The more L2s there are, the more optimistic I am about the new public chains (alt-L1).
The last bull run was the Beta stage of non-Ethereum L1:
Alt-L1s compete by offering liquidity mining rewards on top of the same forked protocols as Aave and Uniswap V2, attracting yield-hungry degenerators.
But there has been little innovation at the application layer outside of Ethereum.
Even non-EVM chains have launched EVM sidechains: Near’s Aurora, Polkadot’s Moonbeam, Cosmos’ Kava. EOS EVM and Solana’s Neon were late to the party.
The only differentiating factors among the above L1s are:
1) Lower gas fees;
2) Speed;
3) Brand;
4) How much liquidity mining rewards they can provide.
However, with the onset of the bear market, liquidity mining rewards decreased and TVL returned to Ethereum’s embrace.
To make matters worse, a new narrative for Ethereum L2 has emerged with the advent of Optimism, Arbitrum, promising to bring scalability without compromising security.
Additionally, these L2s are attracting users with potential airdrops.
L1 needed to reinvent themselves, and I'm glad to see they did it:
Avalanche: Doubling down on expansion through subnets, focusing on asset tokenization, bringing more stablecoins to become a foreign exchange trading chain, etc.
Polygon: Becoming the L2 hub for any specific purpose application. The recent event attracting OKX is a major success.
Near: Builds itself into a monolithic and modular blockchain. Collaborates with Polygon to extend Ethereum at the DA layer, but Near also provides chain abstraction for L2 through a unified UI (BOS) and L2 account aggregation.
Solana: Leading the monolithic scaling wave with fast transactions; fast but without the cumbersome modular user experience. I will share more about Ethereum vs Solana in tomorrow’s blog post
Fantom: Double down on monolithic design with Sonic upgrade, bringing 2k TPS without sharding or L2. The goal is to attract a new generation of dapps
BNB Chain: opBNB L2 was launched to reduce fees, but the more important upgrades are BNB Greenfield, DataFi focused on data and IP monetization, and decentralized AI (large language model training with privacy protection).
Cosmos: ATOM tokens seem to have lost their value proposition, but with Osmosis, Injective, Kuji ecosystems thriving, the Cosmos Hub is thriving
L1s are now innovating and becoming professionalized, while L2s seem to be following the same path as L1s before them - attracting forked protocols for airdrop farming, but lacking innovation and diversification.
Unfortunately, many L2 tokens have poor token economics. Look at the problematic ARB token “staking” proposal.
As expected, the old but good L1 tokens are rising. They offer a more enticing value proposition now than in the previous bull run.
