The race to create a globally accepted, scalable and user-friendly cryptocurrency network is an ever-evolving marathon in which new participants are joining the race.
Bitcoin is the market leader in network security, active users, market capitalization, and market capitalization. Ethereum, however, has established itself as the leading smart contract platform. However, the ongoing difficulty in scaling these networks has made it possible for new-generation blockchain protocols to emerge.
In recent months, Ethereum’s fragile reign has come under increasing pressure as many layer-one-based and layer-two-based protocols launched incentive programs to draw liquidity and users into their ecosystems.
We take a look at the top layer-one smart contract platforms competing for more liquidity in the crypto market.
Fantom encourages developers to migrate
Fantom is a protocol which uses a directed-acyclic graph architecture for its consensus. It is theoretically infinitely scalable because of this design.
Participants in the crypto community have been paying more attention to the network’s high-speed and low-cost nature in recent months. This is despite the fact that the Ethereum network continues suffering from high transaction costs, slower confirmation times, and network congestion.
After the announcement on Aug. 30, of a 370 million-FTM incentive program that would reward developers who create new protocols on Fantom, activity on the network began to rise.
Based on data from Defi Llama, the Fantom incentive program’s total value locked (TVL), has increased by $691 million to a record $1.44 trillion on Sept. 9.
Fantom’s total value Source: Defi Llama
Fantom Foundation data shows that Fantom is the fourth largest Ethereum Virtual Machine (EVM-compatible) network with a TVL of $1.44 trillion. It currently adds more than 20,000 addresses to the market and processes over 1.5 million transactions daily.
Numerous new protocols for decentralized finance (DeFi), and non-fungible tokens (NFT), are being launched on the network. It’s possible that this trend could continue as liquidity moves to Fantom.
Avalanche is “rushed” by liquidity
Avalanche is another network that has been draining liquidity out of the Ethereun network. It is an open-programmable smart contract platform specifically designed for decentralized applications.
The protocol’s activity saw a significant increase following the Aug. 18 launch of the Avalanche Rush DeFi Incentive Program, which allocated $180 million for DeFi protocols and liquidity to Avalanche ecosystem.
Initial integration was with Curve and Aave which are two top DeFi protocols on Ethereum. However, the program has expanded to include other protocols such as SushiSwap and Benqi Finance.
Data from Defi Lama shows that after the Avalanche program was launched, the total value of the Avalanche protocol rose from $311.5 millions on Aug. 18, to an all-time high of $2.42 billion on September 5, before a market pullback reduced its value to $2.11 trillion at the time of writing.
Avalanche has a total value of $2.5 billion Source: Defi Llama
Avalanche also saw a variety of new DeFi protocols and NFT protocols launched on the network. This partnership included Topps, a collectible and trading card manufacturer, who launched their “2021 Topps Major League Baseball Inception NFT Collection” on Avalanche.
In June, the Avalanche Bridge was launched. This made it possible for users to continue migrating to Ethereum at a fraction of the cost.
Related: El Salvador, Honduras, and Guatemala launch Bitcoin
The competitive field becomes even more crowded
Fantom, Avalanche and other rising stars of layer-one gaming are just two of many that have been siphoning Ethereum network users. But they are not the only ones.
Polygon and the Binance Smart Chain were two other EVM-compatible networks which made significant progress earlier in the year. Both networks allow users the ability to keep their assets on Ethereum while avoiding high fees at the base layer.
The top 7 blockchain protocols with the highest total value locked. Source: Defi Llama
Solana is the most dangerous non-EVM-compatible Ethereum chain. It has seen the largest TVL gain over the past seven day, followed closely by Terra, a stablecoin-focused protocol.
The self-amending blockchain protocol Tezos, which allows for the creation of new transactions, and Algorand (which is a proof-of-stake protocol) are two final noteworthy mentions.
Data from Defi Llama showed that each network’s TVL rose by 207% and 71% over the past seven-days, respectively. However, their token prices soared to new heights due to protocol upgrades and (in the case of Algorand), adoption by the government in El Salvador.
As stated at the beginning and as shown in the TVL figure, the Ethereum network is the most popular smart contract blockchain in terms users, protocols, and TVL. However, current limitations of the network make it difficult for other competitors to take its market share.
It is still unclear if Ethereum 2.0 will resolve the issues or if a new-generation protocol will emerge to solve the blockchain trilemma that provides decentralization, security, and scalability all in one platform.
You would like to learn more about investing and trading in the crypto markets?
What stablecoins actually remained stable during the sudden Bitcoin price crash this week?Cointelegraph Research. Solana is an ‘Ethereum Killer’?VORTECS(tm). Spotlight: Fantom’s 500%+ rally was triggered by this trading metric. Staking will eat proof of work for breakfast. You should do your research before making any investment or trading decision.