Layer1 Overview for the Next Cycle from 2024-2028

An Overview of Layer1's Development from 2024 to 2028

This article compares and analyzes the strengths and weaknesses of mainstream Layer 1 projects such as Aptos, Sui, Monad, Aleo, Celestia, etc. in terms of scalability, ecosystem development, and team strength. It believes that they will become the main players in the next round of Layer 1 project competition, and the future Layer 1 projects will form a more diverse and larger ecosystem.

For cryptocurrency investors, the Layer 1 conflict is no longer a new concept. However, as Layer 1 continues to be created and improved, investors who don’t keep up with the market may find investing in Layer 1 extremely unprofitable and no longer in line with the development trend.

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

I. Layer 1 Project Historical Review
1. The first Layer 1 battle

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When I entered the cryptocurrency market in 2018, an OG told me, “Buy ETH, the price has already been cut in half from the top; it has reached the bottom.” This was also my opportunity to enter the market. Previously, projects like Ethereum were not referred to as Layer 1 but were called smart contract platforms.

During this period, the birth of numerous smart contract platforms like Cardano and NEO (referred to as Chinese Ethereum, Tron, EOS, and Monero) was to solve this problem. Ethereum’s scalability solutions (transaction speed + transaction fees), also known as ETH Killers, emerged. However, most of the ETH killers no longer exist.

2. 2020-2024 Cycle of Intense Battles

The next Layer 1 battle takes place during the recent cryptocurrency bull market, and we are still in this cycle. The main task in this stage is to solve Ethereum’s scalability problem. However, this conflict seems to be more diversified than the previous cycle of wars. But the result is still the same!

This cycle focuses on fundamental blockchains with the following characteristics:

1) Blockchain Internet: Cosmic, Polkadot, and Avalanche.
2) Overall blockchains: Solana, Near Protocol, Fantom, Celo…

In this article, we won’t delve into the competitive process of Layer 1, but we want to make it clear that the trend of developing Layer 1 is not only a solid concept that has remained attractive since its inception, but also a relatively new one. However, the next generation of projects showcases grander and stronger features compared to the previous generations.

Therefore, looking back and looking ahead, there is a high probability that the next round of the first layer battle among well-known projects such as Sui Blockchain, Aptos, Aleo, Celestia, and Monad will occur in the next bull market cycle.

II. Overview of the next cycle’s first layer platforms

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

1) Scaling 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 trend of traceability/airdrops. Initially, users creating the NFT testnet on the Aptos network received an average airdrop of $3000 per account.

Scaling solutions on Aptos

Aptos uses the Block-STM algorithm and a BFT consensus mechanism to facilitate transactions on the network, addressing Ethereum’s scalability issues and avoiding the repeated incidents of Solana crashing. Aptos’ parallel processing capabilities allow for the execution of a large number of transactions, resulting in a network speed of 160,000 TPS.

Aptos uses Rust, which is one of the most famous languages in the cryptocurrency market, along with Move, which is built on Facebook’s Diem.

Aptos ecosystem

After introducing the APT token and conducting a large-scale airdrop to the community, the number of projects in the Aptos ecosystem has grown rapidly. This indicates that Aptos has had a promising start. However, most early Aptos projects have low quality, with a considerable number involved in fund scams. Nevertheless, due to the following positive developments, the future of the Aptos ecosystem still holds considerable potential:

1) Strong support from Binance and the BNB Chain: Aptos is the first blockchain to land LianGuaincakeSwap, demonstrating that Binance’s support for Aptos goes beyond strategic investment.

2) Some highlighted projects, including Thala Labs, Pontem, Aries Market, Totuga Finance, and Martian Wallet, have successfully fundraised. This proves that venture capital continues to see key components of the Aptos ecosystem favorably.

3) Additionally, the increasing use of Rust and many other notable programming languages can help strengthen the Aptos ecosystem.

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

Team and investors

The talent of the Aptos development team is undeniable; this team previously worked at Facebook and built DIEM until the project was nearing completion 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. In addition, the Binance Launchpad also invested in Aptos’ strategic round.

Ratings

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

1) From a technical perspective, Aptos solves Ethereum’s scalability issues in the execution phase. However, there are still risks with parallel execution of multiple transactions, and the real problems cannot be identified until the project is launched. Aptos’ horizontal scaling option seems appropriate at this time.

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

2. Sui

Unlike Aptos, Sui’s mainnet activity has not met expectations, as there were no airdrops or retroactive rewards, and testnet players did not like it. Instead, there was only an opportunity to buy SUI at a discounted price of $0.03, resulting in a valuation of $300 million. But this is not the reason why Aptos performed better than Sui on the frontlines.

