Layer 1s Ethereum, Solana Bounce Back After Shaky Start to 2022

Key Takeaways

  • Layer 1 chains appear to be staging a recovery.
  • Ethereum, Solana, and Avalanche are some of the top performing assets over the past 24 hours.
  • As macroeconomic conditions are still uncertain, it may be too soon to call the current price movement the beginning of a recovery.

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Several Layer 1 chains have rallied as the wider crypto market appears to be staging a recovery. 

Layer 1s Climb Higher

Layer 1 chains are leading the crypto market.

After dipping to their lowest levels in over six months, several Layer 1 chains appear to be staging a recovery. 

Ethereum has continued producing higher highs on the local timescale, reaching a price of $2,868 earlier this morning. The second-biggest crypto asset is now trading at its highest levels since crashing over 35% in mid-January. Ethereum is quickly approaching the psychological price barrier of $3,000, which is likely to be the next big test for the asset. 

ETH/USD chart. Source: CoinGecko

Solana is another top performer, putting in an 11% gain over the past 24 hours. Despite SOL falling 13.5% following the $322 million hack on one of the chain’s major bridges, the token has shown a strong recovery. Other recent news, such as Solana Labs CEO Anatoly Yakovenko’s proposition to introduce a fee market on Solana may be acting as a bullish catalyst for the chain. Solana is currently trading at $105.55, up 29% from its January low of $81.41.

Not to be left behind, the Ethereum-compatible Layer 1 chain Avalanche is also retesting higher levels. The AVAX token has risen a modest 8% on the day and appears to be taking another shot at holding above its current resistance level of $70. Avalanche has breached this price point three times in the past two weeks but has been unable to hold onto its gains. 

While Layer 1 chains are enjoying positive price action today, the wider crypto market still appears to be at the whim of macroeconomic conditions. Bitcoin and Ethereum’s correlation to the U.S. stock market is at its highest level in over four years, as fears over the Fed’s proposed rate hikes loom. 

Elsewhere, tensions between the U.S. and Russian governments over a possible Russian invasion of Ukraine are also putting a damper on global markets, including crypto. With these unknown variables still in play, it’s likely too early to decisively call today’s price action the beginning of a crypto market recovery.

Disclosure: At the time of writing this feature, the author owned ETH, SOL, and several other cryptocurrencies. 

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Fantom, NEAR Ride Layer 1 Boom Into 2022

Key Takeaways

  • Fantom and NEAR are soaring amid high demand for Layer 1 coins.
  • The recent rise follows the SOLUNAVAX trend that dominated the second half of 2021.
  • An upcoming Fantom project involving Andre Cronje and Daniele Sestagalli may explain FTM’s recent rally.

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Fantom and NEAR are two of the latest Layer 1 coins to rally. 

Crypto Layer 1 Boom Continues 

Layer 1 hype isn’t dead yet. 

Several smart contract blockchains have seen their native tokens rally this week despite a decline among major assets like Bitcoin and Ethereum. Two of the latest winners are Fantom and NEAR Protocol. 

FTM has jumped 15.5% in the last 24 hours, currently trading at $2.88. NEAR, meanwhile, is up 16.1%, trading at $16.91. The rise comes amid a bullish spell for both assets: FTM is up 109.3% in the last 14 days, while NEAR has gained 97.7% in the same period. Other Layer 1 assets like Oasis Network, Celo, and Harmony have also risen, though their gains have been less significant. Fantom has a market cap of $7.3 billion, while NEAR’s is around $10.1 billion. 

Interestingly, the popular DeFi builders Andre Cronje and Daniele Sestagalli have been teasing plans for a new Fantom-based product on Twitter over the last few days, which may have contributed to Fantom’s sudden jolt. “What’s frog nation’s multisig address on Fantom? Asking for a friend…” Cronje wrote Monday. The Yearn.Finance founder had previously confirmed that he was planning to “deploy a new experiment” on Fantom in January. Following Cronje’s tweet, Sestagalli warned his followers that “FTM season is coming.” Crypto enthusiasts often refer to “seasons” due to the speed at which the space moves: late 2021 saw a so-called NFT season, a dog coin season, and a Metaverse season in the space of a few months as traders rotated between different niches in the crypto ecosystem. 

