In 2023, the landscape of Layer 1 continued to evolve, and showcased a dynamic interplay of established giants and promising newcomers, each shaping the ecosystem in unique and impactful ways. We witnessed a powerful resurgence of Solana and Tron, as they reaffirmed their pivotal positions in Layer 1. Meanwhile, this year was also marked by the emergence of new Layer 1s like SUI which promise exciting strides towards enhancing blockchain transaction efficiency.
Key Statistics
- Total Value Locked
The TVL in L1s surged from ~ $33 billion to ~ $39 billion in 2023. Tron witnessed a remarkable surge of ~ 84% in TVL, surpassing the BNB chain and reaching a staggering $7.54 billion. Both BSC and Avalanche saw declines of ~ 36% and 15% in their TVL respectively. Meanwhile, Solana’s TVL grew by ~ 207%, and reached $645 million.
- Average Daily Transactions
Solana’s remarkable achievement of ~ 19.8 million average daily transactions in the current year underscores its leading position in Layer 1 solutions. The expansive ecosystem of dApps ranging from DeFi to NFT on Solana’s network is instrumental in driving heightened transaction volumes. Tron closely followed it as the runner-up with ~ 6.69 million average daily transactions, followed by BSC and AVAX.
- Cumulative Unique Addresses
In terms of cumulative unique addresses, BNB Chain emerged as the direct winner with ~ 402 million addresses. Tron followed closely with ~ 199 million addresses while Solana had ~ 145 million addresses. Although AVAX lags behind the other chains in terms of Unique Active Addresses, the ratio of Addresses to Transactions is the highest in AVAX, which demonstrates its active and organic user base.
Emerging Layer 1 Protocols
The new Layer 1 blockchains aim to tackle pressing issues prevalent in established blockchains. They strive to overcome the limited transaction throughput witnessed in prominent blockchains like Bitcoin and Ethereum, aiming to alleviate congestion and high fees during peak network periods. Additionally, these new entrants are seeking to improve cross-chain communication by enhancing interoperability.
Few emerging Layer 1s to watch out for are as follows:
- Aptos: It is a Layer 1 blockchain which employs the Block – STM algorithm and the BFT Consensus Mechanism allows for a 100% up-time in contrast to Solana. Parallel processing of the Aptos network enables the execution of a large number of transactions concurrently, resulting in a network pace of up to 160,000 TPS.
- Sui: It utilizes an object-centric model and harnesses parallel transaction execution driven by the Move programming language which enhances its throughput capabilities. It has garnered ~ 8.3 million users within a short span of time.
- SEI: It is a Cosmos-based layer-1 blockchain which through their Twin Turbo Consensus, powered by Cosmos SDK and Tendermint Core, aims to equip decentralized trading apps with unmatched speed, security, and capital efficiency for optimal performance. It is backed by the likes of Multicoin capital, Coinbase and more.
- Aleo: It operates as. a privacy-centric Layer 1 blockchain, leveraging zero-knowledge proofs (ZKPs) to facilitate confidential and secure transactions. It features SnarkVM which achieves scalability by offloading computations off-chain, requiring only proof of computation publication on-chain for enhanced efficiency. It is backed by SoftBank vision fund and Andreessen Horowitz.
Expert Opinion
Rene Stefancic, COO, Enjin
2023 continued the trend from 2022 and proved to be an operationally challenging year for most companies in the cryptocurrency industry. However, the trend has reversed in the last quarter of 2023. Ecosystems which continued to innovate and develop regardless of the past years’ difficult environment are well suited to capitalize on this reversal throughout 2024, particularly ecosystems focused on AI, gaming, and NFT digital assets
Future Outlook
2024 could be the year of Emerging Layer 1s such as SUI, Aleo, etc., which with their innovative architecture and robust data management capabilities are set to redefine scalability, efficiency, and security paradigms.
There could also be a surge in customized blockchains as enterprises seek bespoke solutions, spurring innovation and adaptability. For instance, Gaming-oriented blockchains like CHZ and Enjin have done commendable work by fine-tuning their infrastructure to cater precisely to the intricate demands of the gaming industry.
Solana’s imminent firedancer upgrade, slated for the first half of 2024, promises substantial advancements in throughput and reliability. Anticipated advancements in 2024 foretell the maturation of sharding implementations in Ethereum for improving its scalability. Concurrently, increased adoption of Data Availability Sampling (DAS) implementations is expected, further augmenting the efficiency of Layer 1 protocols.
Crypto Outlook 2024
2023 was a roller-coaster ride for the crypto sphere, marked by dynamic shifts, innovative advancements, and transformative trends that reshaped the industry’s landscape. Our Crypto Outlook Report for 2024 reflects on the highs, lows, and pivotal moments that defined the past year, while also peering into the horizon to forecast the exciting potential and emerging patterns set to influence the year ahead, with insights from industry leaders at Stepn, Enjin, Hacken, SuperScrypt, and more.
Click here to read the full report!
