Sustained competition with high prices and networking has led to low-one solutions such as Polkadot, Solana and Cosmos, which have become established competitors.
In bull and bear markets, prudent investors in cryptocurrency know that the primary focus should be on project life rather than jumping on every short price movement. As the crypto system expands and new sectors emerge, protocols that offer the greatest value to society have the greatest chance of long-term survival and price increases.
The purpose of this newsletter is to take a more thematic macro picture of niche sectors in the cryptocurrency market and identify projects that indicate they want to succeed in space.
It is not about the symbolic price; it's about the technology, the basics of the project, and how everyone should help take the industry to the next level.
In a recent interview with Cointelegraph, Élie Le Rest, a partner at ExoAlpha, a digital asset management firm, said: 'The trends in the industry and cryptocurrencies are large and will be sustained, but an idiosyncratic risk must be taken into account taken when portfolios are balanced. '
According to Le Rest, "the crypto market usually works on similar principles", which is a recurring trend that has been seen several times in its history.
With that said, let’s take a closer look at the current rotation of the market cycle taking place in the broader crypto market to gain a better understanding of where new money and market entrants are starting to draw their attention.
Layer One projects still attract users
Layer one is a term used to describe the most important underlying blockchain architecture of a network, while layer 2 is solution protocols that work on top of the underlying L1 blockchain and cannot function without the framework it provides not.
Bitcoin is by far the dominant L1 solution in terms of value, while the Ethereum network has been fundamental in reforming the crypto-market landscape over the past few years, thanks to smart contracts and the rise of sectors such as decentralized financing and intangible tokens.
While Ethereum has received a lot of attention when it comes to discussing smart contracts, a lot of work has been added recently, due to the high cost and low performance of the part. The second part of the Ethereum network draws plans to be built. new networks.
Ethereum's success has shown the world the potential for smart contracts, but ongoing battles have opened the door to policies such as Polkadot, Solana, and Cosmos containing information, similar to cost-effective solutions to fundamental development problems. price and accuracy over the past year.
Pika polka
In 2021, Polkadot will become a well-known and complete L1 operator in the crypto space in addition to Ethereum thanks to its work for integration and closer collaboration than ever before the Ethereum killer way by many people.,.
The Polkadot network was developed in part by Gavin Wood, who also played a key role in the development of Ethereum, and brought more connections than just opening the multi-integrated sharing system that the Ability to cross bridges to be able to function and network that best suits their needs and can be easily relocated if needed.
Multi-Chain Polkadot functionality is not limited to just arguments that can transfer data or assets to each chain, helping to create multiple combinations of separate block connections.
The Polkadot ecosystem is one of the largest and most active in the area, with rapidly growing plans developing out of the process, seeking one of the roles upon arrival after the jump.
As can be seen in the figure above, the Polkadot ecosystem has been further expanded to integrate major cryptocurrency ecosystem industries, including the DeFi platform, volatile sign protocols, oracles, and regulatory agencies.
The network also includes development lists that support process integration, including multiple portfolios that support Polkadot's DOT and Polkadot-based tools, as well as multiple network searches, including Polkascan.
Popular projects currently operating in the Polkadot test and approved for parachain benefits include the DeFi Acala Network ecosystem and the decentralized Polkaswap exchange, both of which are currently available for testing and can be used.
When the parachute competition is over and work is done in Polkadot, the network development will be completed. Although no major date has yet been set for the start of the strike campaign, congratulations to the DOT, which continues to evolve, meaning prices will rise by more than 800% in 2021
With the expectation that full networking capabilities will launch within a period of weeks per month and receive general attention, many investors think that Polkadot is well positioned to see further price increases and acceptance as a key player in the future of interoperability in blockchain networks .
Solana
Solana is a fast, secure and censorship-resistant network that, according to the project's website, provides an open infrastructure needed for worldwide acceptance.
Linking the project to the FTX cryptocurrency exchange and its CEO, Sam Bankman-Fried, who also had a hand in setting up and operating the decentralized Exchange Serum, which operates on the Solana network, was financially beneficial to the protocol. exposure.
In addition to these positive associations, Solana's core network technology has attracted the attention of a wide range of projects interested in starting or overcoming its fast, inexpensive environment.
Translation result
The rapid expansion of the Solana ecosystem over the past year has begun with a focus on decentralized financing and has been enhanced by the success of Serum, which allows users to access multiple Solana-backed wallets, including Sollet, Ledger and Math. Wallet.
Although most network support tools and infrastructure are targeted by DeFi, recent additions to the network, such as decentralized music sharing and the Audius broadcast protocol, indicate that the protocol is starting to branch out and attract attention from other types of projects. in his skills.
The Solana protocol uses an innovative hybrid model that consists of a history-based consensus, combined with the basic blockchain inventory-resistant consensus to increase the overall network scale.
Recently, the network saw a number of new projects using the same tactics that clashed activity and enthusiasm on the Ethereum network in 2017, including overhead points and copying projects.
Although some consider it negative, it shows the increasing acceptance and attractiveness of a free environment, and also shows that Solana is a developer-friendly network.
These effects, along with a host of other factors, have increased the price of Solana (SOL) by more than 3,200% so far in 2021.
While DeFi and other popular sectors of the cryptocurrency sector are still in their infancy, Solana is well equipped to watch the ecosystem expand and the value of the grant increases as cryptocurrency adoption increases.
Cosmos
Cosmos calls itself the 'blockchain internet' which consists of 'an ever-growing ecosystem of interconnected programs and services built for a decentralized future'.
The network comes from the Tendermint project, which is considered the 'gateway to the Cosmos ecosystem' and was launched in 2017 via a token sale. The protocol uses a PoS consensus algorithm that allows token holders to insert their coins to save the main project ship. blockchain Cosmos Hub secure while earning a paid return on Cosmos (ATOM) tokens.
The momentum for the 2021 project launched in February following the Stargate update, which includes the Inter-Blockchain communications protocol, an interaction layer for Cosmos blockchains.
With the IBC, projects built using the Cosmos software development package, such as Kava and Band Protocol, can easily collaborate and pass signals through other blockchains on the Cosmos network, which currently offers more than 240 applications and services.
The IBC capabilities will eventually be linked to other blockchain networks, such as Binance Smart Chain, contributing to interaction in the cryptocurrency ecosystem.
With a transaction speed of 7 seconds and an average fee of $ 0.01, transactions on the Cosmos network are a welcome experience for expensive Ethereum users.
The conclusion of the Decentralized Gravity Exchange e-commerce competition on May 10 indicates that the protocol is ready to offer Uniswap-like solutions at a fraction of the fees, hinting at a promising future for this growing ecosystem.
Low-cost projects are weak, but there are some hurdles to overcome
Growing ecosystems and planned development and integration of interoperability features are strong indicators of longevity for low-rise projects in the space of high-growth cryptocurrencies.
Potential threats to the success of L1 solutions include projects such as Polygon and Phantom, which provide bridge transitions to other more capable networks, and L2 solutions that eliminate scaling issues affecting the Ethereum network.
While these threats are real, eventually each network or protocol will face its own unique challenges that hinder its capabilities and open the door for competitors to provide a better solution.
Ethereum has introduced smart contracts to the world and expanded the scope of what can be done in L1 solutions beyond what was previously possible for Bitcoin.
Limitations on the original and current Ethereum network model have opened the door for newer L1 solutions such as Polkadot, Solana and Cosmos to establish themselves as stable competitors thanks to faster transaction times and a consensus mechanism already in place for the sake of the game.
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