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# Layer 1 Research Report
A layer 1 blockchain is a network made up of distributed nodes all running the same software, each individually keeping track of the current state of the chain. The software each of these nodes are running provides the fundamental rules and protocols for how the L1 network functions. This includes how transactions are validated and added to the chain, how consensus is reached, and how the network achieves security and reliability. It is the first layer of the blockchain technology stack and provides the basic features and functions necessary for a blockchain network to operate. This layer is responsible for maintaining the ledger of transactions, securing the network through cryptographic algorithms, and enabling the creation and transfer of digital assets.
Over the last couple of years, the crypto industry has seen tremendous growth in both the number of users and new projects coming to the ecosystem. This was mostly driven by the year and a half long bull run from ~March 2020 - Nov 2021. This most recent bull run seemed to differ from previous ones, most obviously, by the number of different things you could actually do with your crypto.
During this run, many different blockchain ecosystems began to spread their wings and move from very small niche markets to mainstream behemoths, gaining tens of millions of users along the way. In this research report, we will examine some of the most popular L1s from this past bull run diving into what makes each one unique and what their outlook for the future may look like.
Before getting into the report, we’ll need to first define what we’ll be considering as an L1. Bitcoin is obviously the very first and largest Layer 1 by market cap, currently at ~$330 billion (with a high of ~$1.27 *trillion* in November of 2021*)* with Ethereum not far behind it in second place (~$161B) *.* For the purposes of this report, though, Bitcoin and Ethereum will not be considered. This report’s focus is on L1s that have both native support for Smart Contracts and have seen a meteoric rise, from small unheard-of projects to some of the largest blockchain ecosystems in the world over the last year or two.
Crypto total Market Cap
![](https://i.imgur.com/GXqqdOk.png)
[TradingView Chart](https://www.tradingview.com/chart/JJlnTHLE/?symbol=CRYPTOCAP%3ATOTAL)
## Top L1 Smart Contract Platforms by MCAP
Let’s take a look at the top Smart Contract platforms currently.
![](https://i.imgur.com/ukAiNO4.png)
[https://messari.io/screener/smart-contract-platforms-DC75E6E0](https://messari.io/screener/smart-contract-platforms-DC75E6E0)
Ethereum is the clear leader in the space currently - Ethereum was the first blockchain to offer Smart Contracts natively that gained traction and has been the leader in the space for some time. Over the last two years, though, many new platforms have emerged as legitimate competitors offering things that Ethereum has been unable to match thus far (low transaction fees, faster block times, higher TPS). This, in turn, has siphoned a lot of users and developers from the Ethereum ecosystem into many of these newer, faster, shinier chains.
Specifically, ecosystems like Solana, Avalanche, and Cosmos have seemed to really pull in the most devs, projects, and users in recent years. Looking at smart contract platforms ranked by market cap you would expect all of these to be in the top 5 if that were the case and, currently, none of them are! Market cap can sometimes be a misleading metric to measure a blockchain ecosystem - especially in a down market. There are a lot of other metrics to look at that are much more indicative of the health of an ecosystem, whereas market cap (which is just a derivative of token price) is more of a lagging indicator.
## Solana
### Backstory
Most likely, if you’re reading this, then you’re already familiar with [Solana](https://solana.com/). Many have considered Solana to be the number 1 competitor to Ethereum in recent years. Out of all of the chains in this report, Solana probably had the biggest bull run.
[Anatoly](https://twitter.com/aeyakovenko?s=20&t=5rwZS77tVWkVP57sK37jpA) published the [original whitepaper](https://solana.com/solana-whitepaper.pdf) for Proof of History in 2017 and worked on implementing the idea for Solana (originally called Loom) for a couple of years. The Solana mainnet beta was launched in March 2020, right at the very start of this most recent bull run. Fun fact: Solana is actually *still* on Mainnet Beta.
![](https://i.imgur.com/FvLH40z.png)
[https://messari.io/asset/solana/chart/price](https://messari.io/asset/solana/chart/price)
### Dev Ecosystem & Growth
The Solana development ecosystem is truly one of a kind. Solana supports smart contracts in multiple programming languages (C/C++, Python, Solidity with [Neon](https://neon-labs.org/)), but the most commonly used is Rust. In the early days of Solana, learning how to write Rust smart contracts for the Solana programming model was very, very difficult. So difficult, in fact, it garnered the name “Chewing glass”.
