First of all, let’s settle which blockchain projects count as alt layer ones. Aside from Bitcoin, every single layer one project. I know some Ethererum supporters might consider Ethereum in the league with Bitcoin. But in my humble opinion, they are different by nature. Bitcoin is digital gold, but Ethereum is a technology project. And given the latest developments, it might not be the leader of this new cycle. One analogy I’d like to make here is Nokia vs. Apple. The first mover does not always end up on the top.
In every crypto cycle, different narratives lead the way. But looking back at the previous three cycles, the layer ones consistently offer the highest price potential, even before the birth of memes. Who are the leaders this time around? Let’s have a look.
Solana
Let’s start with the L1 with a legendary comeback story. The hottest name in town has a history full of tears and despair. FTX and Alameda were the largest investors in Solana. Hence when FTX collapsed, many feared that Solana would go down with it. To the contrary, Solana survived. In fact, it not only survived, it thrived. Both its active user number and trading volume surpassed Ethereum in December. Many say it is due to the airdrop effect (many anticipate airdrop tokens from Solana ecosystem projects). But it could be just a start. What Solana has that Ethereum does not? Extremely low gas fee. While a $10 transaction costs $30 gas fee on Ethereum chain, it costs about $0.00001 on Solana. And because of this, Solana does not need a hundred layer twos to optimize transaction fees.
Another thing Solana does exceptionally well is ecosystem growth. Solana manages to create a large ecosystem that is filled with quality projects and quality people. That is something extremely hard to come by from a builder’s perspective.
Celestia
Celestia is a modular blockchain project with a humble beginning. Literally, it was laughed at as a layer one with the worst listing performance when it was listed on CEXs in October. But that didn’t last long. Smart players in the space quickly recognized its value and pushed it to the center stage of this bull run.
What is a modular blockchain? Different from a monolithic blockchain which does everything (execution, settlement, consensus and data), a modular blockchain specializes and optimize a given function. This specialization enables breakthroughs in scalability, flexibility and interoperability. Celestia claims to be the first modular blockchain project. The product itself hasn’t been tested and the number of active users is low. Nevertheless, that never stops enthusiastic crypto degens.
SEI
SEI has a similar story comparing to Celestia. Also launched during the bear market, it was largely ignored until some sophisticated players spilled the magic words “Parallelized EVM”.
What does parallelized EVM mean? Parallelized EVM refers to the process of utilizing multiple processors or cores to run the Ethereum Virtual Machine (EVM) in parallel, allowing for faster execution of smart contracts. This can improve the performance and efficiency of the Ethereum network, enabling higher throughput and scalability. Below is a chart from SEI blog shows how it works.
Although the vision is dazzling, the product itself still has a long way to go. The launch of its first meme $seiyan almost broke the chain. But with the resources and a growing community, I expect the product to catch up quickly.
Monad
Among every layer one project that is yet to launch, Monad definitely occupies the most mindshare. It is another parallelized EVM blockchain (no surprise there) run by a team of MIT mathematicians (no surprise there, either).
It touts 10,000 TPS, which is 1000x better than Ethereum. According to Monad CTO Hunsaker, the existing EVM-compatible layer one chains simply copy the codebase of Ethereum without re-doing any architecture work. Monad aims to build an EVM chain from the ground up with significant improvements in both the architecture design and execution layer.
It is worth mentioning that Monad has the best intern on crypto twitter. If you haven’t watched intern’s 2023 Crypto Year In Review, here is the link.
So to re-cap, the narrative of this cycle is modularity and parallelized EVM. The projects that can capitalize on this narrative will thrive. May the best one win.