The “Frog Nation,” meanwhile, refers to a community that has formed around Sestagalli’s Abracadabra.Money, Wonderland Money, and Popsicle Finance, three innovative projects that place emphasis on preserving decentralization in DeFi. Many have categorized this new suite of products under a new movement called “DeFi 2.0” alongside the likes of Tokemak and Olympus DAO. 

Although both Fantom and NEAR have seen substantial growth over the last year, they were overshadowed by Solana, Terra, and Avalanche—three Layer 1 networks that have exploded in recent months thanks to rapid growth in their respective DeFi ecosystems. While Ethereum was weighed down by its expensive gas fees throughout 2021, many market participants turned their attention to the so-called “SOLUNAVAX” narrative, a reference to SOL, LUNA, and AVAX. Solana was the first of the three to enjoy its own “season” as it went parabolic, followed by Avalanche, and finally Terra. 

While the market looked shaky throughout much of December, 2022 has kicked off with several lower cap coins outperforming major assets. Following a weak end to 2021, both Bitcoin and Ethereum have both seen a slight tumble in the last 24 hours, pushing Solana, Terra, and Avalanche further into the red. However, based on the recent performance of Fantom and NEAR, it looks like traders are set on making yet another Layer 1 rotation. 

Disclosure: At the time of writing, the author of this feature owned ETH, FTM, and several other cryptocurrencies. Andre Cronje is an equity holder in Crypto Briefing. 

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Beginner’s Guide: How to Use Terra

Key Takeaways

  • While still comparatively small, Terra’s DeFi ecosystem boasts one of the most innovative decentralized applications in crypto.
  • Terra Station is the go to wallet for users wishing to participate and interact with the network.
  • Staking LUNA currently yields over 7% annualized, and the staked asset, bLUNA, can be utilized as collateral for farming yield farming via projects like Anchor.

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Terra is a smart contract blockchain protocol and payments-focused financial ecosystem powered by algorithmically governed, scalable, and decentralized fiat-pegged stablecoins. Terra’s ecosystem offers an innovative suite of DeFi products, making the protocol worthy of exploration. 

About Terra

Launched in January 2018, Terra is a scalable, high-throughput blockchain protocol built on the Cosmos SDK. It uses the Tendermint Delegated-Proof-of-Stake (DPoS) consensus mechanism to guarantee sufficient decentralization while offering low-cost transactions with fast settlement speeds. What sets Terra apart, however, isn’t the high performance of the underlying technology but the thriving ecosystem of innovative and unique user-centric applications built on it.

Decentralized applications like Anchor, Mirror, Pylon, Mars, and Spectrum have unlocked a world of investing and yield farming opportunities on Terra, attracting hundreds of thousands of users and a notable number of developers to the protocol. Additionally, after completing its recent Columbus 5 upgrade, Terra became interoperable with blockchains like Cosmos, Solana, and Polkadot, making its growing ecosystem of DeFi applications more accessible to participants on these blockchains.

Cross-chain interoperability also means more utility and higher demand for Terra’s flagship product—the decentralized, algorithmically governed UST stablecoin. Through bridges like Wormhole and TerraBridge, users can easily move UST between Terra and Ethereum, Binance Smart Chain, and most other blockchains, and use it for various purposes across the multi-chain world.

Creating and Funding a Wallet

Engaging with the Terra ecosystem requires setting up a wallet.

While there are several options to go with, arguably the best one is the Terra Station wallet created by Terraform Labs. It is a non-custodial wallet available as a mobile app, browser extension, and native Windows and iOS application. It offers a similar user experience to MetaMask, albeit it offers fewer features like in-wallet token swaps or NFT support.

Terra Wallet
Source: Terra Station

Once you’ve downloaded Terra Station from Terra’s official website, follow the few simple steps to create a new wallet. Creating a backup of your Seed Phrase and storing it in a secure, preferably air-gapped environment is paramount here. This is because the Seed Phrase gives you—or anyone else—access to your private key, which in turn provides access to your funds. It’s therefore essential to write down the Seed Phrase on a piece of paper and store it in a safe place, or use a more durable solution such as titanium. 

After creating a wallet, you’ll need to fund it with some LUNA tokens. LUNA is Terra’s native staking token used for governance, mining, and a volatility absorption tool for Terra stablecoins that captures rewards through seigniorage and transaction fees. You need LUNA in your wallet to pay for transaction fees. The easiest way to get LUNA is to buy it through a centralized exchange like Binance, Coinbase, Phemex, or FTX. After you’ve done that, simply withdraw the tokens to your Terra Station wallet address, which can be found at the top of the browser extension or your wallet app.

