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Easy-to-understand analyses and guides that cover both core technologies and external influences, using relatable analogies and side-by-side comparisons to help you navigate crypto investing confidently.

Comparison of Major Layer-1 Blockchain Ecosystems

Explore the key differences and unique features of major Layer-1 blockchain ecosystems by market cap.

Specialized network, highly secure, decentralized, and widely recognized. Considered “digital gold.” Mainly used as a store of value and for peer-to-peer transactions.

Architecture

Proof-of-work consensus type, with monolithic architecture which handles the execution and settlement of transactions as well as the maintenance of consensus within a single layer. Highly secure and decentralized due to the extensive network of miners and nodes. Limited by block size and block time, leading to slower transactions and higher fees during congestion.

Tokenomics highlights

Bitcoin has a fixed supply of 21 million BTC, creating deflationary effects. New bitcoins are generated through mining, with rewards halving approximately every four years. Initially, bitcoins were distributed as mining rewards.

Governance model

Off-Chain Governance via Bitcoin Improvement Proposal (BIP) Process with Miner Consensus

Challenges

High transaction fees and scalability issues with slow transaction times as well as environmental cost due to proof-of-work

 

 

Digital platform that introduces smart contracts, which are like programs with specific procedures that, once deployed, no one can change. Acts as an infrastructure for most decentralized applications with a large developer community.

Architecture

Proof-of-work consensus in the beginning, Proof-of-stake since the Merge in 9/2022. Ethereum uses modular architecture which separate into distinct, specialized layers. Strong security and high level of decentralization with a large number of nodes and active developers. Scalability issues are solved through rollup chains which help lower fees significantly.

Tokenomics highlights

Ethereum does not have a fixed supply cap and has lower issuance than Bitcoin. Its supply can become deflationary when network activity increases through the burning mechanism. A significant amount of ETH is staked, and unlike Bitcoin miners, ETH stakers don’t need to sell to cover operational costs. Consequently, many ETH holders are less likely to sell, reducing the available supply. ETH was initially distributed through an Initial Coin Offering (ICO) in 2014.

Governance model

A hybrid approach that incorporates both off-chain and on-chain elements, with off-chain governance including community discussions and Ethereum Improvement Proposals (EIPs), while on-chain governance involves stakeholder voting on the blockchain. Various stakeholders, from Ether holders to protocol developers, play roles in this process. EIPs are proposed, reviewed, and iterated upon before being implemented through network upgrades.

Challenges

Scalability of transactions causing high gas fees, ranging from a few dollars to over $100 during periods of high network congestion. Layer 2 solutions reduce fees by offloading transactions from the main chain, typically fractions of a cent, but cause fragmentation of liquidity and user experience.

 

 

Digital platform focused on extremely fast transactions and low fees, supported by robust architecture for handling thousands of transactions per second. Supports smart contracts and DApps with high throughput and low latency. High security with innovative mechanisms, but newer and less battle-tested and less decentralized than Bitcoin and Ethereum, with fewer nodes but still growing. 

Architecture

Solana uses Proof of History as a tool in its Proof of Stake consensus. Proof of History avoids the need for every node to agree on each transaction’s order, leading to significantly faster transaction processing. Solana’s monolithic architecture handles the execution and settlement of transactions as well as the maintenance of consensus within a single layer. 

Tokenomics highlights

Solana uses a unique inflation model to reward network validators and tokenholders, which provides supply predictability and supports long term economic stability. Transaction fees are participant-to-participant transfers that compensate network participants for including and executing a proposed transaction. A portion of each transaction fee is also partially burned to protect against forking and support long-term economic stability. Tokens are distributed through public allocation (sale or airdrop), ecosystem/treasury, investors, and the team. No capped max supply.

Governance model

Off-Chain Governance. The community can propose changes, but core developers and validators decide on their implementation. The Solana Foundation supports the ecosystem’s development and provides funding and strategic guidance. On-chain voting is possible through the feature program, however lacks functionality and visibility and has barely been used in practice.

Challenges

Frequent Solana has faced network outages due to congestion from high transaction volumes. The high cost and technical requirements for running a validator node can lead to centralization

 

 

Originally developed by Telegram, which ceased its direct involvement due to regulatory challenges, The Open Network (TON) has since been continued by the global developer community under the same name. It offers high transaction speeds, a strong focus on usability, and integration with existing platforms like Telegram. Leveraging Telegram’s vast user base for mass adoption, it is particularly well-known for its gaming ecosystem.

Architecture

Proof-of-stake consensus. Multi-blockchain system with a masterchain and multiple workchains facilitating parallel transaction processing across multiple chains. Asynchronous message delivery allows transactions to be processed independently and in parallel to improve scalability. Supports smart contracts with the ability to integrate seamlessly with messaging apps like Telegram. TON dapps are deployed directly in Telegram as per its “open platform” philosophy, creating a smooth UX with web3 features abstracted away.

