Every week we provide insights into popular assets and hot topics in crypto, so you can easily learn more about the crypto market in bite-sized pieces.
In this Crypto in Focus we take a closer look at Layer 1 Blockchains - the place where it all begins
Layer 1 Blockchains
Layer-1 blockchains are the foundational networks home to decentralized applications (dApps) and services. Think of layer-1 blockchains as the iOS operating system that runs the iPhone, with dApps as the applications in the Apple App Store.
Since Ethereum’s emergence, many “Ethereum killers” have competed for market share as layer-1 blockchains can be highly valuable if they attract users and applications. There is still no consensus on which layer one will dominate, as shown by Solana’s impressive rise last year. As a result, the layer-1 trade is one of the biggest areas of interest among crypto investors.
We'd like to share with you some insights into three key blockchains that are shaping the future of the crypto space: Ethereum, Solana and NEAR, all available in Change App.
Ethereum ($ETH)
ETH was the first layer one smart contract platform and has been live for a long time, giving it a significant early advantage. It has the strongest developer community, the most developers, applications, and users. However, Ethereum has struggled with scaling challenges. The current approach to scaling through layer two networks brings its own issues. Additionally, the first spot ETF products will launch in the US some time later this year.
Solana ($SOL)
SOL emerged as a solution to Ethereum’s scaling challenges, offering high-speed transactions with very low fees. This has made Solana the go-to chain for retail users who prefer lower fees, as opposed to Ethereum, which is often used by whales and early crypto adopters due to its higher fees. Recently, the first Solana spot ETF application was submitted in the US, highlighting its growing relevance and importance in the crypto industry. Over the past 12 months, Solana has experienced a meteoric rise and is positioning itself to challenge Ethereum for the top spot.
NEAR ($NEAR)
NEAR is another layer one blockchain that stands out, aiming to improve on Ethereum’s fees and transaction speed. Recently, NEAR has gained significant mindshare due to its strong connections to artificial intelligence (AI). Its co-founder, Illia Polosukhin, previously worked at Google Research, where he worked on AI technologies. The market has recognized NEAR’s affiliation with AI, and it is currently riding this wave. This connection to AI serves as a strong differentiating factor for NEAR.
Given Ethereum’s significant underperformance relative to Solana over the past 12 months, it’s clear that the jury is still out on which layer-1 blockchain will eventually dominate. This presents ample opportunity for investors to identify and invest in the right project. Whether it’s Ethereum, Solana, NEAR, or another chain, only time will tell which will ultimately prevail.
AI is a major trend in crypto, leading to new projects that benefit both areas. This mix improves computing power, storage, and data security, providing various investment opportunities.