Alternatively, those with funds on Ethereum can purchase a wrapped version of Luna (wLUNA) via Uniswap and transfer it to the Terra Station wallet via the Terra Bridge.

Terra Bridge
Source: Terra Bridge

 Navigating the Terra Bridge is quite intuitive: connect your Etheruem wallet to Terra Bridge, select the Ethereum network in the “from” dropdown menu on the left-hand side of the app, choose Terra on the right-hand side, select LUNA in the “asset” dropdown, set the amount, paste your Terra Station wallet address in the “destination address,” and click next. Once you’ve approved the transaction in your MetaMask, Terra Bridge will automatically swap wLUNA for LUNA and deposit it to your wallet address on the Terra network. If you have funds on Solana, you can go through the same process to move funds only using the Wormhole Bridge.

Exploring Terra 

So you’ve created and funded your wallet, and now you’re wondering where to next. 

The first thing you might want to do is put the LUNA you’ve purchased to work by staking it on Terra Station. As Terra is a delegated Proof-of-Stake-based protocol, it relies on a set of 130 validators to verify, clear transactions, and secure the network by running full nodes and committing new blocks to the blockchain. In return for their service, validators and delegators can earn a steady stream of revenue from transaction fees and seigniorage, which currently amounts to roughly 7.07% for delegators and 7.47% for validators. 

To become a validator on Terra, users must either bond their LUNA tokens for a minimum of 21 days and be amongst the top 130 largest stakers, or have other users delegate their LUNA stakes. This creates a way for everyone to put their LUNA tokens to work by staking or delegating them to validators, who will then share a portion of the revenue they make with their delegators.

Terra Staking
Source: Terra Station

To delegate LUNA, navigate to Terra Station and select “Staking” in the menu on the left side of the page. When you do this, a new dashboard showing a list of available validators will open. After you select the validator of your choice by clicking on their name, another dashboard will open, where you’ll be able to delegate your LUNA by clicking on the “delegate” button.

From here, you’re all set, and your bonded LUNA (bLUNA) will automatically accrue yield. However, if that’s not enough and you want to do more, you can use your bLUNA tokens on the Anchor protocol to earn even more yield by borrowing UST. Anchor pays you to borrow UST with its native ANC token, and the UST can be deposited on the same protocol to earn a fixed 19.49% interest rate. 

Borrowing and lending on Anchor is simple. Navigate to the “borrow” page of the app, click on the “borrow” button, set your desired loan-to-value ratio and deposit your bLUNA collateral. Once you’ve done this, you’ll have UST in your wallet, which you can use for whatever you wish, including purchasing other Terra-native tokens on TerraSwap, investing in synthetic stocks or providing liquidity on Mirror, or farming on Spectrum Protocol.

Getting familiar with Terra while the ecosystem is still relatively young and developing can give users a serious edge over the wider market. Some of its decentralized applications like Anchor and Mirror have become successful and big enough to rival even some of Ethereum’s DeFi “blue chips.” Terra experienced a breakout period in 2021, entering the top 10 cryptocurrencies by market cap as LUNA soared to above $100 for the first time. With protocols like Mars, Spar, Loop Finance, and Alice expected to launch in early 2022, Terra is well-positioned to continue on its trajectory and see increased adoption in the future.

Disclosure: At the time of writing, the author of this feature owned ETH and several other cryptocurrencies. 

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Algorand, NEAR Rally as DeFi Activity Increases

Key Takeaways

  • Algorand and NEAR are soaring while Bitcoin and Ethereum lag.
  • A liquidity mining program on Algorand’s Algofi is bringing in new users.
  • The strong price action on these networks appears to be fueled by increased DeFi activity.

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The alternative Layer 1 networks Algorand and NEAR have surged as new users jump into their DeFi ecosystems.

Alternative Layer 1s Rally

Algorand and NEAR’s native tokens are outpacing the rest of the market.

Algorand led the crypto market Thursday, rising 17.6% while Bitcoin and Ethereum lagged. The ALGO token bounced from a low of $1.43 late Wednesday to post a strong recovery, trading at $1.68 at press time. 

