Best Layer-1 Projects for Cryptocurrency Investments
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Layer 1 blockchains are the base of the cryptocurrency ecosystem. Scalable blockchains like Ethereum, Solana, and Cardano have played a key role in the advancement of notable Decentralized Finance technologies like Non-Fungible Tokens and will keep doing so. Consequently, this sector of the cryptocurrency ecosystem has received billions of dollars from investors over the past five years.
There will surely be merits and demerits. Nevertheless, the volatile nature of the traditional Leyer-1 cryptos always attracts regulatory bodies in the United States and Europe. And, except for ETH and BTC, the Security Exchange Commission (SEC) is taking a hostile stance against all the famous Layer-1 chains.
Blockchains at Layer 1 (L1) are what really support emerging cryptocurrency marketplaces. With the first-ever functional Layer-1 protocol, Bitcoin set the bar high. But this came with more advanced and scalable chains like Ethereum, which have now become more advanced in their technology and design.
Besides the fact that Bitcoin is a very lucrative asset and Layer-1 project, other projects such as ETH (Ethereum), SOL (Solana), and ADA (Cardano) provide other varied benefits. Nevertheless, the future of other Layer-1 projects seems rather unclear. This is mainly because the competition between them is too tough, or because of some inherent weakness or growing pressure from regulatory bodies.
Three Leading Layer-1 Projects by Market Capitalization
Ethereum (ETH)
As the second-biggest blockchain by market capitalization, Ethereum is well-known to all crypto users. Initially, the Ethereum blockchain started as a PoW (Proof-of-Work) chain, developed by Vitalik Buterin and some other programmers.
Due to its outstanding support for smart contracts and decentralized applications that can address real-world issues, Ethereum is highly popular. Ether (ETH), the second-largest cryptocurrency by market cap, is the blockchain’s original asset.
Ethereum started a transition from Proof of Work to Proof of Stake (PoS) in 2020 due to growing network congestion and expensive transaction fees (gas). In April 2023, the last network update (the Merge) was finished.
BNB Chain (BNB)
The BNB Chain was launched in 2020 and was initially referred to as the BNB Smart Chain. It was launched by Binance, which is a crypto exchange and the biggest one at that. It is true that Binance itself is a centralized exchange, but the Binance Chain was created to be non-centralized, and its blockchain doesn’t require any permission.
Before being upgraded to a legitimate cryptocurrency on its native Layer-1 project, BNB was first designed as an ERC-20 token on the Ethereum network. People think of BNB Chain and BNB as rivals to Ethereum and ETH, respectively.
BNB Chain offers DeFi, smart contracts, and scalable Layer-2 chains, just like Ethereum. The Layer-1 protocol also employs a PoS, and validators who provide liquidity and execute transactions are rewarded with Binance Coin.
The BNB Chain is very famous in other countries apart from the United States. Nevertheless, this organization has had its own share of hard times due to regulatory action in the United States.
The lawsuit that was filed against Binance earlier this year (2023) by the SEC has had a great impact on their ability to render their services to customers in the United States. Depending on the result, both the exchange and the BNB chain may have to pay more to operate and comply in the US. Other nations have done the same.
Cardano (ADA)
From 2017 to 2020, many more chains were launched, and they have improved scalability due to their PoS agreement mechanism. All these Layer-1 projects became known as a close substitute for Ethereum. This is because the Ethereum blockchain is now being weighed down by elevated transaction fees and network congestion.
The native token is called ADA in honor of Ada Lovelace, a pioneer of computer programming, while Cardano is named for an Italian genius from the 16th century. Cardano was a top contender among these protocols for the moniker “Ethereum Killer.”
Conclusion
The SEC in the United States is monitoring all other Layer-1 blockchains save the main two, bitcoin and Ethereum. Each of these tokens has a security label on it. Unregistered securities sales and trades may result in regulatory sanctions.
The affected layer-1 blockchain tokens are no longer available for trade or sale on a large number of US-based exchanges and platforms. If you have already invested, we strongly advise you to exercise caution before investing in L1s other than Bitcoin and Ethereum.
