Layer 1 blockchains form the backbone of the entire cryptocurrency and decentralized finance (DeFi) ecosystem. These foundational platforms are responsible for processing transactions, deploying decentralized applications (dApps), and enabling smart contracts. As the demand for decentralized technology grows, Layer 1 blockchains play an increasingly vital role in shaping the future of Web3.
But with so many options available, choosing the right Layer 1 blockchain to invest in can be daunting. Each blockchain has its unique features, scalability solutions, consensus mechanisms, and ecosystem of dApps. In this detailed guide, we’ll explore the top 20 Layer 1 blockchains to keep an eye on, highlighting their strengths and what investors should look for when evaluating these networks.
1. Ethereum (ETH)
Overview: As the most established and widely used Layer 1 blockchain, Ethereum is often considered the king of smart contracts and decentralized applications. Ethereum introduced the concept of programmable blockchains, allowing developers to build dApps and execute smart contracts.
What to Look For:
- Ethereum 2.0 Transition: Ethereum’s shift from Proof of Work (PoW) to Proof of Stake (PoS) has been a significant milestone. Look for continued improvements in scalability through Layer 2 solutions and the implementation of sharding.
- Ecosystem Growth: Ethereum has the largest ecosystem of dApps, DeFi platforms, and NFTs. Its wide adoption and network effects are key factors to consider for long-term investment.
- Gas Fees: Keep an eye on Ethereum’s gas fees, which have been a pain point for users. Layer 2 solutions, like Optimism and Arbitrum, are helping reduce costs, but it’s worth monitoring how these solutions scale.
2. Solana (SOL)
Overview: Solana has emerged as one of the fastest-growing Layer 1 blockchains, known for its high throughput and low transaction costs. Solana uses a unique consensus mechanism called Proof of History (PoH), which, combined with Proof of Stake, allows the network to process thousands of transactions per second (TPS).
What to Look For:
- Scalability: Solana’s ability to scale without compromising speed or low fees makes it a strong contender in the Layer 1 race. However, network outages have been a challenge, so look for improvements in network stability.
- DeFi and NFT Ecosystem: Solana has a rapidly growing DeFi and NFT ecosystem, with projects like Serum, Raydium, and Magic Eden leading the charge. Investor interest in these platforms could boost Solana’s long-term value.
- Development Activity: Watch Solana’s developer community and partnerships, as continued innovation will be key to sustaining its growth trajectory.
3. Avalanche (AVAX)
Overview: Avalanche is another Layer 1 blockchain focused on scalability and low-latency transactions. It employs a consensus mechanism called Avalanche Consensus, which enables quick finality and supports sub-second transaction times.
What to Look For:
- Cross-Chain Compatibility: Avalanche is known for its interoperability with Ethereum through its Avalanche Bridge, making it easier for Ethereum dApps to move to Avalanche. This cross-chain compatibility is a crucial factor for investors seeking versatility.
- Avalanche Subnets: Subnets allow users to create their own custom blockchain networks, which can be tailored to specific use cases. The success of Avalanche’s subnets could be a game-changer for scaling the network.
- DeFi Growth: Avalanche has been growing its DeFi ecosystem, with projects like Aave, Trader Joe, and Pangolin gaining traction. The expansion of DeFi on Avalanche is worth watching for future growth.
4. Polkadot (DOT)
Overview: Polkadot is a Layer 1 blockchain that focuses on interoperability and scalability through its unique parachain architecture. Polkadot’s Relay Chain connects multiple parachains, allowing them to communicate and share data seamlessly while maintaining security.
What to Look For:
- Parachain Auctions: Polkadot’s parachains allow for the development of specialized blockchains. The success of parachain auctions and the growth of projects building on these chains will be key to Polkadot’s future.
- Interoperability: As one of the leading projects aiming to connect different blockchains, Polkadot’s ability to bridge networks will play a significant role in Web3 development.
- Ecosystem Development: Projects like Acala, Moonbeam, and Phala Network are building on Polkadot’s parachain architecture. The growing list of parachains and dApps will be critical to watch for potential network effects.
5. Cardano (ADA)
Overview: Cardano is a highly-researched blockchain platform known for its scientific approach to development. Using the Ouroboros Proof of Stake consensus mechanism, Cardano is designed to be secure, scalable, and energy-efficient.
