Popular L1 performance comparison: Besides Solana, which public chains still have room for growth?

BY THOR HARTVIGSEN

Compilation: Deep Tide TechFlow

In the last bull market, L1s such as Solana, Avalanche, Fantom, and Polygon performed very well in terms of price pull. One might argue that the dominance of this infrastructure is characteristic of an industry that is still in its infancy.

So has the situation changed significantly from 2021 to today?

L1s + L2s + DeFi 30-day performance

This begs the question: is the current outperformance of prices related to improved fundamentals, or is it simply the same old routine we saw in the last market cycle?

Solana (SOL)

Solana differs from most L1s in that it uses parallel processing to validate and execute transactions without the need for an additional scaling layer. This makes it a low-cost and capital-efficient platform for user interaction.

Daily Active Addresses on Solana

In terms of user activity, Solana is currently one of the most popular blockchains in the space, largely due to emerging protocols airdropping tokens to early adopters. There is a growing interest in leveraging the ability of the Solana Virtual Machine, such as Eclipse, to extend ETH Workshop’s current capabilities. One factor in Solana’s rise is the year-over-year decrease in its native token issuance, as SOL’s inflation rate is decreasing.

Here are some of the ecosystems on Solana, and if the ecosystem continues to thrive, there should be a decent increase in the token price:

Jito ($JTO: $3 billion FDV): Jito, Solana’s premier liquid staking protocol, has gained a lot of popularity in the crypto community after an airdrop to over 10,000 users.

Bonk ($BONK: $1.4 billion FDV): $BONK As the most popular community coin on the Solana blockchain, the market cap is huge, and the price has increased by about 400% in the last 30 days as more and more people use the network and participate in it.

Marginfi ($MRGN: Unminted Coins): Marginfi is a decentralized lending protocol that currently has a total value locked (TVL) of over $240 million, and it currently rewards users with points through their interactions with the platform. These points will be used to airdrop their upcoming tokens to users at a later date. If you are interested in airdrops, you can take a look at the recently published airdrop calculation rules.

Avalanche (AVAX)

Avalanche is a fast and scalable platform that allows developers to build custom blockchains or use existing subnets (partitioned portions of a blockchain). The Avalanche main network actively uses three blockchains, as shown in the diagram below.

Most of us are familiar with the C-chain because that’s where DeFi applications are located. The Avalanche main network itself is a special subnet. Currently, there are various projects that deploy their own subnets on the system, and some notable projects include:

• Beam (Gaming): Aims to provide a platform for developers through a community-driven approach
• UPTN (Web3): Piloted in South Korea to integrate blockchain technology into real-world businesses
• DFK (Game): gameFi platform, Defi Kingdom

TVL by Avalanche

As AVAX broke through the long-term oscillating price range and TVL increased significantly, the ecosystem on AVAX gradually gained more heat. Importantly, this growth is due to the appreciation of AVAX and not the inflow of additional tokens.

The bull market case for Avalanche is the increasing number of platforms deploying subnets that have opted for this approach over the L2 solutions currently available on the market to meet the needs of their specific applications.

If there is a sustained upward trend in the ecosystem, some Avalanche ecosystems may perform well:

• Trader Joe (JOE: $307.81 million FDV): The chain’s top DEX and a major component in the ecosystem, has been aggressively rolling out updates and incurring significant fees amid spikes in trading volumes.
• Benqi (QI - $182.74 million FDV): Benqi offers a range of DeFi products such as lending, liquid staking, and validator leaning. With the tremendous growth of its liquid staking arm, TVL, the price of QI has risen by about 250% in the last two weeks.

Near (NEAR)

Near is a blockchain, also known as an operating system, that provides interoperability across any blockchain. Their core focus is scalability, implemented through “sharding”, which splits the network into smaller pieces to process transactions more efficiently, while maintaining speed, low cost, and decentralization.

Near Daily Active Addresses

By partnering with EigenLayer, Near’s upcoming “Fast Final Tier” will provide faster and cheaper transactions for ETH rollups. The testnet is expected to launch in the first quarter of 2024. In addition, real-time market data provider Pyth has also entered Near to offer their oracle solution. This makes stock, commodity, and market data easily available to on-chain applications.

If the ecosystem continues to grow, some of Near’s ecosystem applications are likely to perform well:

Meta Pool (META: $2.27 million FDV): A multi-chain liquidity-based ecosystem offering a range of products including: LSTs, liquidity provision, launchpads, and bonds. Meta Pool’s cumulative TVL is $42.56 million, with 97% of the value on Near;

Ref Finance (REF: $9.39 million FDV): Ref with a TVL of $16.87 million is the largest AMM on Near, where users can trade spot or isolated at low transaction costs.

Injective (INJ)

Built on the Cosmos SDK, Injective is a blockchain for financial applications that offers fast transaction processing and low gas fees, along with strong interoperability with a variety of other chains (e.g., ETH, Solana).