Tokenomics highlights

TON’s tokenomics features an initial supply of 5 billion tokens, increasing by approximately 0.6% per year through staking rewards. The $TON token can be purchased via credit card on Telegram Wallet and used for digital goods and advertisements within Telegram.

Governance model

TON uses an on-chain governance model where decisions are facilitated by specialized smart contracts called Fate Channels and token-holder voting. The community can propose changes and vote on them, with token holders having a say in the network’s future direction.

Challenges

Past issues with the SEC create ongoing concerns about regulatory compliance and potential future legal challenges. The TON ecosystem currently has a relatively small number of developers compared to other ecosystems, facing significant challenge in boosting developer engagement due to the complexities of its programming languages, FunC and Fift.

 

 

Aims to create an “Internet of Blockchains,” Cosmos allows developers to set up their own blockchain easily. The blockchains in Cosmos ecosystem are interoperable and interconnected.

Architecture

Cosmos’s architecture underscores modular blockchains, separating functions into distinct, specialized layers, including the Tendermint Core consensus engine, the Cosmos SDK, and the Inter-blockchain Communication Protocol (IBC). This structure supports strong security through the Tendermint consensus and staking mechanisms, ensuring robust protection. The modular architecture is highly scalable, allowing for the creation of multiple interoperable blockchains with the Cosmos SDK. The IBC enables different blockchains within the Cosmos ecosystem to communicate and transfer data or tokens seamlessly. The Cosmos Hub acts as a central connector in a hub-and-spoke model, linking various independent blockchains, known as zones. Additionally, it supports smart contracts on connected blockchains. Most of Cosmos ecosystem uses Proof-of-stake consensus, although some permissioned blockchains in the Cosmos ecosystem that leverage Proof-of-Authority (PoA).

Tokenomics highlights

The Cosmos ecosystem features a fixed supply cap with an inflationary model. The inflation rate varies between 7% and 20% annually, depending on the amount of ATOM staked. Initial distribution occurred through an ICO in 2017, with ongoing issuance provided through staking rewards.

Governance model

The Cosmos ecosystem employs an on-chain governance model with weighted voting based on the amount of staked ATOM tokens. The Inter-Blockchain Communication (IBC) protocol facilitates governance across multiple interconnected blockchains (zones), each of which can maintain its own unique governance structure.

Challenges

In optimizing for sovereignty and flexibility, each zone in Cosmos can have its own governance, token economics, and operational rules. As a result, the Cosmos network’s main token, ATOM, doesn’t directly benefit from the increased activity or value generated in other zones. Because each zone on Cosmos uses its own tokens for validation and gas fees, these tokens may not be easily exchangeable or interchangeable with ATOM or tokens from other zones. This lack of fungibility limits the liquidity and ease of use of tokens across the entire Cosmos ecosystem. 

 

 

Comparison of Notable Emerging Ecosystems

Discover the distinctive attributes and innovations of notable emerging blockchain ecosystems to stay ahead in the evolving world of blockchain technology.

High-performance blockchain for scalable and low-latency dApps aiming to provide a scalable and developer-friendly platform for efficient dApp deployment

Architecture

Sui’s architecture features an object-centric model, Move programming language, and parallel transaction execution which contrasting sharply with the traditional sequential method.  Additionally, Sui employs a unique consensus mechanism combining Narwhal, a Directed Acyclic Graph (DAG)-based mempool, and Bullshark, a Byzantine Fault Tolerant (BFT) protocol, ensuring robust security and efficiency by organizing transactions in a graph structure to manage and confirm them securely. Sui is incompatible with Ethereum Virtual Machine (EVM).

Tokenomics highlights

Fixed total supply of 10 billion SUI tokens. A significant portion is allocated to the community, which include research and development and validator subsidies. Token is used for transaction fees, securing the network through staking, and participating in governance.

Governance model

On-chain governance is facilitated through Movernance. SUI token holders can actively participate by staking their tokens to a validator.

Challenges

While Sui aims to provide high scalability, actual performance under heavy usage remains to be fully proven. Sui as an ecosystem also faces challenges in broader adoption, particularly due to the learning curve of its unique Move language.

 

 

A decentralized exchange (DEX) protocol built on the Cosmos SDK, aimed at creating fully decentralized financial markets. It supports a variety of financial products, such as spot trading, derivatives, and synthetic assets, and emphasizes cross-chain compatibility along with fast, low-cost transactions.

Architecture

Injective’s architecture is built on the Cosmos SDK, benefiting from a modular and interoperable framework, as well as Tendermint consensus. It utilizes an order book model instead of an Automated Market Maker (AMM), allowing for more complex trading strategies and a familiar trading experience. The platform supports cross-chain trading via the Inter-Blockchain Communication (IBC) protocol, ensuring high throughput and low latency.