ALGO/USD chart. Source: CoinGecko

Algorand’s solid price action is likely fueled by the launch of a $3 million liquidity mining program to drive DeFi adoption on the network. Algofi, a lending and borrowing protocol similar to Ethereum’s Aave, has partnered with the Algorand Foundation to distribute ALGO token rewards to early users. 

DeFi on Algorand is growing quickly. The network’s first decentralized exchange, Tinyman, has already secured over $40 million of total valued locked and sees daily trading volumes of over $5 million. Additionally, an Ethereum and Bitcoin bridge called Algomint launched its own liquidity mining program last week, incentivizing users to bridge their funds onto the network. 

NEAR Protocol is another standout today, with its native token climbing 10% over the past 24 hours. Like Algorand, NEAR has also seen DeFi activity pick up on its network. According to data from DeFi Llama, the total value locked on NEAR has increased 19.24% over the past week to more than $133 million. 

NEAR also received a boost earlier in December when it partnered with fellow Layer 1 network Terra, kicking off its current rally. The partnership means that Terra will deploy its UST stablecoin to the NEAR and Aurora ecosystems, opening up new DeFi strategies.

While activity on Algorand and NEAR is still low compared to more prominent Layer 1s such as Avalanche and Solana, DeFi on these networks is growing fast. Investors are likely speculating that these alternative networks will see increased valuations following the explosion of Layer 1 chains earlier this year in August. Only time will tell if this Layer 1 trend will continue into 2022. 

Disclosure: At the time of writing this feature, the author owned LUNA, SOL, and several other cryptocurrencies. 

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Here’s How High Ethereum (ETH) Can Soar in 2022, According to Crypto Analyst Michaël van de Poppe

Cryptocurrency analyst and trader Michaël van de Poppe is plotting out new price targets for Ethereum (ETH) after the leading smart contract platform experienced major growth during 2021.

In a year-end strategy session, Van de Poppe tells his 158,000 YouTube subscribers that Ethereum has not only held up well against the number-one crypto Bitcoin (BTC) but might very well become the focus of the next major crypto cycle.

The crypto strategist thinks widespread market adoption means Ethereum’s market cap could overtake that of Bitcoin, an event known as “the flippening.”

“We might be looking at a flippening of Bitcoin because it’s not only about Bitcoin anymore, it’s about the entire ecosystem.

One of the things that has changed is Ethereum… is being used in decentralized applications, so DEXs [decentralized exchanges] are using Ethereum mostly to trade their assets, which we’re using with Uniswap and SushiSwap.

The actual adoption of the Ethereum ecosystem has been growing relatively fast.

We also know from the NFT [non-fungible token] space that if you want to mint your NFTs you use Ethereum.”

Van de Poppe notes Ethereum’s overall growth and demand despite the network’s high gas fees.

Most importantly, ETH has proven more resilient than Bitcoin during the recent market correction dating back to November.

“Ethereum has been showing way more strength than Bitcoin in the recent correction, which means that the strength in Ethereum is higher than in Bitcoin.

Meaning that potentially this cycle is not anymore about Bitcoin.

It is about layer-1s and Ethereum that are producing the first layer fundamentally for the entire ecosystem, because you need platforms and layer-1s to actually succeed in this entire market space.”

Moving on to his 2022 price predictions, the analyst thinks Ethereum could be on the cusp of explosive growth that mirrors Bitcoin’s action back in 2017. He says ETH could even top $20,000.

“We could be using Fibonacci extensions to derive the next target points, in which we can be saying, ‘Based on the previous low of the cycle, previous high, and we’re reaching somewhere around the 3.618.’

In that case, we could also say, ‘Previous high, previous low,’ we can start targeting ourselves numbers where Ethereum might be topping out, which as a matter of fact target numbers around $12,600, $17,300, and potentially even $22,000.”

Source: Michaël van de Poppe/YouTube

Van de Poppe concludes his upside price prediction by saying that ETH must hold a key support level.

“The crucial part here is that Ethereum has to hold a green block. If that happens, the trend continues and we can continue running the entire cycle.”

The price of Ethereum is currently down 8.94% to $3,811. ETH began 2021 at $730, hit a mid-year peak in May of $4,182 before falling to a summer low of $1,795 in July. The token has since seen choppy upward price action but remains 422% higher for the year.

In comparison, Bitcoin grew 63.75% during 2021. BTC went from a starting point of $29,352, lurched to an April peak at $63,576 before crashing to a summer low of $29,971 in July.

