Which projects will emerge victorious in the Layer 1 track in the next round?

Author: Beehive Validator

Compiler: Huo Huo, Bai Hua Blockchain

For cryptocurrency investors, the Layer 1 conflict is no longer a new concept. Nevertheless, as Layer 1s continue to be created and refined, investors who do not keep up with the market may find investing in Layer 1 extremely unprofitable and no longer aligned with development trends.

This article will outline the past and upcoming Layer 1 wars, including analyses, evaluations, and lessons learned from observing these Layer 1 conflicts.

I. Historical Review of Layer 1 Projects

1. The First Layer 1 Battle

When I entered the crypto market in 2018, an OG told me, "Buy ETH, the price has been cut in half from the top; it has bottomed out," which was my opportunity to enter the market. At that time, projects like Ethereum were not referred to as Layer 1 but rather as smart contract platforms.

During this period, the emergence of numerous smart contract platforms such as Cardano and NEO (referred to as China's Ethereum, Tron, EOS, and Monero) was aimed at addressing this issue. Ethereum's scalability solutions (transaction speed + transaction fees) were also known as ETH Killers. However, most ETH killers have since disappeared.

2. Intense Battles from 2020 to 2024

The next Layer 1 war occurred during the recent cryptocurrency bull market, and we are still living in this cycle. The main task during this phase is to solve Ethereum's scalability issues. Nevertheless, this conflict seems to be more diverse than the wars of the previous cycle. But the outcome remains the same!

This cycle focuses on foundational blockchains with the following characteristics:

1) Blockchain Internet: Cosmic, Polkadot, and Avalanche.

2) Overall Blockchains: Solana, Near Protocol, Fantom, Celo…

In this article, we will not delve deeply into the competitive process of Layer 1, but we want to clearly indicate that the trend of developing Layer 1 is not only a solid idea that has remained attractive since its inception but also a relatively new concept. However, the next generation of projects showcases grander and stronger capabilities than previous generations.

Therefore, looking back at the past and looking forward to the future, there is a high probability that the next round of Layer 1 wars among well-known projects such as Sui Blockchain, Aptos, Aleo, Celestia, and Monad will occur in the next bull market cycle.

II. Overview of Next Cycle Layer 1 Platforms

For new Layer 1 projects, we will review the following highlights:

1) Scalability Solutions

2) Ecosystem

3) Core Team and Investors

4) Ratings

1. Aptos

Aptos is one of the new Layer 1 mainnets that has made significant contributions to the retroactive/airdrop trend. Initially, users creating NFT testnets on the Aptos network received an average airdrop of $3,000 per account.

Scalability Solutions on Aptos

Aptos employs the Block---STM algorithm and BFT consensus mechanism to facilitate transactions on the network, addressing Ethereum's scalability issues and avoiding the repeated outages experienced by Solana. The parallel processing capability of the Aptos network allows for the simultaneous execution of a large number of transactions, achieving a network speed of 160,000 TPS.

Aptos uses Rust, which is currently one of the most renowned languages in the cryptocurrency market, in addition to Move, built on Facebook's Diem.

Aptos Ecosystem

After introducing the APT Token and conducting a large-scale airdrop to the community, the number of Aptos projects surged. This indicates that Aptos has made a good start. However, most early Aptos projects were of low quality, with a significant portion involved in scamming user funds. Nevertheless, due to the following positive developments, the future of the Aptos ecosystem remains quite promising:

1) Strong support from BN and BNB Chain: Aptos is the first blockchain to launch PancakeSwap, indicating that Binance's support for Aptos goes beyond mere strategic investment.

2) Several highlight projects, including Thala Labs, Pontem, Aries Market, Totuga Finance, and Martian Wallet, have successfully secured funding. This proves that venture capital continues to view the key components of the Aptos ecosystem positively.

3) Furthermore, the increased use of Rust and many other well-known programming languages can help strengthen the Aptos ecosystem.

Although the number of quality projects on Aptos is relatively low, Aptos has a relatively positive start in the long run and has left a deeper impression than its peer Sui, which is a positive signal for the ecosystem.

Team and Investors

The talent of the Aptos development team is undeniable; this team worked at Facebook and built DIEM until the project was nearly complete and ready to launch without government intervention.

Even after the mainnet launch, the platform raised hundreds of millions of dollars, with a valuation of $4 billion. Additionally, the Binance incubator invested in Aptos's strategic round.

Ratings

We will evaluate the platform based on two main technical and ecosystem-related factors:

1) Aptos technically addresses Ethereum's scalability issues during the execution phase. However, the parallel execution of multiple transactions also carries risks, and the real issues cannot be identified before the project launches. Aptos's horizontal scaling options seem quite appropriate at this time.

2) From an ecosystem perspective, Aptos's new ecosystem is still in its early stages, with insufficient evidence for a detailed evaluation.

2. Sui

Unlike Aptos, Sui's mainnet activity has not met expectations, as there were no retroactive or airdrop opportunities, and testnet players did not favor it. Instead, there was only a priority purchase opportunity for SUI at a price of $0.03, corresponding to a valuation of $300 million. However, this is not the reason why Aptos performs better than Sui on the front line.

Scalability Solutions on Sui

Sui is a monolithic blockchain similar to Solana, Fantom, or Near Protocol. However, Sui and Aptos are quite similar in some respects. Unlike Solana, they choose horizontal growth instead of vertical growth. If Aptos decides to adopt parallel execution to handle multiple transactions simultaneously, Sui will choose a different development direction. This means that Sui has adopted a different approach to solving blockchain scalability issues, allowing Sui's transaction speed to match or even exceed Aptos without using Solana-standard nodes. Therefore, Sui has made breakthroughs in addressing the trade-offs between blockchain scalability, security, and decentralization.

