A slew of smart contract platforms have been surging in price over the past 30 days, and blockchain analytics firm Glassnode is digging into the metrics to determine whether or not any of these platforms can compete with Ethereum (ETH) in the future.
Avalanche (AVAX), Solana (SOL), and Terra (LUNA) have all exploded over the past month, gaining 292.9%, 212.2%, and 191.4% in value, respectively, according to CoinGecko.
Glassnode first discusses the “spike in interest” on AVAX and SOL.
“Alternative smart contract platforms like Avalanche and Solana have found massive 30 day token price growth as hints of activity and bets on a multi-chain future start to garner attention.”
Glassnode notes that Avalanche had attracted limited liquidity across its decentralized finance (DeFi) projects until earlier this month when it announced a $180 million DeFi incentive program.
The Avalanche Foundation allocated the first $27 million for users of lending and borrowing protocol Aave and decentralized exchange Curve (CRV). The analytics firm highlights the exponential rise of liquidity in AVAX’s DeFi projects since the incentives were announced.
Glassnode also says, however, that liquidity on Avalanche remains limited comparatively.
“Projects on Avalanche remain marked by being clones of existing projects on Ethereum, attracting this growth through incentives and inflated yields that may or may not persist long term.”
Solana has focused on DeFi protocol implementations, which have driven growth in its ecosystem, according to Glassnode. Solana also has a processing capacity of between 50,000 to 65,000 transactions per second, which allows the network to scale.
Still, growth in the Solana ecosystem is very limited compared to Ethereum, according to the analytics firm.
“There are five projects in the Solana DeFi space which have more than $100M TVL [total value locked]. For comparison, Ethereum boasts over 60 projects with more than $100M TVL.
Solana certainly presents an attractive alternative option for projects requiring scaling. Though for now, it has barely scratched the surface in competing with Ethereum for total liquidity.”
Terra has demonstrated “non-trivial signs of adoption in a few choice protocols,” says Glassnode. Anchor Protocol, Terra’s largest DeFi protocol, has more than $3.4 billion in total value locked.
Like Solana and Avalanche, Terra has yet to host more than five projects with more than $100 million in liquidity, according to the analytics firm.
“While some alternative layer one smart contract platforms have seen their native tokens rally in recent weeks, actual liquidity on each chain remains limited relative to the Ethereum chain.”
Glassnode sees a world in which more users are migrating to these platforms, particularly if Ethereum struggles to scale its network.
“As some users traverse across to newer and more experimental blockchains, developers will have to assess the viability and longevity of additional users and capital moving on or off of Ethereum.
As competition for users, attention and capital increases, many developers and protocols may find the trade-offs worth it, or even find untapped value and opportunity in protocol design. And if Ethereum L2s struggle to scale the network, or create a heavy barrier for user experience, users may naturally gravitate towards alternative chains in response.”
Check out the full Glassnode report here.
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