The leading crypto fought its way to another new all-time high above $69,000 in November but has since tumbled to below $47,000 amid choppy price action. Currently, it’s down 8.74% to 48,065.

Van de Poppe concludes his Ethereum discussion by pointing out what recent project upgrades plus the upcoming rollout of Ethereum 2.0 could mean moving forward.

“Ethereum is the one to watch.

Potentially we are seeing an Ethereum cycle instead of a Bitcoin cycle.”


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Terra Touches $100 Following Solana and Avalanche Rally

Key Takeaways

  • Terra’s LUNA token hit an all-time high of $100 today.
  • LUNA’s bullish price action follows similar moves from Solana and Avalanche, two other Layer 1 projects.
  • The three tokens, collectively dubbed “SOLUNAVAX” by crypto traders, have soared during 2021.

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Amid ongoing hype for Layer 1 blockchains, Terra’s LUNA has hit $100 for the first time. The asset’s price action follows a similar trajectory to Solana and Avalanche, which have both soared in recent months.

Terra Hits $100

Terra is benefiting from the Layer 1 hype.

The stablecoin-focused blockchain is home to one of the fastest-growing DeFi networks, with a variety of popular apps including Anchor Protocol, Mirror Protocol, Terraswap, and Astroport. Its native token, LUNA, is currently leading a Christmas rally in the market. It hit $100 for the first time today after rallying over 50% in the last week. It’s since cooled off, trading at $96.53 at press time.

LUNA’s upward move comes amid a period of bullish momentum in the market following Bitcoin’s rebound from $45,700 to $51,200.

Its native LUNA token is leading the ongoing “Santa Rally” on Christmas eve. LUNA’s all-time high comes when the altcoin market is slightly recovering due to Bitcoin rebounding to $51,200 after dipping to $45700 earlier this week.

Terra Luna
Source: TradingView

On Monday, LUNA broke prior resistance levels at around $75 on the daily timeframe. LUNA has since met psychological resistance at $100.

Several recent developments have served as catalysts for LUNA’s bullish momentum. While LUNA has risen, the total value locked on Terra has crossed $21 billion, helped in part by the Astroport exchange’s ongoing token lockdrop. Terra now holds the second highest total value locked in DeFi, trailing only Ethereum.

LUNA’s price trend has closely followed those of two other Layer 1 coins: Solana’s SOL and Avalanche’s AVAX. Both SOL and AVAX have also experienced a parabolic rally in the second half of the year, posting new all-time highs in November. Ethereum’s soaring gas fees, generous token incentive programs, and the market’s growing confidence in a multi-chain future can all explain the rise among Layer 1 coins.

Source: TradingView

While several Layer 1 networks have gained traction in recent months, Terra, Solana, and Avalanche have been three of the strongest performers in the final two quarters of the year. The trend has led several traders to coin the term “SOLUNAVAX” in reference to the market strength and rotations they have made between each coin.

Of the three, LUNA is the biggest gainer of 2021. According to data from CoinGecko, it was trading at $0.65 on Jan.1, which means it’s posted a 14,670% gain. Solana’s SOL has risen 7,800%, while Avalanche’s AVAX is up 3,300% year-to-date.

Still, all three coins have outperformed the two leading cryptocurrencies by some distance. Bitcoin is up around 76% this year, while Ethereum has jumped 446%.

Disclosure: At the time of writing, the author of this piece owned ETH, SOL, and other cryptocurrencies.

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Terra Leads Layer 1 Resurgence Targeting $100

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Terra is continuing to trend higher amid a resurgence of Layer 1 chains. NEAR, Fantom, and Cosmos are also showing strong recoveries after trending lower since the beginning of December. 

Terra Targets $100

Layer 1 season may be back for a second round.

Several Layer 1 chains have posted double-digit gains today following a wider market recovery. Terra has led the charge, climbing higher after a series of new all-time highs. The chain’s native LUNA token is closing in on the $100 milestone, reaching a high of $97.90 this morning according to CoinGecko. 

LUNA/USD chart. Source: CoinGecko

As a result of Terra’s continuing rally, the network’s DeFi ecosystem recently overtook Binance Smart Chain to become the second-biggest behind Ethereum. Terra’s native UST stablecoin has also outpaced MakrDAO’s DAI token, becoming the largest decentralized stablecoin in existence.