Over time, more and more developers took on the masochistic act of Solana development and began shipping products that just weren’t possible to do on a blockchain before. About a year into Solana’s Mainnet Beta release, [Armani Ferrante](https://twitter.com/armaniferrante?s=20&t=5rwZS77tVWkVP57sK37jpA) spearheaded the development of the [Anchor framework](https://www.anchor-lang.com/). Anchor is a tool created to make writing Rust smart contracts for Solana much easier - Anchor essentially abstracts a ton of the lower level Solana primitives away from the developer. Anchor’s first public Rust crate was released in January 2021. Today, Anchor is the most popular framework for writing Solana smart contracts - I’d estimate Anchor alone has accelerated Solana’s dev growth 100x.
In addition to that, Solana’s DevRel team and third-party organizations (like SuperTeam !!) have contributed tremendously to the ecosystem. The amount of learning and educational material has increased exponentially and devs have many places to go to meet others and buidl. One of the most impactful features of the Solana Dev ecosystem, though, is the Solana Hackathons. Solana’s hackathons have been a tremendous success, helping on-board thousands of new devs and leading to many hackathon projects turn into actual startups with VC funding. Solana’s most recent hackathon, SummerCamp, saw 18,000 participants and 750 final projects submitted with sponsored prizes from companies like Stripe, Brave, and Orca. While these hackathons are online and global, the Solana Foundation and other third parties have started sponsoring Hacker Houses at cities all over the world bringing developers in by the thousands to hack away irl.
[https://twitter.com/hackerhouses/status/1587548919655010310](https://twitter.com/hackerhouses/status/1587548919655010310)
The number of Developers on Solana is something that has been talked about a lot recently on twitter. So much that the [Solana Foundation just recently released a report](https://solana.com/news/measuring-developer-and-user-activity-on-solana-december-2022) with their current estimate and detailing how they arrived at this number. The Solana Foundation estimates that in November, there were 2053 unique active developers contributing to Open-Source GitHub repos with key Solana packages. 1654 of those were contributing to repos that were focused solely on Solana. The report also makes a distinction between one-time contributors and full-time developers, noting that there have been 1139 one-time devs vs 120 full-time devs contributing to repos in the past month. There is a pretty significant drop off between those two numbers and I’m sure increasing developer retention rate is something the Solana Foundation and the DevRel team are thinking heavily about.
The number of Solana Repos and daily unique programs used on mainnet have seen tremendous growth in just the last year.
![](https://i.imgur.com/h1FcDiW.jpg)
[https://twitter.com/solana/status/1590500404877557760](https://twitter.com/solana/status/1590500404877557760)/
Taking all of this into account, I find it *very* hard to believe the actual number of Solana developers is not much higher. Given the participation Solana has seen in its hackathons, the advancements made in developer tooling/education, and the dramatic increase in GitHub repos/daily unique programs I feel the real number is closer to the 5k - 10k range and that it will continue to increase.
### **Project Adoption & Growth**
All of this developer activity means nothing if they aren’t shipping real products for real users! In Nov’22, Solana was seeing about 1,114 daily unique Programs processing transactions on Mainnet. In addition, Solana is seeing ~11.5M active accounts and ~1.7M active fee payers in Oct’22.
![](https://i.imgur.com/fESXZim.jpg)
[https://twitter.com/solana/status/1590500400364326913](https://twitter.com/solana/status/1590500400364326913)
Looking at fee payers is the most accurate proxy for measuring users on Solana. For the most up to date information, you can view the number of fee payers, transaction signers, and other metrics [here](https://app.flipsidecrypto.com/dashboard/solana-foundation-key-metrics-4eCaQh).
For the most part, Solana’s most popular sectors are DeFi and NFTs.
Solana has ~$249.5M TVL locked in DeFi protocols currently, which only represents 0.7% of all TVL across all chains. At its peak, Solana DeFi still only represented ~6% of all TVL in DeFi.
![](https://i.imgur.com/Z5vX4N3.png)
[https://defillama.com/chains](https://defillama.com/chains)
We can see Solana’s top 10 Dapps over the last 30 days by Unique Active Wallets, which can serve as a proxy for number of users. 9 of the top 10 fall into the category of DeFi and/or NFTs, so it’s pretty clear what Solana is mostly used for today. According to Dapp Radar, Solana’s Top 10 Dapps account for ~336k daily active wallets with Magic Eden accounting for ~44% of them.