What to Look For:
- Smart Contracts: Cardano introduced smart contract functionality with the Alonzo upgrade, allowing developers to build dApps on the platform. The growth of smart contracts and Cardano’s DeFi ecosystem will be key indicators of adoption.
- Academic Research: Cardano’s development is driven by peer-reviewed academic research, which ensures a deliberate and well-thought-out approach to scaling. This focus on security and scalability makes it an attractive long-term investment.
- Ecosystem Growth: Projects like Meld, SundaeSwap, and Ardana are expanding Cardano’s ecosystem. Keep an eye on developer activity and new partnerships.
6. Binance Smart Chain (BSC)
Overview: Binance Smart Chain (BSC) is a Layer 1 blockchain developed by Binance to provide a fast, low-cost alternative to Ethereum. It uses the Proof of Staked Authority (PoSA) consensus mechanism and is compatible with Ethereum Virtual Machine (EVM).
What to Look For:
- Adoption and Growth: BSC has quickly grown to become one of the most popular platforms for DeFi and NFTs. Its low fees and fast transactions make it attractive for users priced out of Ethereum.
- Centralization Concerns: While BSC’s speed and low fees are attractive, some investors are concerned about its centralization. Binance controls much of the network, which could present governance risks.
- DeFi Expansion: BSC is home to leading DeFi projects like PancakeSwap, Venus, and AutoFarm. Keep track of how these projects and the overall DeFi ecosystem on BSC evolve.
7. Algorand (ALGO)
Overview: Algorand is a high-performance Layer 1 blockchain that focuses on speed, scalability, and decentralization. It uses a Pure Proof of Stake (PPoS) consensus mechanism, which allows for quick finality and low transaction costs.
What to Look For:
- Adoption by Governments and Institutions: Algorand has positioned itself as a blockchain for enterprise and government use cases, with partnerships in CBDCs (Central Bank Digital Currencies) and green blockchain initiatives.
- Ecosystem Development: Algorand’s DeFi ecosystem is still growing, but projects like Yieldly and AlgoFi are gaining attention. Continued growth in this area will be important for Algorand’s future.
- Sustainability: Algorand is marketed as an environmentally friendly blockchain, which could attract institutions and developers looking for sustainable blockchain solutions.
8. Cosmos (ATOM)
Overview: Cosmos is known for its focus on creating a network of interconnected blockchains through its Tendermint consensus mechanism and Inter-Blockchain Communication (IBC) protocol. Cosmos is often referred to as the “internet of blockchains.”
What to Look For:
- Interoperability: Cosmos aims to enable seamless communication between independent blockchains. Its IBC protocol will be a key feature to watch, especially as more chains join the ecosystem.
- ATOM Staking: Staking ATOM tokens provides rewards, and staking participation is an important factor in the security of the network.
- Ecosystem Expansion: Cosmos has seen the growth of notable projects like Terra, Osmosis, and Secret Network. The continued expansion of the Cosmos ecosystem will impact its long-term value.
9. Fantom (FTM)
Overview: Fantom is a fast and scalable Layer 1 blockchain that uses a unique consensus mechanism called Lachesis, a form of asynchronous Byzantine Fault Tolerant (aBFT) consensus. Fantom aims to provide high performance for DeFi and enterprise applications.
What to Look For:
- DeFi Growth: Fantom has become a popular platform for DeFi, with projects like SpookySwap, Scream, and SpiritSwap leading the way. DeFi expansion on Fantom will be a key driver of value.
- Partnerships: Fantom has established partnerships with various governments and enterprises. Continued adoption by institutional partners could fuel growth.
- Low Fees and High Speed: Fantom’s low fees and fast transaction times make it a compelling alternative to Ethereum for developers and users.
10. Near Protocol (NEAR)
Overview: Near Protocol is a Layer 1 blockchain designed for scalability and ease of use. Near uses a sharded architecture combined with a Proof of Stake (PoS) consensus mechanism, allowing it to process thousands of transactions per second.
What to Look For:
Ecosystem Growth: Projects like Ref Finance and Octopus Network are helping expand Near’s DeFi ecosystem. Keep an eye on new dApp launches and developer activity.
Sharding Implementation: Near’s ability to scale through Nightshade sharding could make it one of the most scalable blockchains. Monitoring the success of this implementation will be important.
Developer-Friendly: Near is designed to be user-friendly for developers, making it easy to build dApps. Its Rainbow Bridge also enables interoperability with Ethereum.
