Original Author: Natasha Che, Founder of Soundwise | Compiled by: 0x137
"If you have trouble figuring out which layer 1 blockchains are investment worthy, it’s not your fault. There’re so many L1 chains now & things are changing fast. Hard to keep up."
— Tascha (@TaschaLabs) December 26, 2021
This article compiles insights from Natasha Che’s analysis of major L1 and L2 blockchains, evaluating their growth potential and challenges. Public chains are categorized into 4 tiers based on adoption and network effects:
Key Tiers Overview
- Zero Tier: Ethereum (OG)
- First Tier: High-adoption L1/L2 (Solana, Avalanche, Terra, Polygon)
- Second Tier: Technologically sound but limited traction (NEAR, Cosmos, Harmony, etc.)
- WTF Tier: High-market-cap outliers with questionable fundamentals
Zero Tier: Ethereum
Ethereum’s evolving narrative faces scalability and competition challenges. While it explores sharding and L2 solutions, rivals like Avalanche and Cosmos already offer modular alternatives. Ethereum’s future hinges on overcoming fragmentation and delivering competitive L2 rollups.
👉 Explore Ethereum’s latest upgrades
First Tier: The Heavyweights
1. Solana
- Pros: Single-chain scalability, unified tokenomics, and high staking participation.
- Cons: Limited flexibility for private chains; DeFi ecosystem lacks standout apps.
- Outlook: Needs more successful dApps to sustain leadership.
2. Avalanche
- Pros: Subnet architecture, EVM compatibility, and strong DeFi adoption.
- Cons: Competition from late entrants like Near and Algorand.
- Quote: "Avalanche and Solana are the Android and iOS of Web3."
3. Terra
- Pros: UST-driven growth, mass-market products (Anchor, Mirror).
- Cons: Centralized around few protocols; replicable models.
4. Polygon
- Pros: ETH-compatible, rapid tech iteration.
- Cons: Few native innovations; reliant on Ethereum migrations.
Second Tier: Contenders
| Blockchain | Strengths | Challenges |
|---|---|---|
| NEAR | EVM Aurora, Octopus Network | Unproven DeFi momentum |
| Cosmos | Interchain vision | Low ATOM token utility |
| Algorand | Strong team | Needs killer dApps |
👉 Compare blockchain performance metrics
WTF Tier: High-Risk Plays
Avoid chains in the top 100 with no clear adoption or community buzz. Examples include obscure projects with inflated valuations.
FAQ Section
Q1: Which L1 has the best risk/reward ratio?
A1: Avalanche and Solana currently lead, but monitor NEAR’s growth.
Q2: Is Ethereum still a good investment?
A2: Yes, but diversify with L2 solutions and competitors.
Q3: Why is Terra’s growth centralized?
A3: Over-reliance on Anchor Protocol (~60% TVL dominance).
Final Thoughts
Crypto is dynamic—no chain guarantees perpetual loyalty. Reassess investments every 1–2 years, and avoid maximalist biases.