What are the top crypto layer 1 projects in 2022?
Crypto layer 1 projects refer to coins which serve as the base networks for other projects. These layer-1 blockchains can validate and complete transactions without the need of additional network. These are also known as layer 1 blockchains because they are the main networks of their respective ecosystems. This means that other projects are built on top of their infrastructure. In this article we will discuss some of the top crypto layer 1 projects in 2022 and whether it’s too late to invest in them.
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Bitcoin (BTC)
Bitcoin remains the top cryptocurrency in terms of market cap at the moment. It’s the benchmark for the overall market and the main driver behind price movements. Is it a good solution to build projects on? The BTC network and structure has severe limitations when it comes to developing solutions such as DeFI, NFTs etc. This is partly due to the slow transaction times and inability to scale. Some of these problems can be solved by layer 2 solutions, but for now BTC is lagging in this section.
The fact that BTC is based on Proof of Work (PoW) will also limit its attractiveness as a layer 1 solution in the future.
Then why are we putting BTC as the number one – the answer is that although it’s not the most used blockchain to build projects on, it is still by far the most influential on the crypto market. It is the pioneer and the biggest blockchain in terms of market cap. Furthermore, it has proved itself as a storer of value at least for now.
Is it a good time to invest in BTC? – Being the biggest, it’s also one of the most expensive and price for 1 BTC at the time of writing was just over 41,000USD with a market cap of nearly 800billion. This is a serious valuation and makes BTC look rather expensive when compared with other layer 1 projects. However, analysts point that the future market cap of crypto and related industries can grow by significant amount over the next 10 years. This means that even at such high prices BTC might have potential for further upside in terms of price and market cap. It probably won’t have as much influence because projects won’t be built on it.
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Solana (SOL)
Solana is one of the top crypto layer 1 projects at the moment. With the Solana foundation behind it, it is known for its easiness to use by developers to create gaming, DeFI and other projects. It uses Proof of Stake which makes it more eco-friendly and easier to scale. It also has low fees and fast transaction times which makes it very attractive.
Currently it’s trading at just above 105 USD with a market cap of 35 billion and fully diluted market cap of nearly 55billion. If we compare this with Ethereum (ETH) market cap, Solana is about 7x cheaper and looks like a bargain. Especially considering that it’s already overcome some of the issues which Ethereum has.
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Ethereum (ETH)
Ethereum is currently the most used layer 1 project in terms of creating an ecosystem around it – Defi, NFTs, Games, Tokenizing properties etc. It has it all and the ease of usage is remarkable. However, the one thing holding Ethereum back are the high transaction fees. During busy times of the day sometimes people can pay more than 200USD per transaction. What is behind this problem? – the blockchain has simply become too big and still uses proof of work (PoW) for its transactions.
This hurdle is likely to be overcome soon, as we move towards the adoption of Ethereum 2.0. This means that the Ethereum blockchain will move from Proof of Work (PoW) to Proof of Stake(PoS) and this will likely lead to low transaction fees and higher speed.
What does this mean for Ethereum in terms of investment? If the transition to 2.0 is successful, it may mean that some of it’s competitors like Solana lose some of their attractiveness. It will also boost the usability of all the apps that are built on the Ethereum blockchain and likely lead to a new crypto revolution. With a market cap of 373 billion and a price of just over 3000 USD, provided that we manage to get ETH 2.0, the future for the ecosystem looks bright.
Honorable mentions – here are some of the other top layer 1 projects at the moment – Avalanche (AVAX), Fantom (FTM) and Binance Coin (BNB).
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