illustrated on the charts, the greater the number of
users of a particular protocol, the more value it tends to attain.
In other words, the hypothesis that a multi-year bear is lurking
because altcoins have gone up too much requires some nuance. The
explosive growth in these layer-1 coins could followed a similar
path as those cryptocurrencies that benefited for a short term only
to see their use base decimated, or users could form communities
and become permanent contributors with their expansion. In that
sense, the implementation of second layer scalability solutions for
Ethereum could become a threat for those projects. A Multi-Chain
Industry Supported By Layer-1 Cryptos A separate report by Delphi
Digital records a major growth in other layer-1 projects during
2021. Terra (LUNA) was one of the most important on those terms
alongside Polygon (MATIC), a scalability platform for the Ethereum
ecosystem. In terms of total value lock (TVL), Terra saw a 356x
increase while Polygon experienced a 17,100x increase in its TVL.
As seen below, Fantom and Avalanche entered the top 10 blockchains
by TVL but with a smaller increase that the aforementioned
cryptocurrencies. Despite its high transaction fees, and congestion
issues Ethereum remained the largest network in terms of TVL during
2021 and preserved its dominance, for the time being. When
analyzing the biggest protocols by TVL, it is interesting to find
Lido Finance and Multichain, as Delphi Digital claimed, two
platforms with interoperable and cross-chain capabilities. This
could hint at a future where Ethereum and layer-1 coins find
themselves in an equal field as users turn to the latter in search
of a more cost-efficient ecosystem, and cross-chain features.
Related Reading | TA: Ethereum Plunges After Rejection: Technicals
Remain Bullish As of press time, ETH trades at $3,811 with a 1%
loss in the past day.
Terra (COIN:LUNAUSD)
Historical Stock Chart
From Feb 2024 to Mar 2024
Terra (COIN:LUNAUSD)
Historical Stock Chart
From Mar 2023 to Mar 2024