Ethereum‘s Dominance Wanes: A New Era of Web3 Competition
The era of Ethereum‘s undisputed dominance in the layer-1 (L1) blockchain space may be coming to an end. This is according to Alex Svanevik, CEO of data service Nansen, who spoke during a panel discussion at the LONGITUDE by Cointelegraph event. While Ethereum remains the most popular L1 network, its dominance has been steadily eroding, paving the way for a new wave of contenders.
While Ethereum still boasts a significant $52 billion in total value locked (TVL), representing 51% of cryptocurrency residing on blockchain networks, its share has dwindled from a peak of 96% in 2021. This decline is attributed to the emergence of faster, cheaper alternatives, particularly Solana (SOL).
Solana‘s Meteoric Rise: A Serious Challenger
Solana, known for its speed and low transaction fees, is emerging as a frontrunner in the race to become Web3‘s next leading chain. Svanevik highlighted Solana‘s impressive performance across key on-chain metrics: “Solana has overtaken Ethereum on most onchain metrics — active addresses, transaction volume, even gas fees.” While Ethereum retains its lead in TVL and stablecoin issuance, Solana‘s rapid growth is undeniable.
A Multi-Chain Future: The Rise of Alternatives
The rise of Solana is just one example of the broader trend towards a more decentralized and diverse L1 ecosystem. A multitude of smaller chains are vying for market share, driven by their unique functionalities, scalability, and community support. This multi-chain landscape presents both opportunities and challenges.
“It’s an open race between multiple L1s for becoming the go-to platform for trading and broader blockchain use,” said Svanevik. “We’re seeing smaller chains grow extremely fast, and a group of five or six chains emerging as leaders. It’s an exciting time.”
However, this rapid growth also brings with it a degree of volatility. Vardan Khachatryan, chief legal officer of trading platform Fastex, cautioned against the allure of short-term hype: “Unfortunately, what we see in reality is that chains become popular when they are the hype of that particular bull run, new coins, airdrops, etc., rather than sustained adoption.”
The evolution of the L1 landscape presents a fascinating dynamic for the Web3 ecosystem. Ethereum‘s long-held position as the dominant platform is being challenged by a wave of innovative alternatives. As the competition intensifies, the future of Web3 development will likely depend on a multi-chain approach, where different L1s cater to specific use cases and communities.