Year-to-date INJ price action

INJ Volume

The project has received funding from a number of well-known investors in the tech and crypto sectors. Despite its large market cap, there isn’t much on-chain activity other than staking, but there are some significant efforts to attract builders to the platform. Earlier this year, a $150 million ecosystem fund was created to accelerate interoperable infrastructure and DeFi adoption. Despite the upward trend in transaction volume over the past few months, $5 million to $7 million per day isn’t a lot for a $3 billion project.

Polygon (MATIC)

Polygon (PoS) is an EVM-compatible sidechain designed to enable low-cost, fast transactions.

Polygon DEX Volume

The Polygon DEX has seen a slight increase in trading volume in recent months, but not as fast as Solana or Avalanche.

In a blog post published in July of this year, Polygon announced their 2.0 upgrade. Polygon is building a modular stack that includes components such as “Supernets” (application-specific chains), privacy aggregations, and the recently launched Polygon zkEVM.

Key takeaways from this update include:

• Redesigned protocol architecture;
• Tokens renamed from MATIC to POL;
• Optimize ecosystem benefits:
• Enhanced security;
• Increased scalability;

These could be upside factors for the MATIC token in 2024. If the MATIC bounces back, the following apps to watch out for are:

• Quickswap (QUICK: $45.02 million FDV) is deployed on multiple Polygon layers, with the majority of its $125.65 million TVL located on the PoS chain, where users can swap tokens and trade perpetual contracts while enjoying a wide range of products and services outside of DeFi. QuickSwap has generated $10.3 million in fees and about $11.1 billion in cumulative trading volume this year.

THORChain (RUNE)

THORChain operates as a standalone L1 cross-chain AMM, allowing users to swap native assets across multiple chains without the need to use wrappers or anchor assets.

THORChain Volume

It’s clear from the volume metrics that the protocol’s underlying technology is being effectively used for on-chain transactions. THORChain-endorsed loan agreements are actively destroying the majority of RUNE’s supply. Its lending model allows users to borrow BTC or ETH with multiple collateral options with zero interest and no liquidation. However, depending on market conditions, these loans require a higher minimum collateral ratio, ranging from 200% to 500%.

If ecosystems continue to grow, the ones that are likely to perform well include:

THORSwap (THOR: $129.54 million FDV): This DEX aggregator offers a one-click token swap between 10 chains and over 5,000 assets and shares 75% of the revenue to users who stake their tokens. The protocol is currently conducting monthly token burns based on trading volume and recently reached $1 billion in TVL.

Maya (CACAO: $73.03 million FDV): A fork of THORChain, Maya is a cross-chain DEX designed to compete directly with centralized exchanges by reducing the risks associated with such entities while providing deep liquidity and low fees.

Fantom (FTM)

Fantom is a high-performance blockchain from the last cycle that hosted one of the largest DeFi ecosystems. Since the collapse of Terra, the decoupling of Tomb, and the incident of the Multichain bridging vulnerability, Fantom’s activity has dropped significantly.

FTM TVL

Despite going through a tough time, the team is still actively planning to launch brand new blockchain technology soon to stay competitive. With new virtual machines and improved storage capabilities, their upcoming version called “Sonic” is expected to achieve more than 2,000 TPS. The upgrade is expected to be available in spring 2024.

If the ecosystem continues to grow, applications that may perform well include:

• SpookySwap (BOO: $11.33 million FDV); Fantom’s leading DEX offers native and cross-chain token swaps and distributes a portion of transaction fees to stakers.
• BeethovenX (BEETS: $4.43 million FDV); BeethovenX, which was forked from Balancer V2, is an AMM that provides users with optimal exchange rates, minimal slippage, and stable income opportunities. Token holders receive a share of the exchange fees generated by the platform.
• WigoSwap (WIGO: US$14.12 million); Wigo, which offers a range of products, from trading to gaming, is committed to being the core of the Fantom ecosystem.

Cardano (ADA)

Cardano is a PoS blockchain that emerged in the last cycle and is favored by ordinary investors. Although ADA has become an important meme in the minds of many, the ecosystem continues to grow, indicating an increase in adoption.

Cardano’s TVL

Despite not being known for its DeFi scene, Cardano has excelled in on-chain value and activity growth, fueled by its loyal community. To further stimulate usage and network efficiency, pain points around scalability are being addressed with an L2 solution called “Hydra”. Hydra is defined as an isomorphic L2 for off-chain processing, where each Hydra “head” can process 1000 TPS.

Some of the ecosystem applications on Cardano:

Indigo (INDY: $114.91 million FDV) Cardano’s preferred CDP platform, providing users with the ability to create fully collateralized synthetic assets such as BTC, ETH, and USD.

Minswap (MIN: $174.28 million FDV) community-focused Minswap protocol is the DEX leader in the ecosystem and remains ahead in terms of TVL and trading volume despite a vulnerability incident earlier this year.

Below is a summary of each of the L1 metrics presented in today’s research report.

In conclusion, it is clear that some of these L1s have seen growth in fundamental metrics such as daily users, TVL, and trading volume. More obviously, however, the recent price appreciation of many of these products has far outweighed the fundamental growth. In our view, these tokens should be seen more as narrative transactions than long-term fundamental investments.