Elsewhere, other Layer 1s are starting to rally. NEAR appears to have broken from its downtrend, surging 22% over the past 24 hours. Yesterday’s news that Terra is partnering with NEAR to bring its UST stablecoin to the NEAR and Aurora ecosystems is likely the main catalyst behind the rise. 

Fantom has also moved higher, up 13.3% on the day. The FTM token has held onto its bullish momentum despite Fantom DeFi project Grim Finance suffering a $30 million hack over the weekend. 

Other base-layer blockchains such as Cosmos have also gained pace today. Like NEAR, the ATOM token appears to have broken out of its December downtrend, climbing 11%. Osmosis, a decentralized exchange for IBC connected coins on the Cosmos SDK, has seen similar appreciation, gaining 10.6%, indicating a wider recovery in the Cosmos ecosystem. 

Several more Layer 1s such as Solana and Avalanche are also looking strong heading into the end of the year. However, whether the current upward momentum will be able to continue remains uncertain. Layer 1 chains did well during August and September as Bitcoin recovered from its summer lows. If Bitcoin starts heading lower, a similar downward move from Layer 1s could follow. 

Disclosure: At the time of writing this feature, the author owned LUNA, SOL, and several other cryptocurrencies. 

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Layer 1 Coins Lead Market Rally After Fed Meeting

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Avalanche, Fantom, Kadena, Terra, and other Layer 1 coins have posted double-digit gains today. 

Layer 1 Projects Rally on Fed Meeting 

Layer 1 projects are leading the market again. 

According to data from CoinGecko, Avalanche is up 15.4% today, Terra has jumped 10.1%, and Solana has risen 9.9%. Other lower cap projects like Fantom, Elrond, and Arweave have also rallied, with each recording double digit gains. Kadena, a Proof-of-Work Layer 1 project, is outperforming all of them after gaining 21.6%. 

The two largest cryptocurrencies, Bitcoin and Ethereum, are also trading in the green, though their jumps have been less significant. Still, the market is showing positive momentum after a relatively sluggish December, likely because of Wednesday’s Fed meeting. 

The U.S. central bank hosted its final Federal Open Market Committee of the year yesterday, where it announced that it anticipates three interest rate hikes in 2022. The Fed Chair Jerome Powell also revealed that tapering would be accelerated to $30 billion a month, rather than the current $15 billion. Tapering is a strategy central banks use to reduce the effects of quantitative easing. It focuses on interest rates and slowing asset purchases, topics that have been increasingly at the forefront of investors’ minds since the beginning of the Covid pandemic. The Fed’s balance sheet has doubled from $4 trillion to $8 trillion since January 2020, while exuberant money printing has acted as a catalyst for assets to soar in value. Stocks like Tesla and Apple have hit record highs over the last year, and crypto assets have also benefited from the macroeconomic environment. 

Many celebrated investors such as Paul Tudor Jones have sought refuge in Bitcoin as an inflationary hedge since March 2020, and when it was revealed that inflation was at a 31-year high in early November, the leading crypto asset rallied to $69,000 for the first time. However, the market has looked shaky over the last few weeks. Fears over the Omicron variant have sent fear through global markets, with crypto struggling to post new highs since the new Covid strain was discovered. Many crypto assets have been trading sideways for weeks. 

Investors are indicating that the outcome of the Fed meeting is bullish for crypto, but it’s not only digital assets that have surged. The Dow Jones has also risen over 200 points, while the Nasdaq Composite Index is also up 2%. 

Disclosure: At the time of writing, the author of this feature owned ETH, FTM, and several other cryptocurrencies. 

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Layer 1 Projects Rocked by Market Selloff

Key Takeaways

  • Several Layer 1 coins are down today amidst a wider market selloff.
  • Measures of sentiment in the market suggest that fear may be peaking.
  • It is possible that factors and conditions in the world at large may be contributing to the downward price momentum.

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Many popular Layer 1 projects in the top 100 are down today amidst an overall market selloff. While the cause is unclear, possible factors include a new Covid variant, fears over Chinese debt obligations, and uncertainty regarding the Federal Reserve’s plans for bond purchases. 

Crypto Markets Shaken

Several Layer 1 protocols have suffered losses during a wider selloff that has shaken crypto markets over the weekend.