11. Tezos (XTZ)
Overview: Tezos is a self-amending Layer 1 blockchain designed for smart contracts and decentralized applications. Its key differentiator is the on-chain governance feature, which allows for upgrades without hard forks. This smooth, self-amending mechanism keeps the network up to date while avoiding the contentious splits seen in other blockchains.
What to Look For:
- On-Chain Governance: Tezos’s governance model allows stakeholders to vote on protocol upgrades, ensuring community-driven development and adaptability.
- Adoption in NFTs: Tezos is becoming a popular platform for NFTs due to its low energy consumption and scalability, attracting eco-conscious artists and developers.
- Enterprise Use Cases: Look for partnerships with large corporations, particularly in areas like finance and real estate, where Tezos has been gaining traction.
12. Elrond (EGLD)
Overview: Elrond is a highly scalable Layer 1 blockchain that uses Adaptive State Sharding and a Secure Proof of Stake (SPoS) consensus mechanism. It aims to provide fast, secure, and highly efficient blockchain infrastructure, with the capability to process 15,000 transactions per second (TPS).
What to Look For:
- Adaptive State Sharding: Elrond’s sharding mechanism is designed to optimize scalability, and its ability to dynamically adjust shards based on demand makes it one of the most scalable blockchains in existence.
- Maiar Exchange: Elrond’s native Maiar DEX (Decentralized Exchange) is a key part of its ecosystem, and its growth will be important for the long-term value of EGLD.
- Developer Activity: Monitor the expansion of dApps and projects building on Elrond, as developer adoption will be key to its success.
13. Hedera (HBAR)
Overview: Hedera Hashgraph is a unique Layer 1 blockchain that uses hashgraph consensus rather than a traditional blockchain structure. It’s designed for high throughput, low-cost transactions, and enterprise applications. Hedera has garnered significant attention for its speed and energy efficiency.
What to Look For:
- Enterprise Adoption: Hedera has focused heavily on enterprise solutions, with major companies like Google, IBM, and Boeing serving on its Governing Council. Continued adoption by big-name enterprises will be crucial.
- Low Transaction Fees: Hedera offers low transaction costs compared to other blockchains, making it an attractive option for businesses that need scalable, low-cost solutions.
- Sustainability: Hedera is one of the most environmentally friendly blockchains, making it appealing for organizations with sustainability goals.
14. Flow (FLOW)
Overview: Flow is a Layer 1 blockchain developed by Dapper Labs, the creators of CryptoKitties and NBA Top Shot. It’s optimized for NFTs, gaming, and interactive dApps, with a focus on user-friendly development and scalability for large-scale consumer applications.
What to Look For:
- NFT and Gaming Focus: Flow’s specialization in NFTs and gaming makes it a key player in the burgeoning NFT market. Look for growth in partnerships with sports leagues, entertainment companies, and gaming studios.
- User Adoption: Flow has been widely adopted by non-crypto users, thanks to its intuitive design. Continued adoption by mainstream audiences will be crucial to its long-term success.
- Developer Tools: Flow offers robust tools for developers, making it easier to build consumer-facing applications. Pay attention to developer activity and new projects launching on the platform.
15. Zilliqa (ZIL)
Overview: Zilliqa was the first Layer 1 blockchain to implement sharding as a solution for scalability, enabling high throughput without compromising decentralization. It’s designed for enterprise use, decentralized applications, and DeFi.
What to Look For:
- Sharding Technology: Zilliqa’s early implementation of sharding makes it highly scalable, with the capacity to handle large transaction volumes.
- Growth in dApps: Zilliqa’s ability to attract new dApps, especially in DeFi and NFTs, will be crucial to expanding its ecosystem.
- Enterprise Partnerships: Zilliqa has been working on enterprise adoption, particularly in digital advertising and gaming. Watch for further partnerships and use cases in real-world industries.
16. Harmony (ONE)
Overview: Harmony is a scalable, fast, and energy-efficient Layer 1 blockchain that uses Effective Proof of Stake (EPoS) and sharding to improve scalability. It’s designed for the future of cross-chain finance and decentralized applications.
What to Look For:
- Cross-Chain Capabilities: Harmony’s focus on cross-chain interoperability allows it to bridge different blockchains, a key feature that sets it apart from other Layer 1 chains.