Scaling Solutions on Sui

Sui is a monolithic blockchain similar to Solana, Fantom, or Near Protocol. However, Sui and Aptos are quite similar to some extent. Unlike Solana, they choose horizontal growth instead of vertical growth. If Aptos decides to adopt parallel execution to process multiple transactions simultaneously, Sui will choose another development path. This means that Sui takes a different approach to solving the scalability issue of blockchain, allowing Sui to achieve transaction speeds comparable to or even surpassing Aptos without using Solana-standard nodes. Therefore, Sui has made breakthroughs in balancing the scalability, security, and decentralization of blockchain.

The Narwhal-Tusk consensus algorithm is a key component; this consensus mechanism solves the main issue of the Memepool, where validators categorize transactions into the blockchain and is considered the bottleneck of each blockchain. This will address the scalability issue of blockchain.

Therefore, Sui’s TPS can be comparable to or even higher than Aptos without the need for Solana-standard nodes. Therefore, Sui partially solves the trade-off between scalability, security, and decentralization of blockchain.

Sui’s Ecosystem

Sui’s ecosystem is still in the early stages of infrastructure development, so it has received little attention. Typically, first-layer platforms take about a year to establish infrastructure components such as wallets, bridges, oracles, and APIs before the ecosystem can enter the stage of sustainable operations and growth.

Team and Investors

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

Rating

For the future of the Sui blockchain, it is currently difficult to make an accurate prediction. However, compared to its competitor Aptos, Sui’s development team is more focused on solving transaction issues. In terms of scalability, Sui’s solution is safer and more practical. However, the development team and technology are still in the early stage.

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 Jump Trading Team

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

Scalability Solution on Monad

Monad, unlike Near Protocol, Sui Blockchain, and Aptos, 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?

Monad, like Sui Blockchain and Aptos, believes that the execution phase is the scalability barrier for any platform blockchain. Similar to Aptos, Monad found that traditional blockchains use sequential execution to organize transactions. To address this issue, Monad adopts parallel execution.

Monad’s Ecosystem

Monad is still in the development process and is preparing to launch a testnet version in the near future. Therefore, Monad’s ecosystem currently does not have any participants.

Team and Investors

Monad’s development team has been collaborating with Jump Trading for more than 7 years. In addition, Monad has successfully raised $19 million from investment funds such as Dragonfly Capital, Lemniscap, Shima Capital, LianGuailceholder, etc.

Rating

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

1) In addition, it validates potential development teams by raising funds from numerous large investment funds.

2) Parallel execution also carries risks.

4. Aleo

Aleo is a blockchain platform that aims to provide decentralized and fully private applications for all Web3 users through the development of core zero-knowledge technology.

Scalability Solution on Aleo

According to Aleo documentation, the platform does not emphasize scalability very much, but Aleo hopes to provide privacy for all platform users through Zk technology functionalities.

Aleo’s Ecosystem

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

Team and Investors

Aleo has successfully raised a total of $298 million from A16Z, Coinbase Ventures, Placeholder, and Polychain Capital… Although the development team of Aleo is not particularly impressive. Obviously, the fund investors have information that we have not yet discovered.

In early February 2022, Zk technology was not as interesting, attention-grabbing, or FOMO-inducing as it is now, especially after CZ tweeted about Zk technology.

Ratings

Currently, we lack sufficient information to evaluate Aleo and we need additional observation time. Governments, especially the U.S. government, may actively hinder the areas of interest that Aleo focuses on. Will Aleo adjust its goals when such significant obstacles arise?

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 still arouses great interest in the crypto community.

Scaling 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 holistic blockchains. However, in Celestia, these processes will be isolated and managed in different layers. So, how does Celestia solve the scalability issue?

Roll-ups: Off-chain transaction processing With the aforementioned data storage structure, Celestia has the potential to be 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 reaggregate the state of the chain.

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

Celestia’s Ecosystem

Celestia is still in the development process, so the ecosystem has not yet formed.

Team and Investors

Celestia’s development team has several notable aspects. The project’s co-founders are also senior developers of Cosmos, and other team members also have extensive backgrounds.

Ratings

Celestia’s model is overall well-founded, but becoming a modular blockchain will take a lot of time. Compared to Aptos and Sui, Celestia’s growth rate is noticeably slower because the technology they are attempting to develop is very complex.

Conclusion

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

We will continue to update Blocking; if you have any questions or suggestions, please contact us!