![](https://i.imgur.com/U1zmLmY.png)
[https://dappradar.com/rankings/protocol/solana](https://dappradar.com/rankings/protocol/solana)
### Geographic Growth
Solana has a clear global reach; this is evident in the locality of Hacker Houses on almost every single continent. In addition to the Hacker Houses, Solana’s largest conference, Breakpoint, has been held in Lisbon, Portugal for the past two years. There are also many different projects leading the charge on making the Solana developer ecosystem more of a global effort. [SuperTeam](https://superteam.fun/) is leading the pack here with core SuperTeam groups in India, Vietnam, Germany, and Turkey.
Solana Validators are distributed globally as well, with a majority of them located in the U.S and Europe.
![](https://i.imgur.com/wLwsMlF.jpg)
[https://www.validators.app/](https://www.validators.app/)
The United States is probably Solana’s largest market, given that the Solana Labs and Solana Foundation teams are for the most part located here, this seems to make sense. Solana has done a good job of growing and fostering their ecosystem in Europe and Southeast Asia as well. Looking ahead, I think a continued push in SE Asia and beginning to put roots down in South America are two of the biggest geographic regions for Solana to grow and gain market share.
### Unique Use Cases
Solana is a high-performance blockchain that uses a proof-of-stake consensus algorithm to achieve fast and scalable transaction processing. Unlike many other proof-of-stake systems, Solana uses a unique proof-of-history mechanism to ensure the security and decentralization of the network. This allows Solana to process transactions at a much higher rate than other blockchains, making it an attractive platform for applications that require fast and reliable transaction processing. Additionally, Solana is designed to be energy efficient and environmentally friendly, as it does not require the intensive energy consumption associated with proof-of-work algorithms.
Solana has a true TPS of ~350 (excluding voting txs), while the TPS including voting txs is ~3500. Voting transactions are transactions submitted by Validators running the network voting on blocks trying to reach consensus.
![](https://i.imgur.com/UI8JZfi.png)
[https://solana.fm/?cluster=mainnet-qn1](https://solana.fm/?cluster=mainnet-qn1)
Solana’s high TPS and throughput have created a much better UX for crypto natives and has created opportunities for developers to build more unique products on-chain.
### Wins/Fails
Solana has had numerous big wins and some big fails over the course of its very young life. Most recently, the Saga phone is probably Solana’s biggest win. Solana Mobile [announced the Saga phone](https://solana.com/news/saga-reveal) over the summer of 2022 with it set to release in Q1 ‘23. Saga is an Android phone with native Web3/Solana support. The two biggest innovations with this announcement are the integrated hardware wallet within the phone and SMS. SMS stands for [Solana Mobile Stack](https://github.com/solana-mobile/solana-mobile-stack-sdk) and it’s an SDK specifically for creating crypto native mobile applications for Saga.
The Saga has not been released to the public yet, but it is definitely something to look forward to in the Solana ecosystem. Crypto has not really gained any traction on mobile yet due to the siloed ecosystems and barriers to entry in the typical Web2 space. I honestly don’t envision many people leaving their iPhones for Saga, but I think it could serve as a proof of concept to a company like Apple about the potential that Web3 has in mobile.
The elephant in the room with Solana is always the downtime. Over the last year, Solana has experienced a halt to the chain on 4 separate occasions pausing transactions from processing for hours at a time. This is obviously not ideal for a decentralized network, as a user you want to make sure what you’re using has a reliable uptime. Solana has already taken plenty of flack for these issues on CT, so I won’t dwell on them here. Instead, looking at how these can be prevented in the future, Jump Crypto is actively working on an [independent Solana validator written in C++](https://jumpcrypto.com/jump-crypto-sets-out-to-build-new-validator-client-for-the-solana-blockchain-to-increase-the-throughput-and-reliability-of-the-network/) vs Solana Labs Rust implementation. This will be the first additional validator client created that is not a fork of the original Solana Labs implementation. Hopefully, in the future having multiple validator clients running the network and processing transactions can help mitigate or prevent these from happening altogether. In addition to Jump’s new client, the Solana Labs team has also been making changes to the core protocol to address these issues.
The reasons behind these stoppages are pretty technical and beyond the scope of this report, but I’ll link some post mortems of each one in the appendix for anyone interested.