- DeFi and NFT Growth: Harmony’s growing DeFi ecosystem, with projects like ViperSwap and DeFi Kingdoms, will be a strong indicator of network health and user adoption.
- Sustainability and Scalability: Harmony’s sharding technology and eco-friendly approach provide a foundation for long-term growth. Continued success in building scalable solutions will boost its standing.
17. Kusama (KSM)
Overview: Kusama is the “canary network” for Polkadot, designed as a testing ground for new features before they are implemented on the Polkadot mainnet. It provides a faster and more experimental platform for developers and projects that want to push the limits of Polkadot’s ecosystem.
What to Look For:
- Parachain Development: Like Polkadot, Kusama uses parachains, and these will be critical for building a robust ecosystem. Keep an eye on parachain auctions and new projects launching on Kusama.
- Innovation and Testing: Since Kusama is where cutting-edge experiments take place, its role as a testing ground for Polkadot’s features gives it unique value. Developers looking to deploy faster often turn to Kusama first.
- Governance: Kusama’s decentralized governance model allows token holders to participate in decision-making. Monitor how governance evolves and whether it drives innovation within the ecosystem.
18. Celo (CELO)
Overview: Celo is a mobile-first Layer 1 blockchain focused on creating accessible financial tools for the unbanked and underbanked populations around the world. It’s designed to be user-friendly on mobile devices, with a focus on stablecoins and DeFi applications.
What to Look For:
- Mobile Adoption: Celo’s emphasis on mobile usability could make it a key player in expanding blockchain technology to developing markets. Watch for user adoption in regions with high mobile penetration.
- DeFi on Mobile: Celo’s mobile-optimized DeFi tools are designed to reach a broader audience, particularly in emerging economies. The expansion of DeFi applications on Celo will be crucial for growth.
- Partnerships: Look for partnerships with mobile carriers, NGOs, and financial institutions as Celo aims to bridge the gap between traditional banking and decentralized finance.
19. Oasis Network (ROSE)
Overview: Oasis Network is a Layer 1 blockchain focused on privacy and scalability. It uses a unique architecture that separates consensus from computation, allowing for parallel processing. Oasis is designed for private DeFi, data tokenization, and confidential smart contracts.
What to Look For:
- Privacy Features: Oasis’s focus on privacy through confidential smart contracts gives it a competitive edge, particularly in use cases like data sharing and private DeFi. Its privacy-first approach will be a major factor in adoption.
- Partnerships: Oasis has partnered with major companies like Binance, Chainlink, and BMW, demonstrating its appeal to both enterprises and developers. Keep an eye on new partnerships that drive real-world use cases.
- DeFi and Data Tokenization: The network’s focus on private DeFi and data tokenization sets it apart from other Layer 1 chains. The growth of these sectors will determine the network’s long-term value.
20. Internet Computer (ICP)
Overview: Developed by the DFINITY Foundation, Internet Computer aims to redefine the internet by creating a fully decentralized, scalable cloud platform where websites, apps, and services can run entirely on-chain. It’s one of the most ambitious Layer 1 blockchain projects in the space.
What to Look For:
- Decentralized Web Services: Internet Computer’s goal is to decentralize the entire internet infrastructure, making it a unique player in the Layer 1 space. Watch for adoption by developers looking to build dApps and websites entirely on blockchain.
- Scalability and Speed: Internet Computer claims to have the ability to process unlimited data and computations. Continued development and real-world use cases will validate its claims.
- Institutional Partnerships: Partnerships with major tech companies and adoption by enterprise clients will be important indicators of Internet Computer’s long-term success.
Expanding Your Layer 1 Blockchain Portfolio
The Layer 1 blockchain space is diverse, innovative, and growing rapidly. While Ethereum and other top chains dominate the market, emerging projects offer exciting opportunities for investors looking to diversify their portfolios. Whether you’re interested in scalability solutions, privacy features, or cross-chain interoperability, there’s a Layer 1 blockchain tailored to your needs.
When evaluating Layer 1 blockchains, remember to consider:
- Scalability and speed: Can the network handle growing demand?
- Ecosystem: Does the blockchain have a robust community of developers, dApps, and DeFi projects?
- Adoption and partnerships: Are real-world use cases and institutional partnerships driving growth?
By staying informed and following developments in these top Layer 1 blockchains, you can make smarter, more informed investment decisions in the evolving Web3 space.
