In bull and bear markets, wise cryptocurrency investors know that the main focus should be on the life of the project, rather than keeping up with each short-term price trend. With the expansion of the crypto ecosystem and the rise of emerging fields, the agreement that provides the community with the greatest value has the greatest opportunity for long-term survival and price increases.
The purpose of this press release is to conduct a more thematic macro observation of the segments of the cryptocurrency market and to identify projects whose signals will be successful in this field.
This has nothing to do with the token price. It involves technology, the basics of the project, and how everyone can help push the industry to new heights.
Élie Le Rest, a partner of digital asset management company ExoAlpha, said in a recent conversation with Cointelegraph: “The industry trends and cryptocurrencies are large and will continue to exist, but the idiosyncratic risks must be considered when weighing the investment portfolio.”
According to Le Rest, “the crypto market tends to work on a comparable principle”, which is a repeating trend seen many times in its history.
That being said, let’s take a deeper look at the current market cycle rotation in the broader cryptocurrency market to better grasp where new money and market participants begin to focus their attention.
Tier 1 projects continue to attract users
The first layer is a term used to describe the main underlying blockchain architecture of the network, while the second layer solutions are protocols that run on top of the underlying L1 blockchain. Without the framework they provide, they will not be able to run .
In terms of value, Bitcoin has been the main L1 solution so far, and the Ethereum network has been reshaping cryptocurrencies in the past few years due to the rise of smart contracts and industries such as decentralized finance and non-fungible tokens. Played an important role in the market structure.
Although Ethereum has received most attention in discussions about smart contract platforms, the high fees and low transactions per second on the Ethereum network have attracted some projects, so the rise of several projects has recently attracted more and more attention. Attention. Emerging network.
The success of Ethereum has demonstrated the capabilities of the smart contract platform to the world, but its continued efforts have opened the door to protocols such as Polkadot, Solana, and Cosmos, which provide similar value propositions and the potential problems mentioned. Solution, which to a certain extent achieved the price and relevance of the growth over the past year.
In addition to Ethereum in 2021, Polkadot has become one of the most famous and successful L1 projects in the crypto field, thanks in large part to the interoperability and collaborative approach of the project, rather than the previous ones adopted by many people. The “Ethereum Killer” approach.
Partly created by Gavin Wood, he also played an important role in the creation of Ethereum. Cross-chain bridge In this way, projects and developers can choose the network that best suits their needs and easily transfer their protocols when necessary.
Polkadot’s multi-chain function is not limited to tokens, but can also transfer any data or asset type across chains, thereby helping to establish extensive interoperability between different blockchain networks.
Polkadot’s ecosystem is one of the largest and most active ecosystems in the space. With the launch of the protocol, the list of projects has rapidly expanded and hopes to obtain one of the limited parachain slots in it. Upcoming sidechain auction.
As shown in the figure above, the Polkadot ecosystem has rapidly expanded to include the main areas of the cryptocurrency ecosystem, including DeFi platforms, irreplaceable token protocols, Oracle and decentralized autonomous organizations.
The network also has a growing list of applications that facilitate interaction with the protocol, including various wallets supporting Polkadot’s DOT and Polkadot-based assets, as well as multiple web browsers including Polkascan.
The most popular and popular projects currently running on the Polkadot testnet include the DeFi ecosystem Acala Network and the Polkaswap decentralized exchange, both of which can now be tested and can be accessed using the Polkadot-js wallet browser extension.
Once the parachain auction ends and the project is launched on Polkadot, the launch of the network will be officially completed.Although there is No fixed date It has not yet been determined when the chain auction will start, but the excitement of DOT continues, which means its price will rise by more than 800% in 2021.
Comprehensive network functions are expected to be launched in a few weeks to months, and are beginning to receive mainstream attention. Many investors believe that Polkadot is in a good position to see further price growth and the adoption of the product as a key player in the future of interoperability. Block chain network.
According to the project’s website, Solana is a fast, secure and uncensored blockchain network that “provides an open infrastructure for global adoption.”