### Miscellaneous Stats
[Nakamoto Coefficient](https://news.earn.com/quantifying-decentralization-e39db233c28e): 31
Number of Validators: ~3,050
TPS: 3500 (314 true tps)
Change in Market Cap from Jan’20 - peak (%): ~1.2 Million % increase
Messari does not have a MC for Solana until April ‘20, Solana’s initial MC at launch was ~$6.3M. At the peak of the bull, Solana’s MC reached ~$78B.
[https://messari.io/asset/solana/chart/mcap-circ](https://messari.io/asset/solana/chart/mcap-circ)
## Avalanche
### Backstory
Avalanche is another up and coming young project that has had a fabulous run over the last bull market. Avalanche is a Smart Contract platform that specializes in creating a faster and more efficient EVM focused network with some unique twists. The two most unique ways Avalanche aims to accomplish this are through its novel POS consensus mechanism and Avalanche’s 3 core blockchains: x-chain, p-chain, and c-chain.
The idea for Avalanche was first published on IPFS by a pseudonymous group of developers called “Team Rocket”. [Emin Gün Sirer](https://en.wikipedia.org/wiki/Emin_G%C3%BCn_Sirer) later led a group of Computer Science researchers at Cornell University in taking this idea and turning it into a real product. This eventually led to the forming of Ava Labs, which is the company behind the development of the Avalanche ecosystem. Avalanche mainnet and its native token AVAX launched in September 2020.
### Dev Ecosystem & Growth
Avalanche supports Smart Contracts written in Solidity and has had full EVM support from the very start. This makes it very easy to build a developer ecosystem and tooling from the perspective of Ava Labs because they are not forced to bootstrap everything themselves. Given that Avalanche is completely EVM compatible, devs have the entire Ethereum developer ecosystem at their disposal when building on Avalanche.
Each of Avalanche’s 3 core chains serve a specific function in the overall ecosystem and they all interact with one another - together, they are called the “Primary Network”.
![](https://i.imgur.com/r1XWjRD.jpg)
A majority of Avalanche projects are deployed on the C-chain, which is EVM compatible. The Avalanche consensus protocol has enabled higher speed and lower fees compared to most EVM chains, but scalability can still be an issue. For this reason, Avalanche also supports the creation of application specific blockchains called subnets. Subnets are still in their infancy in the Avalanche ecosystem, with only a handful live today.
Avalanche has seen an exponential growth in number of Unique Contracts Deployed and unique contract deployers. Unique contract deployers is not very indicative of much because most developers most likely use multiple different wallets to deploy contracts. Unique contracts deployed is an interesting metric to look at for developer growth because, although it can be skewed as well (multiple devs deploy multiple contracts), it can still be a leading indicator into the overall health of an ecosystem. Looking at these two metrics, you can tell that there has been a continued push by devs to create new projects on Avalanche.
![](https://i.imgur.com/kfU6RUZ.png)
### **Project Adoption & Growth**
Majority of Avalanche projects are deployed on the C-chain, which is EVM compatible. Due to this, some of the largest projects on Avalanche are non-native, meaning that they were deployed on other chains first (i.e. Ethereum) and ported over to Avalanche.
Avalanche has [almost 300 projects](https://core.app/ecosystem/projects) deployed live on mainnet, with the most popular areas seeming to be DeFi and Gaming.
![](https://i.imgur.com/G0FiuE6.png)
The top 10 Dapps by Unique Active Wallets are almost all DeFi focused, with [Trader Joe](https://traderjoexyz.com/home#/) leading the way. Curve, Aave, and SushiSwap are all very popular DeFi protocols ported over from Ethereum that have found some traction on Avalanche. In addition, two of the most used Avalanche subnets are gaming focused. In fact, the very first subnet to launch was for [DeFiKingdoms](https://defikingdoms.com/crystalvale/) (DFK Chain). [Crabada](https://www.crabada.com/) is another game with its own subnet, the Swimmer network.
Avalanche’s Daily Monthly Users has been on a down trend since the start of the year, but even so, it’s still exponentially higher than just over a year ago. This is very impressive given the year we’ve had in the markets and how young Avalanche is.
![](https://i.imgur.com/H5X9X9h.png)
Avalanche’s Monthly Transaction count has actually been in an up-trend all year, although there has been a significant drop off since September. Still, transaction count is much higher than last year.
![](https://i.imgur.com/LANpcDP.png)
[https://stats.avax.network/dashboard/overview/](https://stats.avax.network/dashboard/overview/)
### Geographic Growth
Total AVAX stake by country.
