Layer 1 Blockchains: Will They Survive or Thrive in Ethereum’s Shadow?

The Layer 1 Landscape

In the world of cryptocurrencies, Layer 1 blockchains are often put to the test, especially as the mighty Ethereum continues to dominate. Despite the ongoing bear market, new contenders are appearing, leading to questions about their compounding strengths and weaknesses.

Ethereum: The Unrivaled Giant

Ethereum allowed decentralized finance (DeFi) to explode onto the scene in 2020, creating quite the buzz. However, its proof-of-work consensus and accompanying high gas fees have sprinkled some annoyance over its popularity. Enter the new players: Layer 1 blockchains like Algorand, BNB Chain, and Avalanche, which are ready to tackle Ethereum’s shortfalls like a determined superhero.

The Double-Edged Sword of Gas Fees

One of the main critiques of Ethereum is its gas fees. Let’s face it—who wants to spend half their transaction on fees? According to Chainalysis, people are spending through the roof just to send some Ethereum. Data shows that those trying to move amounts under $1,000 might as well be donating to the crypto Gods with hefty gas fees. Fun, right?

New Players on the Block: Algorand, BNB Chain, and Avalanche

Despite Ethereum strutting its stuff, other blockchains are becoming serious contenders. Algorand saw a whopping 65% increase in transaction volume during Q3 2021 while Bitcoin and Ethereum lost significant ground. Staci Warden, Algorand’s mastermind, insists their model delivers financial inclusion—making it easier for users globally to engage in DeFi.

A Competition with Style

BNB Chain is also making big waves. With claims of supporting more Layer 2 projects than any other blockchain, they’re saying hello to cheaper fees and more efficient decentralized applications. Statements are flying that the BNB Smart Chain could be a game changer, possessing 30 times the computing power of Ethereum. Who knew blockchain could be so competitive?

The Battle of Finality: Avalanche Steps In

Another contender worth noting is Avalanche, whose self-described “fastest time to finality in the industry” means transactions are locked in faster than you can say “blockchain.” Could Avalanche pull off the ultimate Feat that Ethereum has yet to accomplish? With a knack for scalability and customizability, it aims to provide those heavy-duty DeFi users with the instant gratification they crave.

Survivability in the Crypto Winter

As the crypto winter sets in, the endurance of Layer 1 blockchains becomes the topic of conversation. Will projects that once thrived fall into obscurity? Warden worries that every component of the crypto ecosystem will face scrutiny, but those that can scale and provide utility could find themselves at the forefront. In other words, this winter might just separate the wheat from the chaff.

What Comes Next?

The looming upgrades to Ethereum’s proof-of-stake could complicate things for ambitious Layer 1s. Experts like Alex Tapscott surmise that, despite Ethereum’s impending improvements, there will always be a demand for alternative blockchains. After all, who doesn’t love a good underdog story?