The project’s connection with the FTX cryptocurrency exchange and its CEO Sam Bankman-Fried (he was also involved in the creation and operation of the Serum decentralized exchange running on the Solana network) is very important to the agreement from a financial point of view. helpful. Support and media exposure.
In addition to these positive connections, the basic technology of the Solana network has attracted the attention of many projects interested in launching or bridging to its high-speed, low-cost environment.
In the past year, the rapid expansion of the Solana ecosystem began with a focus on decentralized finance, and has gained The success of serum, Users can interact with multiple wallets that support Solana, including Sollet, Ledger and Math Wallet.
Although most of the tools and supporting infrastructure on the network have been deployed for DeFi, the latest additions to the network (such as the decentralized music sharing and streaming protocol Audius) indicate that the protocol is beginning to branch and attract attention . Other types of projects interested in its functions.
The Solana protocol uses an innovative hybrid model that includes historical proof consensus and blockchain basic equity proof consensus, thereby improving the overall scalability of the network.
Recently, the network has discovered many New project started They adopted some strategies that were comparable to the activities and enthusiasm on the Ethereum network in 2017, including airdrops and imitation projects.
Although some people may think this is negative, it shows that the adoption and attractiveness of low-cost environments is increasing, and that Solana is a developer-friendly network.
These effects and many other factors have combined to promote the price of Solana (SOL) to rise by more than 3,200% so far in 2021.
Given that DeFi and other popular areas in the cryptocurrency field are still in their infancy, with the increase in global cryptocurrency adoption, Solana has a good ability to foresee the expansion of its ecosystem and the growth of token value.
Cosmos calls itself the “Internet of Blockchains” and consists of “an ever-expanding ecosystem of interconnected applications and services built for a decentralized future.”
The network originated from the Tendermint project, which is considered a “gateway to the Cosmos ecosystem” and was launched in 2017 through a token sale. The protocol uses the PoS consensus algorithm to allow token holders to delegate power to their tokens in order to maintain the flagship status of the project. The blockchain Cosmos Hub is safe, and at the same time it has obtained Cosmos (atom) Token.
After the Stargate update, the momentum of the project in February rose to a notch in February, including Communication between blockchains Protocol, which is the interoperability layer of the Cosmos blockchain.
IBC allows projects built using Cosmos software development kits such as Kava and Band Protocol to easily interoperate and bridge tokens on other blockchains on the Cosmos network, which currently hosts more than 240 applications and services.
The function of IBC will eventually be connected with other blockchain networks such as Binance Smart Chain to help improve the interoperability of the entire cryptocurrency ecosystem.
The transaction speed is 7 seconds and the average fee is $0.01. For users who escape the high fees of Ethereum, trading on the Cosmos network is a gratifying experience.
May 10 carry out The results of the Gravity decentralized exchange testnet trading competition show that the agreement is preparing to provide a solution similar to Uniswap at a small fee, which heralds the bright future of this evolving ecosystem.
The first-tier project is optimistic, but there are still some obstacles to overcome
The evolving ecosystem and planned development and integration of interoperability features are powerful indicators of the longevity of first-tier projects in the rapidly growing cryptocurrency space.
Potential threats to the success of L1 solutions include projects such as Polygon Fantom and Fantom, they provide cross-chain bridging to other more powerful networks and L2 solutions, thereby eliminating the expansion problems that plague the Ethereum network.
Although these threats are real, each network or protocol will eventually encounter its own unique challenges, which will hinder its function and open the door for competitors to provide better solutions.
Ethereum introduced smart contracts to the world and extended the range that L1 solutions can complete to the range that was previously impossible on Bitcoin.
The limitations of the original and current design of the Ethereum network opened the door to new L1 solutions such as Polkadot, Solana, and Cosmos, which became viable competition due to faster transaction times and established consensus mechanisms for proof of stake By.
The views and opinions expressed here are only those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading action involves risk, so you should conduct your own research when making a decision.