![](https://i.imgur.com/9CvNiOm.png)
A majority of validators are located in the US and Germany.
![](https://i.imgur.com/1iE7BEj.png)
[https://avascan.info/stats/staking](https://avascan.info/stats/staking)
### Unique Use Cases
Avalanche’s unique use cases come from its ability to support EVM compatible applications with little to no code changes, as well as the ability to deploy app chains in the form of Subnets. It seems Avalanche has developed one of the most organic gaming ecosystems in Web3. I think this can be attributed to both the ability for EVM devs to jump into the ecosystem right away and its high TPS/low fees on the primary network.
Another very unique use case is the idea of a CLOB (central limit order book) on-chain. Building an on-chain orderbook has only been possible on a couple of blockchains so far (i.e. Serum on Solana) due to the need for extremely high TPS, low-latency, and extensive block space in order for an order book to function properly. [Dexalot](https://dexalot.com/) is an on-chain CLOB currently deployed on the Avalanche’s C chain. The Dexalot team is currently in the process of migrating from the C chain to its own Avalanche Subnet.
### Wins/Fails
One of Avalanche’s major wins has been [the announcement of a $290M incentive fund](https://www.notion.so/Superteam-Layer-1-Ecosystem-Growth-Deep-Dive-c2ee5047cb7f4de9b69a6787973aac7e) to help support the growth of Avalanche Subnets. In the same announcement, Ava Labs declared that they would be partnering with major firms like Jump Crypto, Wintermute, Aave companies, and Golden Tree Asset Management to develop a subnet to “build the first horizontally-integrated blockchain specifically engineered for Institutional DeFi with native KYC functionality. This will enable regulated institutions to leverage the power of Subnets to access DeFi primitives at scale and accelerate the institutional adoption of DeFi.”
Avalanche is the youngest ecosystem in this report (~27 months old) and it has not experienced very many major fails yet. The fact that the ecosystem has gone through tremendous growth and almost just as much contraction in such a short amount of time *and* it’s still alive and thriving is definitely something to take into consideration.
### Misc
[Nakamoto Coefficient](https://news.earn.com/quantifying-decentralization-e39db233c28e): 31
Number of Validators: 1,220
TPS: The average TPS is generally in the 20-30 range.
Change in Market Cap from Jan’20 - peak (%): The AVAX token launched in Sept. 20’, before that it had a market cap of exactly $0. The market cap reached a high of ~$26.83B in Nov. 21’. Using a starting point of $1, the percent increase in MCAP to the peak was **~2,683,000,000,000%**.
## Cosmos
Cosmos is an ecosystem of interconnected parallel blockchains, often referred to as the Internet of Blockchains. In the Cosmos ecosystem, developers can create their own application specific blockchains using the [Cosmos SDK](https://v1.cosmos.network/sdk). Chains in the Cosmos ecosystem are able to easily communicate with one another through the Inter-Blockchain Communication Protocol. IBC plays a similar role in the Cosmos ecosystem as TCP/IP does to the internet, in that they are both communication protocols used for transmitting data over networks.
Although the Cosmos ecosystem is made up of many different blockchains, we’ll be treating the entirety of Cosmos as an L1 for the purposes of this report. The Cosmos vision is a very interesting and unique take on how best to solve some of the most important problems of blockchains today: speed, scalability, and interoperability. Essentially all chains within the Cosmos ecosystem are created with the Cosmos SDK, support IBC for communication across the different app chains, and all use Proof-Of-Stake BFT consensus algorithms. The different app chains are not siloed like other different blockchain ecosystems and all Cosmos chains are built around the central Cosmos Hub, which was the very first Cosmos blockchain.
### Backstory
The [original Cosmos whitepaper](https://v1.cosmos.network/resources/whitepaper) was released in 2016 and the Cosmos Hub was launched on March 13, 2019. Tendermint BFT is the main consensus mechanism used in the Cosmos ecosystem and was created by Cosmos co-founders Jae Kwon and Ethan Buchman. Tendermint Inc. and Interchain Foundation (ICF) are the core teams that have been building out the Cosmos infra over the years. ATOM is the native staking token on the Cosmos Hub, but transaction fees can be paid in multiple tokens. The ICF team ran an ICO for ATOM back in 2017 to raise funds to continue the development of the Cosmos SDK and IBC.
