Layer 1 Blockchain Comparisons

5 min readJun 9, 2021

Overview

In this paper I attempt to explore the similarities and differences between the most popular and newly emerging Layer 1 blockchains, mainly being Solana (SOL), Avalanche (AVAX), Fantom (FTM), Cosmos (ATOM) and the Binance Smart Chain (BSC).

What is a Layer 1?

A layer 1 blockchain is the technical term used to describe a main blockchain protocol such as Bitcoin or Ethereum. The term Layer 1 is derived from its relationship with Layer 2 scaling solutions which are secondary layer protocols designed to transfer some of the workload off the main chain to improve transactional throughput and speed of the Layer 1 main chain. A layer 1 is essentially just the parent chain or main network that applications run on.

Ethereum is the most popular and developed Layer 1 blockchain that hosts the largest number of decentralized applications (dApps) and attracts the greatest amount of capital. With the rise of DeFi, users have experienced exponentially increasing gas fees on the Eth network, requiring one to fork out upwards of a few hundred dollars for a simple swap at times. Unsustainable transaction fees and frequent network congestion has led to the rise of multiple prominent blockchains that aim to improve on Ethereum’s limitations, mainly being scalability. As more and more projects integrate and launch on various Layer 1’s, capital is increasingly being drawn away from Ethereum and into faster and more efficient blockchains that boast greater scalability capabilities. While I do not believe in the “Ethereum Killer” narrative, I do believe that Layer 1 blockchains that offer sub-second finality and high transactional throughput that are EVM compatible or able to integrate with the Ethereum network via bridges will be among the biggest beneficiaries as the ecosystem as a whole scales.

Core components of the Blockchain

With the emergence of new blockchain technology and ambitions, each attempts to build and outperform the other in some way. These usually boil down to 3 core concepts that Vitalik Buterin coin, the Blockchain Trilemma. The Blockchain Trilemma addresses the challenges developers face in creating blockchains that are 1) Scalable, 2) Decentralized, and 3) Secure without compromising one to improve the others.

Developers that aim to create new and revolutionary blockchains are often forced to make trade-offs in one area of the triangle, to further develop and improve on the other 2. The facets of the Blockchain Trilemma are:

Scalability: The ability for a blockchain system to handle an increasingly growing amount of transactions

Decentralized: Creating a blockchain system that does not rely on a central point of control

Secure: The ability of the blockchain system to operate as expected, defend itself from attacks, bugs, and other unforeseen issues

A great detailed post covering the blockchain trilemma can be found here: https://medium.com/certik/the-blockchain-trilemma-decentralized-scalable-and-secure-e9d8c41a87b3

Note** the Trilemma is just a model to conceptualize the various challenges facing blockchain technology. There is no law stating that the 3 aspects cannot be achieved. But to date, teams have worked on different approaches in an attempt to maximize decentralization, scalability, and security.

Blockchain Comparisons

Here I will attempt to explore the difference and/or similarities between competing blockchains using the most popular ones being, Ethereum (ETH), Solana (SOL), Avalanche (AVAX), Fantom (FTM), Cosmos (ATOM) and the Binance Smart Chain (BSC).

Relaying this information back to see how each blockchain performs in terms of scalability, security, and decentralization, we can see Solana is the most performant blockchain amongst the various leading smart contract-based platforms. Its novel use of a Proof of History (PoH) consensus mechanism allows the network to rapidly scale as technology improves while continuing to offer sub-second finality times with low transaction costs. Solana however is the only blockchain to not boast EVM compatibility, requiring developers to use a completely different programming language called Rust, limiting interoperability with other ecosystems (Solana does have a bridge with ETH called Wormhole).

Fantom, with its novel asynchronous byzantine fault tolerant (aBFT) Proof of Stake (PoS) consensus mechanism is also another platform built to scale and rivals Solana in terms of speed and throughput. Fantom recently underwent a big mainnet upgrade in early May which spurred users over to its network and as of recently, has been gaining a lot of traction. A recent DAO proposal to lower validator requirements also passed which should result in more validators entering the network and further improving decentralization. (Only 1m FTM tokens required vs previous 3.75m). With its EVM compatibility and support from one of DeFi’s most prominent developers, Andre Cronje, Fantom could be one of the most undervalued blockchains.

Avalanche, another highly performant blockchain, currently has the most active development within its ecosystem among any other project. In the 8 months since its mainnet launch, Avalanche has seen an impressive 206 projects come online, with many more in the pipeline as developers look to integrate and build out the ecosystem as the alternative Layer 1 narrative continues to gain traction.

Conclusion

With unique and novel proposed solutions to common blockchain problems emerging, the competition among Layer 1 blockchain protocols has become increasingly fierce. I believe the ones that will be able to create a multi-asset, cross-chain ecosystem that boasts a simple and easy-to-use interface for the average crypto user will perform the best over the long run, whether that be one that clearly dominates or a combination of multiple.

Sources

https://solanabeach.io/validators

https://ftmscan.com

https://explorer.avax.network/validators

https://hub.cosmos.network/main/validators/overview.html

https://sinoglobalcap.medium.com/why-we-are-bullish-on-solana-c2be784cfdf6

https://medium.com/avalanche-hub/comparison-between-avalanche-cosmos-and-polkadot-a2a98f46c03b

https://medium.com/certik/the-blockchain-trilemma-decentralized-scalable-and-secure-e9d8c41a87b3

https://www.securities.io/investing-in-fantom-ftm-everything-you-need-to-know/

https://www.securities.io/investing-in-avalanche-avax-everything-you-need-to-know/

https://www.securities.io/investing-in-solana-sol-everything-you-need-to-know/

https://www.securities.io/investing-in-cosmos-atom-everything-you-need-to-know/