Crypto economist and commentator Tasha che recently said in a Twitter thread that things are changing rapidly for Layer 1 channels as the space becomes competitive. She noted,
“The truth is whatever Ethereum wants to be in future— sharding, security layer for L2s etc. — newer chains are already delivering similar in more elegant ways…”
She further said: “It is difficult to see a scenario in which Ethereum overtakes competing solutions.” This is something that the recent Arcane Research report also highlights. The latest report noted that ETH outperformed BTC in 2021, but other Layer 1 networks like Solana outperformed ETH.
With that, Arcane Research predicts that in 2022, there will be accelerated adoption of other layer-1s, and they will continue to outperform Ethereum. The report also explained,
“… other Layer 1 networks like Solana, Avalanche, Terra Luna, Fantom and Harmony have significantly outperformed ETH. We expect this trend to continue over the coming year as these other smart contract platforms continue to steal market share from Ethereum in terms of users and the amount of funds stored on the market. network.
Further, Che explained why Solana is a crucial project.
“Solana has highest staking rate among major L1s for a reason. Community is strong & loud FUD from modular crowd only gives supporters breathing room to accumulate more.”
She also explained, “Solana’s lead wouldn’t go away overnight, but she needs better apps to maintain that lead. “
In all this, BSC is somewhat of a star. Arcane Research analyzed that Binance Smart Chain was the first alternative ecosystem to take market shares from Ethereum. And after that, projects like “Solana, Avalanche, and Terra have seen a growing penetration with other layer-1 protocols lurking slightly behind.”
At the time of writing, we can also note that Ethereum’s TVL share as a DeFi channel has fallen to around 62% from close to 70% a few months ago. Channel Terra isn’t right behind, but now demands 18% TVL on Defillama with 14 protocols. This is when 375 protocols are present on Ethereum.
With regard to Terra, Che commented,
“As such, my opinion on Terra is similar to that on S Korea— has a place in portfolio but not something to go all in on.”
On the protocol side, BSC holds 246 protocols and the report also notes that the Binance Smart Chain ecosystem “has experienced massive growth in 2021, taking market share from Ethereum.”