![](https://i.imgur.com/ramFcHT.png)
[https://www.tradingview.com/chart/JJlnTHLE/?symbol=COINBASE%3AATOMUSD](https://www.tradingview.com/chart/JJlnTHLE/?symbol=COINBASE%3AATOMUSD)
### Dev Ecosystem & Growth
The Cosmos developer ecosystem is pretty unique compared to most other blockchains, the biggest reason for that is the Cosmos SDK. Before we dive into the Cosmos SDK, we need to talk a little more about the Tendermint BFT consensus algorithm Cosmos uses. Cosmos’ biggest selling point and differentiator is the idea of application specific blockchains, meaning that devs looking to build Dapps don’t need to deploy a smart contract to a monolithic chain. There could be many reasons why this model might be appealing to developers, creating an application with its own chain eliminates the need to compete with other traffic/transactions the chain’s nodes need to process.
Building a blockchain is obviously very hard and requires skills that, quite frankly, most developers don’t have. It requires building the three core layers of a blockchain from scratch: networking, consensus, and application. Per Cosmos:
> Tendermint BFT is a solution that packages the *networking* and *consensus* layers of a blockchain into a generic engine, allowing developers to focus on *application* development as opposed to the complex underlying protocol.
>
[https://v1.cosmos.network/intro](https://v1.cosmos.network/intro)
This means that Tendermint BFT takes care of the logic required for nodes to process transactions and how validators come to agreement about what transactions are valid and should be added to the state of the chain. These are arguably the areas where the most intense engineering takes place in blockchains. In turn, Tendermint BFT reduces the amount of effort and time it takes to spin up a blockchain exponentially.
While Tendermint can help create a generalized core protocol level, the Cosmos SDK is an extremely versatile tool allowing developers to make customized changes to their app chain - both at the protocol and application level. This gives the developers the freedom to implement custom business logic at the protocol level of their application specific chain. In addition, the SDK makes it easy to deploy applications in the form of Smart Contracts. The most popular way to write Cosmos Smart Contracts is with CosmWasm, which is a module of the Cosmos SDK. CosmWasm supports multiple different programming languages because it compiles them all down to Web Assembly, but the most popular CosmWasm supported language is Rust.
Given the uniqueness of Cosmos’ ideas of app chains and internet of blockchains, it seems it might be a little harder to get started as a developer - especially if you opt in for building your own chain. The Cosmos team has done a very good job creating proper documentation, tutorials, and courses to help any potential developers get started though.
Organizations like the Interchain Foundation and the [Cosmos Builders Foundation](https://www.cosmosbuilders.org/) are spearheading the movement of on-boarding new devs to the ecosystem. The Interchain Foundation has just recently put together a fully-funded 7 week [Developer Academy](https://academy.cosmos.network/) with 70 hours of learning, which is currently in its third cohort. To date, [350 devs have completed](https://blog.cosmos.network/its-back-applications-are-open-for-the-3rd-cohort-of-the-interchain-developer-academy-ababa796911f) the academy - passing the final exam grants you the status of a certified Cosmos dev.
HackAtoms are the name of Cosmos hackathons and they are global events with sometimes up to millions available in prize money. The most recent hackathon was in-person [hosted in Seoul](https://www.buidl.asia/hackatom-seoul-2022).
### **Project Adoption & Growth**
Given that Cosmos is an ecosystem of multiple different blockchains, getting quality data about all of its users and applications can be kind of hard. For that reason, we’ll take a look at a few of the largest projects built with the Cosmos SDK.
---
The first and probably largest one is the Binance ecosystem. Binance has two different chains, Binance Chain and Binance Smart Chain (BSC) - both of which are built with the Cosmos SDK. The BNB token is the native token of the Binance ecosystem and is currently the 5th largest token by market cap overall (including Bitcoin and Ethereum). In 6th place is Binance’s USD stable coin, BUSD.
![](https://i.imgur.com/VgWIDNQ.png)
[https://messari.io/screener/my-screener-7F93FB26](https://messari.io/screener/my-screener-7F93FB26)
Binance has clear user adoption and product market fit - the Binance exchange is the largest crypto exchange in the world. BSC is a smart contract platform that allows for developers to deploy their own applications to it. BSC has a thriving ecosystem completely separate from the exchange with ~$4b in DeFi TVL.
![](https://i.imgur.com/HD3QY5M.png)
[https://defillama.com/chain/BSC](https://defillama.com/chain/BSC)
There are actually only three DeFi protocols in BSC’s top 10 dapps by Unique Active Wallets over the past 30 days. DeFi is definitely a part of BSC’s ecosystem, but it also has a lot of other use cases that haven’t really caught on yet on other chains - like Web3 gaming!
