The rise of the new public chain interprets the future multi-chain development pattern
At this time, it is clear that the future is multi-chain. In the past two years, we have seen a significant increase in the number of alternative first-tier blockchains. Many of these alt L1 (altcoins on the first layer of the network) are called Ethereum killers, but the rumors of Ethereum’s death have been greatly exaggerated-Ethereum is still the number one smart contract blockchain. Most innovative and non-BTC capital exists on Ethereum, which seems unlikely to change.
Having said that, Eth has already transferred part of its market share to competitors, especially Sol, Luna, and Avax.
However, let’s take a step back and return to the BSC season. BSC provides a place where users who are new to encryption can conduct fast and cheap transactions. Users who are new to encryption are introduced to the magic of blockchain currency-being able to lend their money, earn income, use dex, etc. In the end, the BSC season ended, mainly due to the market crash in May last year, but also because the actual BSC was less innovative. Most projects are clones of the Ethereum protocol, and there are also a large number of junk coins in the ecosystem. At the peak of the BSC, TVL was 31 billion, fell to 12 billion, and recovered to 16 billion. Considering how other markets managed to recover, I can hardly believe that BSC will now recover its 21% TVL peak across all chains. This is definitely a crazy number.
For reference, today’s Sol, Lun, and Avax are lower than the 21% that BSC once held. In addition, the chain has some technical problems-not an expert here, but I remember reading that the nodes cannot be synchronized and the hard-coded blocks generated every X seconds also failed. All in all, it turns out that you can’t make a faster version of Ethereum so easily. However, the rise of Binance Smart Chain has consolidated Ethereum and has correctly understood the core principles of what people need in smart contract blockchains.
The only problem with ETH is that the fees are too high for new users to use it. As Vitalik Buterin once said: “The Internet of Money should not cost 5 cents in transaction fees.” The BSC season proved that chains with low fees and good enough products (even if they are clones) can succeed. In addition, the chain has some technical problems-not an expert here, but I remember reading that the nodes cannot be synchronized and the hard-coded blocks generated every X seconds also failed. All in all, it turns out that you can’t make a faster version of Ethereum so easily. However, the rise of the Binance Smart Chain has consolidated that Ethereum has correctly understood the core principles of what people need in the smart contract blockchain. The only problem with Eth is that the cost is too high for new users to use it. As Vitalik Buterin once said: “The Internet of Money should not cost 5 cents in transaction fees .” The BSC season proved that public chains with low fees and good enough products (even if they are cloned products) can be successful.
So this leads us to today. In many respects, AVAX can be regarded as the spiritual successor of BSC, which is an EVM-compatible blockchain with low costs and high-quality products built on it. It even comes with a great shitcoin ( altcoin ) ecosystem, Snowbank and Wolf Game clones, etc. To some extent, shitcoins are bullish on the ecosystem, because if there is an active shitcoin that attracts a lot of attention, it means that there are actual products on the chain that are worth using. Otherwise, no one will use the chain in the first place. (Although I guess DOGE is the only exception here, because it is actually a shit blockchain.) On the other hand, Luna was built with its stablecoin in mind, which makes it very unique. It is not a blockchain with a stablecoin, but a stablecoin with a blockchain. Sol is also another very unique blockchain. In terms of performance, it can exclude everything else-it’s very cheap and very fast. It relies on Moore’s Law for scaling (as the computer gets faster, Sol gets faster). However, there is not much to do on Sol at the moment, but I am optimistic that this will eventually change. There are some interesting financial applications that can be used to complete it, the most prominent for me is CLOB (a type used to save files in a database). I also think that playing games on Sol has great potential. The signing of an agreement between FTX and TSM is an important indicator that Sam has considered games for Solana. In addition, it is usually a foolish act to make Bankman disappear-I don’t think anyone on this planet has as much influence in the cryptocurrency and tradfi world as he does. Finally, many new layers provide large incentive programs to entice users to build/bridging. This has been very successful in attracting these alternative chains, helping to weaken Ethereum’s market share. There is no doubt that compared with last year’s L1 Eth, more people have joined these alt L1s.
All in all, there are many public chains, and each public chain has its own unique proposition, explaining why users should use them. So the question now is, what is the best way to invest in this multi-chain encryption ecosystem concept? The easiest way is to buy the native tokens of all these chains and pray that they will come out within 5 years.
Personally, I am a big fan of infrastructure bets. In order to connect all these chains, we need something that can be used to transfer assets from one chain to another. This leads us to a cross-chain bridge. Personally, I am a fan of Synapse. Cross-chain AMM is really innovative + they have a good team. However, I think any bridge with good use and innovation should be fine here. You want to bet on a well-used chain bridge in the future, while keeping in mind the current market value/FDV (fully diluted market value)/token economics and other factors. You should also keep in mind statistics such as the total number of bridges, the percentage increase over the past X time, and the number of chains available for bridging.
