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Layer one protocols take away Ethereum’s dominance

The rise of decentralized finance and non-fungible tokens has transformed the blockchain ecosystem and generated almost unimaginable riches for investors, but none of this would be possible without the solid foundation offered by single-layer blockchain networks like Bitcoin and Ethereum. .

Smart contracts and layer 2 protocols promise to revolutionize the finance and logistics industry, but they require a robust, secure, and distributed network to operate and ensure immutability.

Currently, most of the major layer two projects operate on the Ethereum network, and this has led to increased transaction costs and delayed confirmation times due to high network congestion.

The recent London update attracted a lot of attention due to the implementation of a fee-burning mechanism that could eventually make Ether (ETH) a deflationary asset, but did little to solve the problem of high transaction costs, and average cost in reality ended up increasing since its implementation.

Due to high fees and limited scalability, competing layer one protocols such as Avalanche, Terra and Cardano, They have increased in value and have attracted new users in recent months, as the most popular projects have been bridging their ecosystems towards these next-generation blockchain protocols.

Avalanche and its incentives

One of the tokens that has appreciated the most in August has been AVAX, native to the Avalanche protocol.

Enthusiasm for the project began to grow after the launch of Avalanche Bridge July 29. The bridge supports a new cross-chain connection between the Avalanche and Ethereum networks, and the ease of use of the product opened the doors for new users to enter the burgeoning Avalanche ecosystem.

As of August 24, the bridge has processed transfers valued at more than $ 1 billion between the two networks, and there are plans to include new assets and stablecoins such as USD Coin (USDC) in the near future.

The protocol has also partnered with top-tier decentralized finance (DeFi) projects such as Aave, Curve and SushiSwap for the “Avalanche Rush DeFi Incentive Program”, a $ 180 million liquidity mining program designed to bring more applications and assets to its growing DeFi ecosystem.

Program funds will be used to provide AVAX rewards such as liquidity mining incentives for Aave, Curve and SushiSwap users over a period of three months.

Avalanche’s native DeFi protocols have also seen a dramatic increase in the total value locked on their platforms. Pangolin leads the ranking with a total blocked value (TVL) of $ 379.4 million, and Benqui has already passed the $ 1 billion mark in TVL, according to data from Defi Llama.

Avalanche also has a transaction burning mechanism, which has burned over 182,000 AVAX tokens as of this writing.

A layer one project with a stablecoin approach

Terra is a one-of-a-kind blockchain protocol, as it focuses on the use of stablecoins pegged to fiat currencies, such as the network’s TerraUSD (UST), to power price-stable global payment systems.

The native token of the LUNA protocol saw its price skyrocket 530% between July 20 and August 24, when a unique token burning mechanism and ongoing community voting to update the network put pressure on the value of the token.

On August 25, the Terra community completed voting for the migration of the Terra network to the Columbus-5 mainnet, and it is expected to be fully launched on September 9.

The Terra ecosystem has exploded this year as established projects like Curve and Yearn.finance integrate UST into their stablecoin pools, and new projects launching on the Terra blockchain also benefit from its stablecoin payment capabilities.

Terra ecosystem. Source: Terrians

One of the most popular applications on the web is Anchor Protocol, a savings protocol that offers UST holders low volatility returns on deposits, while LUNA holders can lock their tokens as collateral to borrow stablecoins.

The platform helped drive network activity and tokens connected to the ecosystem after Add Ether as collateral option to mint UST on August 13.

Following the introduction of Ether as a form of collateral for the Terra ecosystem, the total value locked in the protocol has exceeded $ 6 billion, according to data from Defi Llama.

This makes Terra the third largest blockchain network by TVL behind Ethereum and Binance Smart Chain.

Cardano investors anticipate the launch of smart contracts on the network

Another project that has been gaining traction thanks to the promise of smart contract functionality is Cardano, a proof-of-stake blockchain protocol.

The launch of smart contracts led Cardano’s ADA token to rise more than 190% in the last three weeks, and investors are eager to launch DeFi apps once smart contracts are enabled.

The network and token have also benefited from a high participation rate in staking pools, and the most recent PoolTool data indicates that 70.98% of ADA’s circulating supply is staked on the network.

The protocol has also developed a non-fungible token (NFT) creator that allows users to coin NFT without the need for smart contracts by creating “native tokens.”

Decentralized finance and NFTs have drawn the most attention in the cryptocurrency ecosystem this year, so the possibility of both being able to operate on the Cardano network may have contributed to the current ADA rally.

As Blockchain technology and the cryptocurrency ecosystem continue their slow march towards mass adoption, the field of competing networks is expected to intensify.

Ethereum is currently the leading layer one blockchain network in terms of smart contract capabilities and active protocols, but it must continue to evolve because a handful of competitors are rapidly gaining ground.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Each investment and commercial movement involves risks, you must do your own research when making a decision.

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Tammy Sewell is our Writer and Social at OICanadian.com. Tammy loves sports, she writes our celebrities news. She spends time browsing through several celebs news sources as well the Instagram. Email: Tammy@oicanadian.com Phone: +1 513-209-1700

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