![](https://i.imgur.com/Rpek19e.png)
---
Another major project built using the Cosmos SDK is Terra! Terra is obviously most well-known for the UST death spiral earlier this year that eviscerated billions in a matter of days, but before that it was one of the largest chains by market cap. Terra was home to Anchor protocol, which was a lending protocol that promised 20% returns on all deposits. Ultimately, this contributed heavily to Terra’s downfall, but it did have a thriving ecosystem before the fall and most do not realize that all of this was built within the Cosmos ecosystem.
The metrics for Terra’s current state of affairs are not anything to write home about, but taking a look at what Terra was before the downfall is pretty intriguing. At Terra’s peak, it’s native coin LUNA was the 8th largest crypto by market cap and its stable coin UST was the 10th!
![](https://i.imgur.com/qz6X0sJ.png)
Between just Binance and Terra, the Cosmos ecosystem accounted for 4 of the top 11 cryptocurrencies at one point!
---
[Osmosis](https://osmosis.zone/) is one of the larger app specific chains built on Cosmos. Osmosis is a Layer 1 focused on its multi-chain DEX that was built specifically to support swapping and other DeFi primitives across different chains within the Cosmos ecosystem using IBC. The Osmosis chain is very different from BSC and Terra in that those were created to host other applications, while Osmosis was built specifically for the Osmosis DEX.
![](https://i.imgur.com/SXmpsyR.png)
[https://defillama.com/chain/Osmosis](https://defillama.com/chain/Osmosis)
The Cosmos ecosystem is very diverse and it can be utilized in a multitude of ways. It has been used to create some of the largest blockchain ecosystems in the world and some very specific niche chains that only focus on a single purpose. For more about Cosmos, Mario Gabriel from The Generalist put together a [terrific piece](https://www.generalist.com/briefing/cosmos) on the overall state of the ecosystem in October.
### Unique Use Cases
Cosmos’ most unique use case is the customizability its SDK gives developers, both at the application and protocol level. We’ve seen examples of what can be built with the SDK and it really seems the sky is the limit. [Cosmos claims](https://cosmos.network/ecosystem/apps/) to have 266 distinct apps and blockchains in production using the Cosmos SDK.
The ability to create a blockchain specifically for your application is something most ecosystems cannot offer and it definitely has its pros and cons. For any Web3 ideas that are not completely dependent on the idea of composability, an app chain could be the way to go (social media, gaming, etc). Plus, IBC makes it relatively easy for these different blockchains to communicate with one another. IBC is not limited to just Cosmos ecosystems chains either, other non-Cosmos chains can communicate with IBC as well.
### Wins/Fails
dYdX is an extremely large DEX, originally built on Ethereum and then transitioned to ETH L2 Arbitrum. This year, [the team announced](https://dydx.exchange/blog/dydx-chain) they would be leaving Ethereum altogether to their own Cosmos app chain dYdX Chain. This announcement was a huge win for the Cosmos ecosystem, it is still yet to be seen the full effects of this move.
> In dYdX V4, each validator will run an in-memory orderbook that is never committed to consensus (i.e., off-chain). Orders placed and cancellations will be propagated through the network similar to normal blockchain transactions, ensuring that orders placed and cancellations will always make their way through the network. The orderbook that each validator stores is eventually consistent with one another. On a real time basis, orders will be matched together by the network. The resulting trades are then committed on-chain each block.
>
This quote from the dYdX official blog post announcing the move showcase what kind of things you can do with the Cosmos SDK that would literally be impossible on any other chain!
---
The biggest failure for Cosmos is easily the Terra/LUNA implosion in the spring of this year. It’s important to note, though, that this had nothing to do with Cosmos itself. Cosmos gives developers the tools to build and customize pretty much anything they want. The flaw with Terra was inherent in the design of the ecosystem itself, nothing to do with the Cosmos internals.
Since the Terra ecosystem was so large, there were actually a lot of developers working on projects there. With the chain basically disappearing overnight, this left a large surplus of talented devs in the space that have since matriculated to other projects in the Cosmos ecosystem. Overall, Terra going to zero was probably a net positive for Cosmos. Projects saw a large influx of devs and the ecosystem is still standing strong and vibrant after being at the center of one of the largest erasures of capital in human history.