Tokenomics highlights

Fixed total supply of 100 million INJ tokens. Majority of tokens are allocated to long-term development and growth of the ecosystem. Token is used for transaction fees, governance, securing the network through staking, and various protocol functions like trading and market creation. A portion of transaction fees is burned, reducing the total supply over time and potentially increasing the value of remaining tokens.

Governance model

Operates under a DAO model, enabling decentralized governance through INJ token holders. Participants may receive rewards for their involvement in governance activities.

Challenges

Operating in the financial and derivatives space brings significant regulatory challenges that can impact growth and operations. Plus, competing with well-established DeFi platforms and attracting sufficient liquidity and user base is a constant challenge for Injective.

 

 

A smart-contract platform built on the Lachesis – a Asynchronous Byzantine Fault Tolerance (aBFT) consensus protocol. Lachesis enables Fantom to operate faster and more cost-effectively than previous technologies while maintaining robust security.

Architecture

Lachesis offers instant transaction finality, is leaderless to enhance security, and uses aBFT to maintain consensus even in the presence of malicious nodes, solving many scalability issues of existing blockchains. Fantom is fully compatible with the Ethereum Virtual Machine (EVM). Modular architecture allowing different components to be upgraded or replaced without disrupting the entire network. 

Tokenomics highlights

Maximum supply of 3.175 billion FTM tokens. Majority of tokens are allocated to private sale and the foundation. Token is used for transaction fees, securing the network through staking, securing the network through Lachesis consensus, and governance.

Governance model

On-chain governance with weighted voting power proportional to the amount of staked FTM tokens.

Challenges

Fantom has relatively few validator nodes compared to  other mature public chains. The decentralization is not high enough to attract DeFi protocols, which affects TVL.

 

 

A modular blockchain network designed to enable scalable and secure decentralized applications. It separates consensus and data availability from the execution of transactions, allowing developers to deploy customized execution environments while leveraging Celestia’s consensus and data availability layers.

Architecture

Celestia separates consensus and data availability from transaction execution, allowing developers to deploy customized execution environments while relying on Celestia for consensus and data availability, allowing the network to handle a large number of transactions and data. It uses data availability sampling where nodes are not required to download the entire blockchain. Celestia’s architecture allows for different consensus algorithms to be plugged in, providing flexibility and adaptability to various use cases. As a Cosmos chain, Celestia uses Tendermint consensus.

Tokenomics highlights

The maximum supply is set at 1 billion TIA tokens, and the circulating supply will gradually increase over time. Allocated towards development, ecosystem incentives, the team, and early supporters. Token is used to pay for data availability, as a gas token and currency for new rollups, simplifying blockchain deployment, securing the network through staking, and governance.

Governance model

A hybrid model of on-chain and off-chain governance. TIA holders (not just stakers) can propose and vote on governance proposals.

Challenges

A specialized DA layer without an Execution layer doesn’t serve much purpose. Unlike other blockchain networks, Celestia will consequently rely on other Execution chains to kickstart user activity. Because Celestia doesn’t perform state execution , unlike most chains, its token’s utility as a liquidity source in DeFi and other areas may be limited.

 

 

A sector-specific Layer 1 blockchain focused on optimizing the trading infrastructure for decentralized exchanges (DEXs) and DeFi applications. Built on the Cosmos SDK, Sei aims to provide high throughput, low-latency, and secure trading experiences by offering a specialized environment tailored for trading applications.

Architecture

Sei is built using the Cosmos SDK, enabling interoperability and modularity, and specifically designed to optimize the infrastructure for decentralized exchanges (DEXs) and DeFi applications. Sei includes a specialized order execution layer that provides high-performance and deterministic order execution, tailored for trading applications and shared liquidity across different DEXs and DeFi platforms built on its network. Sei implements Optimistic Parallelization, allowing for parallel transaction processing while maintaining sequential processing when transaction order is critical. As a Cosmos chain, Sei uses Tendermint consensus.

Tokenomics highlights

Fixed total supply of 1 billion SEI tokens. Tokens are allocated to community and ecosystem incentives, the development team, advisors, and investors. Token is used for transaction and trading fees, as native asset liquidity or collateral to applications built on the Sei blockchain.securing the network through staking, and governance.

Governance model

On-chain governance where members vote with their staked Sei. One staked Sei equals one vote. If a user fails to specify a vote, their vote defaults to the validator they are staked to. Validators vote with their entire stake unless specified by delegators.

Challenges

The on-chain ecosystem, overall applications, and TVL are in the early stages, lacking standout DeFi applications. Managing fast finality in various conditions and with changing number of nodes as the network matures will be a future challenge for Sei. Handling transactions in parallel presents inherent complexities due to the nature of blockchains, especially in situations where multiple nodes share states which can lead to disparities in parallel processing.