Shifting Landscape of Layer-1 Blockchains
The landscape of layer-1 (L1) blockchain networks is experiencing significant shifts, with Ethereum’s once unassailable position now under serious challenge. This observation comes from Alex Svanevik, CEO of Nansen, during a discussion at Cointelegraph’s LONGITUDE event. Svanevik reflected on the changing dynamics, stating:
If asked three or four years ago, I would have confidently predicted Ethereum’s continued leadership in the crypto space. However, the situation has markedly evolved.
Ethereum’s Changing Dominance
Data reveals that while Ethereum remains the largest L1 network with about $52 billion in total value locked (TVL) — accounting for 51% of the cryptocurrency value across blockchain platforms — it has seen a reduction in its dominance. Just two years ago, in 2021, Ethereum commanded an impressive 96% of the TVL across L1 networks. Today, Svanevik describes the competition among various L1s as an “open race” poised to determine which platform will emerge as the preferred choice for trading and overall blockchain applications.
Emerging Competitors
The CEO identified Solana as a front-runner in this emerging competition, recognized for its rapid transaction speeds and lower fees compared to Ethereum. He pointed out that Solana has surpassed Ethereum in several key metrics such as:
- Active user addresses
- Transaction volumes
- Gas fees
Despite these advancements, Ethereum still retains its lead in TVL and the issuance of stablecoins.
Challenges for Smaller Chains
In addition to Solana’s ascendance, numerous smaller L1 chains are seeking to carve out their own niches in this evolving market. However, Vardan Khachatryan, the chief legal officer of the trading platform Fastex, issued a word of caution:
Many of these smaller chains often gain traction due to market hype surrounding particular trends, like bull runs or token airdrops, rather than indicating true, sustainable adoption.
Conclusion
The LONGITUDE event by Cointelegraph serves as a gathering point for experts and innovators in blockchain and Web3, fostering critical conversations about the future of these technologies amidst rapid industry changes.
