‘New’ Layer 1 Decentralized Finance Networks Outperform the Market

The success of Layer 1 platforms seems to have a knock-on effect on each other, as several post significant weekly surges.

Layer 1 Taking Pole Position in Percentage Charts

Layer-1 blockchains have been gaining in popularity as the race for scalability between different chains wages forward. With Solana up over an astonishing 75% over just seven days, according to CoinGecko, many are sitting up and paying attention to the Layer-1 alternatives.

The price-performance is especially eye-catching compared to the rest of the market in a week that has seen several DeFi protocols such as UniSwap lag, if not fall a couple of percent. The surge in price by the likes of Solana has also come alongside positive movement by Layer 1 platforms like Cardano, which has twice surpassed its all-time high this week. As Polkadot and Cosmos also show significant rises, we’re left wondering why investors are encouraged by Layer 1’s.

“I think people are realizing how large the potential market for smart contracts can be,” Muneeb Ali, founder of Sparks, told The Defiant. “Success of Ethereum fuels demand for new L1s and L2s. And as people see initial signs of traction of a new L1, recent example being Solana, then their confidence level on newer L1s being able to take market share can go up in general.” 

The growth of blockchain across the globe has coincided with a massive demand for scalable, affordable, and adaptable projects. When Ethereum lagged with congestion and gas fees, a void emerged that demanded innovation. We have now seen an influx of creative blockchain development, the likes of which––we can guess––have only just begun.

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What is Layer 1 vs. Layer 2

In the decentralized ecosystem, a Layer-1 network refers to a blockchain, while a Layer-2 protocol is a third-party integration that can be used in conjunction with a Layer-1 blockchain. Bitcoin, Litecoin, and Ethereum, for example, are Layer-1 blockchains. The two layers can often be connected through a bridge as well.

Layer-2 may refer to a solution like Bitcoin’s Lightning Network or Ethereum’s Plasmas to help settle transactions off of the mainnet. These alternatives were created to relieve the pressure of a Layer-1 chain by handling secondary activities. Layer-2 solutions usually promote faster activity, lower transaction fees, and better privacy. 

Solana Setting Standards

It appears success breeds progress, and the sleek new webpage Solana boasts just days after improved market performance attests to this. 

But the frontend of the platform is not the only impressive aspect of Solana, whose price has doubled over two weeks. Solana has solidified a reputation by ensuring security, establishing a product that has something tangible to offer, and having the numbers to make up for it. 

Evading the recent high-profile hacks, seeing your platform move into the myriad of possibilities (sports, gaming, even dating!) is impressive. Still, you absolutely need the numbers to back that up.

Success also breeds belief and, importantly, legitimacy. As Solana continues to make important strides, the murmurs of ‘Ethereum-Killer’ will begin to crop up once more, and the charts also suggest other projects seem to be taking heart from Solana’s performance. 

As we have mentioned before here at BSC.News, Solana still has important questions to solve regarding its neutrality as a public blockchain and its ability to scale. These are essential questions that will need answering as the crypto market continues to grow. 

‍Source : bsc.news