The Narwhal-Tusk consensus algorithm is a key component; this consensus mechanism addresses the main issue of the Memepool, where validators classify transactions into the blockchain and are considered a bottleneck for each blockchain. This will resolve the scalability issues of the blockchain.

As a result, Sui's TPS can be comparable to or even higher than Aptos without the need for Solana-standard nodes. Thus, Sui partially addresses the trade-offs between blockchain scalability, security, and decentralization.

Sui Ecosystem

The Sui ecosystem is still in the early stages of infrastructure development and has received little attention. Typically, Layer 1 platforms require a year to establish infrastructure components such as wallets, bridges, Oracles, and APIs before the ecosystem can enter a phase of sustainable operation and growth.

Team and Investors

Similar to the Aptos development team, the Mysten Lab development team responsible for building the Sui blockchain consists mostly of members from the DIEM project. However, the number of DIEM developers in the Sui Blockchain development team is significantly higher than in the Aptos team and is more cohesive.

Ratings

It may not be possible to accurately predict the future of the Sui blockchain at this time, but compared to its competitor Aptos, Sui's development team places greater emphasis on solving transaction issues. In terms of scalability, Sui's solutions are safer and more practical. However, the development team or technology is still in its early stages.

The most important factor we need to focus on is the development strategy of Layer 1 itself. From an investor's perspective, Sui and Aptos are the two blockchain platforms that have raised the most funds and have the highest valuations.

3. Monad - An EVM Blockchain Built by the Jump Trading Team

Monad is a blockchain platform that has recently attracted attention in the crypto market, not due to airdrops or retroactive reasons, but rather because of its technology or development team. The project is preparing to launch a testnet version in the near future. Therefore, any long-term investor should pay attention to Monad.

Scalability Solutions on Monad

Unlike Near Protocol, Sui Blockchain, and Aptos, Monad is an EVM blockchain with a proof-of-stake consensus mechanism and scalability of up to 10,000 transactions per second (TPS). So, what contributes to Monad's high speed?

Like Sui Blockchain and Aptos, Monad views the execution phase as a scalability barrier for any platform blockchain. Similar to Aptos, Monad identifies that traditional blockchains use sequential execution to organize transactions. To address this issue, Monad adopts parallel execution.

Monad Ecosystem

Monad is still in the research and development phase and is preparing to launch a testnet version soon, so there are currently no participants in the Monad ecosystem.

Team and Investors

The Monad development team has collaborated with Jump Trading for over seven years. Additionally, Monad has successfully raised $19 million from several investment funds, including Dragonfly Capital, Lemniscap, Shima Capital, and Placeholder.

Ratings

It is currently difficult to evaluate Monad, but preliminary conclusions can be drawn based on the limited information available.

1) Furthermore, the potential development team is validated by raising funds from numerous large investment funds.

2) Parallel execution also carries risks.

4. Aleo

Aleo is a blockchain platform designed to provide decentralized and fully private applications for all Web3 users by developing core zero-knowledge technologies.

Scalability Solutions on Aleo

According to Aleo's documentation, the platform does not emphasize scalability much, but Aleo aims to provide privacy for all platform users through Zk technology capabilities.

Aleo Ecosystem

The new Aleo ecosystem is in the early stages of development, with initial foundational components including Leo Wallet, VolcaniX, Nucleo, Demox Labs… In the future, we will still need a lot of time to follow up on the Aleo ecosystem. Currently, Aleo is still in the testnet phase, and the official mainnet roadmap has not been announced.

Team and Investors

Aleo has successfully raised a total of up to $298 million from A16Z, Coinbase Ventures, Placeholder, and Polychain Capital… although the Aleo development team is not particularly impressive. Clearly, the fund investors possess information that we have yet to discover.

In early February 2022, Zk technology was not as interesting, well-known, or FOMO as it is now, especially after CZ released tweets about Zk technology.

Ratings

Currently, we lack sufficient information to evaluate Aleo and need additional observation time. The government, especially the U.S. government, may actively prevent Aleo from focusing on its areas of interest. When such significant obstacles arise, will Aleo adjust its goals?

5. Celestia

According to the project, Celestia is the first comprehensive modular blockchain in the crypto market. Therefore, although it has not raised as much funding as Aptos or Sui, Celestia has still attracted great interest from the crypto community.

Scalability Solutions on Celestia

Celestia intends to separate the execution and consensus processes from data storage. Consensus, execution, and data storage occur on a single layer, similar to other overall blockchains. However, in Celestia, these processes will be isolated and managed on different layers. So, how does Celestia address scalability issues?

Roll-ups: Off-chain transaction processing. With the above data storage structure, Celestia has the potential to become an ideal environment for developing Roll-ups: OP rollup requires data to prove the invalidity of failed transactions, while zk-rollup requires complete data to re-aggregate the chain's state.

Celestia's future model is similar to the model between Ethereum and Layer 2 platforms utilizing Rollup technology. Once the Ethereum 2.0 roadmap is implemented, Ethereum will also become a fully functional modular blockchain. Modular blockchains are clearly the evolutionary trend of the cryptocurrency market's future.

Celestia Ecosystem

Celestia is still in the research and development phase, so the ecosystem has not yet formed.

Team and Investors

The Celestia development team has several notable aspects. The project's co-founder is also a senior developer of Cosmos, and other team members have strong backgrounds.

Ratings

Celestia's model is generally well-founded, but becoming a modular blockchain requires a significant amount of time. Compared to Aptos and Sui, Celestia's growth is noticeably slower because the technology they are trying to develop is very complex.

III. Conclusion

The above are Layer 1 projects, and we believe these projects will achieve breakthroughs in the next cryptocurrency market cycle.