The big losers of the week are Cosmos, Fantom, Elrond, and Harmony. At the time of writing, Cosmos’s ATOM was down 15% on the week, Fantom’s FTM was down 29%, Elrond’s was EGLD down 31%, and Harmony’s ONE was down 35%.

While many coins are down 15-30% on the week, the notable exception is Terra’s LUNA. LUNA is up around 19% on the week despite its 6.5% correction today. Furthermore, much of the market seems to be bleeding against ETH, which is currently holding above $4,000 despite an overall drop of roughly 4% on the week. 

It is not just Layer 1 protocols that have suffered the past few days. Even metaverse tokens like MANA and SAND, which have been performing quite well recently, are each down roughly 27% over the past week, and the total cryptocurrency market cap has fallen to $2.25 trillion from nearly $3 trillion in November. The commonly cited Fear and Greed Index places current sentiment at an “Extreme Fear” level of 16 (out of 100), dropping below last week’s rating of 33. Last month, the indicator showed a greedy market at 71. 

While many may be perplexed by the state of the current cycle, it appears that there are many possible non-cryptocurrency-specific reasons for the fear in the market. In recent months, negative crypto-specific catalysts, such as regulatory concerns, have seemed particularly pertinent; however, the current downtrend may have more to do with other externalities originating from outside of the crypto space itself. 

While reasons for the selloff remain uncertain, likely contenders could be fear surrounding the new Omicron Covid variant, as well as renewed uncertainty surrounding China’s massive real estate developer Evergrande. There also appears to be uncertainty regarding the Federal Reserve’s timeline for tapering its bond purchases. 

Disclosure: At the time of writing, the author of this piece held ETH, LUNA, and several other cryptocurrencies. 

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Ethereum killers or just pretenders? But Ether remains king for now

The term “Ethereum killer” is beginning to pick up the pace once again in the cryptocurrency markets as the native tokens of several competing blockchain networks are posting significant gains during September. For any alternative network to be considered as a part of this category, it needs to have one essential feature that serves as the backbone of the Ethereum network: smart contracts.

Keeping this in mind, the most prominent blockchain networks by market capitalization that usually come under this purview are Cardano (ADA), Solana (SOL), Binance Smart Chain (BSC), Polkadot (DOT), and Terra(LUNA). The native tokens of these networks have been on an absolute tear this year. Most recently, Solana (SOL) has been in the spotlight after the bulls carrying its rally continued even in the face of a marketwide selloff on Sept. 8 that brought Bitcoin back below the $50,000 mark.

SOL has more than doubled in price over the last 30 days but has since declined to trade around the $155 mark. The token has posted over 300% gains over the last 90 days with an extraordinary 7,871.16% gains year-to-date (YTD). In comparison, these gains dwarf ETH’s 63.77% 90-day gains and 385.36% YTD gains. Ethereum’s market capitalization is currently at around $400 billion which is nearly 9 times SOL’s $47 billion market cap.

Ethereum killer tokens post gains

Several networks have shown promising prospects and gains. Cardano recently completed its Alonzo hard fork that launched Plutus-powered smart contracts on the network that would allow it to host decentralized finance (DeFi) and Web 3.0 applications. Even though its native token, ADA, showed a lackluster response to this milestone in the project’s roadmap, it has still experienced a substantial rise this year. ADA trades at around $2.40, posting 74.16% gains in the last 90 days and 1,273.86% gains YTD.

Marie Tatibouet, chief marketing officer at — a cryptocurrency exchange — outlined to Cointelegraph the twofold reasons that started the Ethereum killer movement. Speaking about the network’s lack of scalability, she said, “As things stand, Ethereum is particularly slow and can only do 15-25 transactions per second with very low throughput.”

She further mentioned how high demand and low throughput lead to the next reason, bloated transaction fees that “are a bit of control.” This could go on to have an impact on the ongoing boom seen in the nonfungible token (NFT) market. She said, “Do you really want to pay half an ETH in gas fees just to mint a JPEG?”

On this, Solana Labs spokesperson told Cointelegraph, “Minting an NFT at peak levels can be very costly. Recently, a minting fee hit 3 ETH, which is more expensive than many actual NFTs. Solana offers faster speeds and lower prices than Ethereum, which is really what it comes down to with market shares.”