### Misc
[Nakamoto Coefficient](https://news.earn.com/quantifying-decentralization-e39db233c28e): -1
Number of Validators: 175
TPS: N/A (not reported)
Change in Market Cap from Jan’20 - peak (%): ~1125%
This is just in terms of the Cosmos Hub native token ATOM, it does not include native tokens created for other Cosmos chains.
## Conclusion
This report focused on Solana, Avalanche, and Cosmos - but there are still other very interesting players in the Layer 1 space. This area has been heating up with competition over the last couple of years, all gunning for Ethereum’s spot as the largest Smart Contract platform.
The three ecosystems in this report were chosen because they all experienced exponential growth during the most recent bull run and have established themselves as legitimate contenders in the space. Each platform offers unique features and capabilities that make it attractive to users and developers, while trying to solve the blockchain trilemma in different ways. Hopefully, after reading this report, you understand how each one differs from the other both technically and how they are being used in production by developers and users alike.
We could go into even more detail about each platform discussed here (there is still a lot that is not covered at all like tokenomics, protocol level differences, and decentralization metrics), but these are outside the scope of this report. I bring this up only to say that, while you now have a comprehensive understanding of the growth and evolution of each of these platforms so far, the rabbit hole goes far deeper. So, don’t stop here! Get your hands dirty with some code, read some white papers, and *use* the applications on each of these platforms.
With that said, these three have had an incredible couple of years. Where will they go from here, only time will tell. I’m personally very excited about Solana (it’s been my chain of choice as a developer for over a year now), but Avalanche and Cosmos have both interested me from time to time. As things stand now, I still believe Solana is the chain best positioned to compete with Ethereum head-to-head, although it will not be easy. Solana has the most organic and largest developer ecosystem outside of Ethereum and I’ve seen firsthand how many devs are continuing to build here through the bear. In my opinion, developer ecosystem is one of the most important metrics to measure the health of a blockchain - it’s also one of the hardest to measure accurately. Solana is also the chain that’s best positioned to open the flood gates that is mobile in Web3. Saga, SMS, and Helium’s recent move over to Solana have the potential to play a major role in the next step of Solana’s evolution.
I view Solana, Cosmos, and Avalanche as tackling problems in different parts of the space and don’t really see them as competitors. I can see a future where all three ecosystems (or some very similar in nature) are all thriving in tandem. Ultimately, whichever platform can create a seamless end user experience that doesn’t even feel like you’re using a blockchain will win. Everyone reading this is very clearly a nerd that cares about the minute details underpinning a blockchain’s tech stack, but the rest of the world could not care less honestly. They’ll want products that are fun, provide value, and to not have to worry about using a bridge to port assets from chain x over to chain y. If that bridging has to happen in the background, then so be it but the user will most likely not care if they’re using an app chain or a monolithic chain, as long as the experience is seamless.
There are even some newer chains that missed out on the most recent bull run, but have been garnering a lot of attention lately. Near, Aptos, and Sui are some other L1s that I’m excited about and wanted to explore in this report but they’re all so young there is not much to report yet. The point is there are *a lot* of L1s today and even more coming in the future. Most likely, the next bull run will not look like the last and only those ecosystems whose communities can continue to build in the bear will survive to the next.
### Appendix
Solana Outage Post Mortems
[9/14/21 - Jump Crypto](https://jumpcrypto.com/reflections-on-the-sept-14-solana-outage/)
[4/30/22 - Solana Labs](https://solana.com/news/04-30-22-solana-mainnet-beta-outage-report-mitigation)
[4/01/22 - Solana Labs](https://solana.com/news/06-01-22-solana-mainnet-beta-outage-report-2)
[9/30/22 - Solana Labs](https://solana.com/news/09-30-22-solana-mainnet-beta-outage-report)
### References
[https://docs.solana.com/history](https://docs.solana.com/history)
[https://solana.com/news/solana-summer-camp-winners](https://solana.com/news/solana-summer-camp-winners)
[https://nakaflow.io/](https://nakaflow.io/)
[https://solanabeach.io/](https://solanabeach.io/)
[https://v1.cosmos.network/about](https://v1.cosmos.network/about)
[https://messari.io/asset/cosmos/profile](https://messari.io/asset/cosmos/profile)
[https://en.wikipedia.org/wiki/Avalanche_(blockchain_platform)](https://en.wikipedia.org/wiki/Avalanche_(blockchain_platform))