Another thing I value very much is that blockchains can directly interact with each other. I think we should call it IBC (Blockchain Interaction), inter-blockchain communication, etc. It already exists. I hold ATOM and am optimistic about the Cosmos blockchain Internet. One of Ethereum’s current problems (by design) is that it uses a mainframe approach on a shared state machine. This means that every transaction is processed by everyone. (In the future, I think a lot of the use of Ethereum will be transferred to other chains that are more dedicated to different types of work, but for now, Ethereum is one of the few that has built a lot of garbage on it. One, and it is difficult to transfer these things to other places overnight + usually there is no better place to go) But 99% of the time we don’t care what other people do on the blockchain. So, what if we have a bunch of blockchains dedicated to different purposes, separate all work, and these blockchains can communicate and work together when needed? That would be cool, and this is what IBC can do. IBC also allows you to perform operations such as sending ERC-20 from Ethereum to Atom. However, doesn’t this make the chain bridge useless? So, what if we have a bunch of blockchains dedicated to different purposes, separate all work, and these blockchains can communicate and work together when needed? That would be cool, and this is what IBC can do. IBC also allows you to perform operations such as sending ERC-20 from Ethereum to Atom. However, doesn’t this make the bridge useless? So, what if we have a bunch of blockchains dedicated to different purposes, separate all work, and these blockchains can communicate and work together when needed? That would be cool, and this is what IBC can do. IBC also allows you to perform operations such as sending ERC-20 from Ethereum to Atom. However, doesn’t this make the bridge useless?
The difference between IBC communications and bridges is that bridges are like direct roads between blockchains, while IBC is like a highway that can be used by any blockchain. A separate bridge must be built between each blockchain, which requires time and resources. IBC provides a way that blockchain can be connected to other first-level chains without building a direct bridge. So which one is better? Depends on what you need. IBC is more like a general solution, and a direct bridge is a bit like a fast track. I think that a first-layer blockchain with sufficient interaction between a pair will naturally generate a demand for direct bridging. I’m relatively confident that some kind of incentives will eventually emerge to encourage people to use bridges, because at some level, bridges are competing to transport your assets.
An interesting prediction in Messari’s 2022 report: The most popular L1 <> L2 / L1 <> L1 / L2 <> L2 bridging protocol will have a higher daily trading volume than the most popular centralized exchanges within five years.
I encourage today to consider bridging agreements similar to the American railroads in the 1800s. There are many places to go. These companies work tirelessly to connect the country. This is very similar to all the different bridges connecting different blockchains today. When investing, please consider the railway company/bridging agreement that you think will build the best/most commonly used road in the future.
This is a very good spreadsheet link for @XLBao_ about saving the chain bridge currently: https://docs.google.com/spreadsheets/d/1jYZOfU2R3PdzRmnY9Nfc4pzerX_YSInNdyhtSj_3oWY/edit#gid=0
I think everyone is happy about the existence of bridges, but eventually bridges will become the norm and bridge agreements will be forced to compete for users. We currently only encounter the problem of blockchain expansion, but if the usage is large enough, I think we may encounter the same bridge traffic problem. However, we are still far from encountering the problem of bridge expansion. Finally, in the distant future, I think we may only see a few bridging agreements, and better bridging will establish dominant brands and annex competitors.
Another thing to consider is the way each bridge is built. I won’t discuss this issue too much, because I think Dmitriy Benzon’s article “Blockchain Bridges: Building Networks of Cryptonetworks” does a better job than me. However, if you look at the picture I extracted from his article, you will find that building a bridge is similar to the blockchain trilemma of scalability, decentralization, and security. It is difficult to do all of these things well, and prioritizing one usually means making sacrifices in another area.
This article somehow turned into a very large bridging article, but when it comes to the rise of multi-chain, another thing I want to mention is stablecoins. I think their role in helping new chains grow is quietly underestimated because we tend to take them for granted. The two I want to emphasize are USDC and UST, but I will also include USDT at the bottom because it is the oldest and largest.
These three stablecoins all exist on multiple chains, and the current market value is about 130B.
Fast stablecoin tangent: stablecoins really exploded in 2020, which is a good thing for encryption. By shifting from coin margin futures to stablecoin margin futures, it is more difficult to cause cruel cascading liquidation candles, thereby reducing the volatility of the crypto market. In terms of total cryptocurrency market value, they are much more sticky, because BTC can reach 40% within a week, but technically speaking, one U.S. dollar is always one U.S. dollar (ignoring inflation).
In any case, stablecoins are helpful because you can go to a new chain and spend your stablecoins there. Compared to selling stablecoins to buy tokens and interacting with the new chain, this is a smoother Experience. In addition, no one wants to enter a chain with insufficient liquidity. Stability is better than benefiting everyone. Stability makes the chain easier to obtain and has deep liquidity. The days of only being priced in BTC on the chain are gone. JOE (AVAX’s comprehensive DEX, covering borrowing and lending) has 200m in AVAX/USDC, RAY (Slanade DEX) has about 400m in each USDC and USDT/Sol pool, BOO (Fanton chain DEX) has 90m USDC/FTM and so on. They are very similar to the way that Europe, Asia, and Africa accepted Roman currency in ancient times. Good money made the economy flourish. In other words, I really don’t know how to bet on stablecoins from a purely multi-chain perspective-in my opinion they are more like the promoters of a multi-chain future.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-rise-of-the-new-public-chain-interprets-the-future-multi-chain-development-pattern/
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