Another Ethereum killer prospect whose token has witnessed an outstanding performance this year is Terra. Its native token LUNA posted over 500% gains in the last 90 days and 5,477% gains YTD, and is currently trading at around $36.

Such significant gains often put a token into the spotlight due to its underlying platform and technology getting more users and increasing adoption rates. Cointelegraph spoke with Lex Sokolin, global fintech co-head and head economist at ConSensys — a blockchain technology company backing Ethereum’s infrastructure — who stated:

“DeFi protocols are applications that grow with the number of users and capital. It is likely that DeFi will be multichain and multipurpose, though the largest amount of liquidity will remain secured by Ethereum. However, expanding and incorporating other capital sources through bridges and exchanges is a net good for the ecosystem.”

Ethereum is currently in an important stage of its transformation to Ethereum 2.0 (Eth2) — an entirely proof-of-stake (PoS) blockchain after undergoing the London hard fork that brought in crucial updates like the EIP-1559 — the aftermath of which is still highly discussed in the cryptocurrency community. This Ethereum Improvement Proposal (EIP) that was agreed upon by the developers, and miners entailed a change in the transaction pricing mechanism for the network.

The change mainly impacted the inflation rate of the tokens and the miner’s revenues since a portion of gas fees are now being burned following the upgrade. According to data, over 311,300 ETH tokens have been burned, with a notional value of nearly $1.1 billion. The current burn rate is 2.7 million ETH tokens per year, which would put the inflation rate at 2.3% with the issuance of 5.3 million tokens per year.

Ethereum is not the only blockchain network to implement this kind of pricing mechanism, as Solana burns 50% of its transaction fees to regulate the supply of the SOL token. The Solana Labs spokesperson further said: “The Ethereum London upgrade changed miner incentives. Some believed that this would increase the MEV and there have been solutions launched to address this, but the cost of transactions on Ethereum continues to provide a barrier to entry.”

On-chain data says Ethereum is still king

Even though the native tokens of these “Ethereum killer” networks have posted impressive gains, a closer look at the on-chain data reveals that Ethereum’s utilization and volumes still dwarf the entirety of the remaining smart contract platform market.

Ethereum currently has a market capitalization of over $400 billion, which is significantly higher than the rest of the market. The closest network in terms of market cap is Cardano, with a $76 billion market capitalization, not even 20% as that of Ethereum.

According to data by DappRadar, the total volume locked (TVL) in DeFi protocols built on the Ethereum blockchain is just over $100 billion. In terms of utilization, the blockchain network that ranks second is the Binance Smart Chain (BSC) with a TVL of $18 billion, less than 20% of Ethereum’s TVL in DeFi.

BSC ecosystem coordinator at Binance cryptocurrency exchange Samy Karim spoke to Cointelegraph about the possibilities of Ethereum retaining its market share once the transition to Eth2 is complete:

“It has to be quick, efficient and decentralized at the same time for DeFi to attain mass adoption. Ethereum is one of the first smart contract compatible chains that can leverage its pre-existing communities to grow once Eth2 is out, but it’s next to impossible to forecast its potential market share on the basis of its probable upgrade.”

Currently, Ethereum leads the market in the NFT space as well with all the biggest NFT platforms, OpenSea, CryptoPunks, Axie Infinity, Rarible and Decentraland all being built on Ethereum. However, the whole NFT market has often been classified as a bubble by naysayers with the Chinese Communist Party becoming the latest addition when it warned the Chinese citizens about digital collectibles, and, yet, the market continues to expand.

Sokolin has voiced his disagreement on this perspective, saying: “We disagree with the categorization of the NFT ecosystem as a bubble — it is a reconfiguration of digital media structure. […] NFTs offer a different path and having a meaningful economic system is unlocking a new business model.”

However, the impact of this “bubble” even going “bust” is limited for Ethereum. In Tatibouet’s opinion, “NFTs or not, Ethereum is still the market leader when it comes to smart contract platforms. The NFT market, however, has helped the competitors in gaining an advantage over their peers.”

As Ethereum continues to build momentum toward its final transition to a PoS blockchain, the confidence that the financial markets are showing in its potential is slowly rising. A report by the British multinational bank, Standard Chartered Bank, discussed the real-world use cases of the blockchain network and accordingly valued ETH “structurally” between $26,000 and $35,000. As of now, ETH continues to show bullish trading patterns such as cup and handle and even has the prospect of hitting $6,500 in the coming few months.