The dominance of the leading altcoin Ethereum (ETH) may face significant threat from Solana (SOL), Cardano (ADA), Avalanche (AVAX), Polygon (MATIC), Terra (LUNA). Solana’s faster trading capability is quickly making it a favorite NFT minting and trading target. On the other hand, Ethereum still has a chance to maintain its dominance. Tascha, a cryptocurrency enthusiast and career macroeconomist, categorizes and analyzes altcoin projects. We also provide expert evaluations cryptocoin.com We have prepared for our readers.
Ethereum is in the first category.
Since the emergence of Bitcoin, Blockchain technology has been gaining ground and it seems likely to last in the long run. This is because the many and varied Blockchain solutions all have a single task, removing the middleman from the equation in financial affairs and making transactions unreliable and peer-to-peer.
Alongside Bitcoin, several Layer-1 Blockchains attempting to solve the triad of being scalable, decentralized and secure look promising in the long run for a number of reasons. These can be divided into four layers for ease of classification, according to Tascha. In a recent thread on Twitter, he shares his basics for classifying top Tier-1 blockchains based on how much traction they have.
In the first category (layer-0 according to Tascha), there is the Ethereum network, which is currently solidified as one of the largest L1s in the market. Ethereum looks promising as expectations are high that the network will become more scalable once it implements sharding. But the problem is that Ethereum hasn’t been able to solve the scalability triad. It’s secure and decentralized, but not scalable enough. While it has yet to implement these plans, which should come with the transition to a Proof-of-Stake (PoS) network, other L1s are finding solutions to the scalability problem and eating away at its dominance.
Altcoin projects in the second category
Tier-1, or the second L1 category that looks promising, includes networks that are starting to emerge with a strong network effect. These altcoin projects include Solana (SOL), Avalanche (AVAX), Terra (LUNA), and Polygon (MATIC). While they all boast being highly scalable and their ecosystems and market value are growing rapidly, they all still have their own challenges, which are their competition for dominance. Solana seems to be the initiator of the L1 wave and currently has the highest stake among L1s, but is vulnerable to being overtaken by other emerging L1s as it hasn’t fixed all of its security issues yet.
Avalanche is one of Solana’s strong rivals. The network is stated to have a more resilient infrastructure than Solana, but it needs to grow its ecosystem faster to stay on top. Similarly, Terra is gaining a lot of traction and is moving into the top echelons of the Blockchain market as its ecosystem grows. The concern for Polygon is that it is weaker than Avalanche as it has few native innovations, but its close ties to Ethereum are considered an advantage.
Altcoin projects in the third and final category
The third category (Tier-2) includes projects with solid teams, technology and funding. But there is very little traction at the moment. According to Tascha, many L1s fall into this category. A few mentioned are Near Protocol (NEAR), Cosmos (ATOM), Harmony (ONE), Algorand (ALGO), and Elrond (EGLD. These altcoin projects all need one thing to gain traction as they have a solid value proposition.
The last layer (tier-3) is where it categorizes all L1 networks currently in the top 15 as yet unspecified cryptocurrencies. A key member of this category will be Cardano (ADA), which underwent a major upgrade known as the Alonzo Hard Fork in September 2021 but has since struggled to attract outstanding projects. According to him, L1s in this category have yet to reach market values, but if they do, it looks promising.
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