5 Ways To Evaluate Layer 1 Blockchains


There are many layer 1 blockchains on the market. Meaning that there’s stiff competitors on this area, which makes it additionally a wholesome setting. Keep in mind, solely the robust survive. However who can be that survivor?

There are a few methods to see which standards will make a distinction. Lucas, a senior intern at Bankless, wrote a Twitter thread about 5 indicators to guage blockchains. We predict they will be useful. So, let’s dive in and see what we have to look out for.

Bitcoin, Ethereum, Solana, Avalanche, Cosmos, Polkadot…

The Layer 1 panorama is aggressive.

How do you consider which one may come out on prime?

Listed here are the 5 questions you have to reply:

🧶

— Lucas 🔥_🔥 (@0x_Lucas) July 6, 2022

1. Safety

Layer 1 blockchains are settlement layers for worth. Their operate is to supply a safe and immutable ecosystem. On this case, what makes a blockchain safe is its consensus mechanism, which has superior cryptographic fashions. Then again, the immutable characteristic of a blockchain refers to its capability to keep away from modifications to confirmed blocks. 

Furthermore, you may measure blockchain safety in these two methods.

a) How A lot Does It Value to Assault the Community?

The one option to successfully assault a blockchain is to do it to 51% of its hash price. So it is smart if only some individuals management community nodes, it’s simpler for them to agree and assault it. That is almost certainly to occur in smaller networks.

Perceive extra about 51 % Assault.#BTC #ETH #wazirXwarriors #Blockchain #Assault pic.twitter.com/QOmotZdAQt

— Nikhil D Prince 🇮🇳 (@NikhilDPrince) September 21, 2020

One other well-known assault type is the Sybil assault. Right here, the attacker will flood a community with many pseudonymous nodes. These can affect a community.

b) How A lot Do Validators Obtain as Rewards, to Be Trustworthy Actors?

A validator is identical as a community node. They help in processing and validating new blocks. This enables them so as to add the blocks to the chain. On a PoW blockchain, this implies mining, on a PoS blockchain we consult with this as staking.

The reward quantity that validators earn varies between blockchains. Being a validator typically asks for a hefty funding. So, the reward should outweigh the funding. For instance, bitcoin at present has 12 mining swimming pools worldwide. See the image under:

Supply: BTC.com

2. Decentralization

In case anybody can not participate in validation or run a node, the blockchain is not going to be decentralized. In that case, you need to use AWS (Amazon Net Companies). It is a absolutely managed service. It lets you shortly create and deploy blockchain networks. Nevertheless, blockchains with this characteristic can’t be known as “decentralized”. 

Within the following image, you will notice what number of validators every layer 1 blockchain has. The extra nodes there are, the extra decentralized.

Supply: Stakers.data

3. Variety of Builders 

It is a essential query. If there are not any builders, there are not any apps. With out apps, there are not any customers. If a venture has no customers, there’s no worth.

So, devs are value their weight in gold, as Peter Schiff would say. That is the place the bucket stops when a blockchain doesn’t have builders who construct use circumstances. Ethereum has probably the most, with nicely over 200 energetic builders per thirty days in 2021.

The image under provides you an concept of what number of builders work on quite a lot of blockchains.

Supply: Twitter

4. Utilization

This have to be a very powerful a part of all. However not solely this, are customers prepared to pay for the companies rendered? In different phrases, will they pay for utilizing the apps? So, listed below are the gasoline charges.

The cheaper the gasoline charges, the extra standard a blockchain can be. Ethereum has its L2 options. All of the Ethereum killers have their distinctive options. Backside line is that everyone likes low-cost gasoline charges. Here’s a comparability chart of charges in layer 1 blockchains:

Supply: Twitter
5. Profitability

To see if a sequence is worthwhile, you have to examine two indicators.

  • How a lot is the blockchain paying for safety?

Chains use hash price, to safe their chains, which prices cash. So, this provides you an concept of how a lot they spend on safety. For example, BTC at present measures the hash price in Exahashes. That is quantillions of Hashes per second. That’s the following step up from quadrillions.

Supply: Buybitcoinworldwide

  • How a lot does a blockchain generate in income? 

There are some ways in which a blockchain can generate revenue. Right here they’re: 

  1. Develop software program options which have particular functions.
  2. Present a number of software program companies.
  3. Transaction charges generate earnings.
  4. Contract agreements.
  5. Speculating on cryptocurrencies.

Now, how helpful the final level is, is debatable. Nevertheless, a coin or token that appreciates, is, normally, good for a sequence.

Conclusion

Listed here are 5 good methods to seek out out if a layer 1 blockchain goes to make it. A blockchain have to be safe and decentralized. Moreover, it wants builders to construct apps and customers of the chain. Finally, a blockchain have to be worthwhile.

Nevertheless, this will depend on many components, for instance, gasoline charges. It is a vital query, although. Who builds throughout this bear market units himself as much as be among the many winners within the subsequent bull market.


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