While any downturn in the cryptocurrency market will dampen the sentiment for the space in general, some think this market will be a good opportunity to “build”. Here are the altcoin projects that people prefer in this “crypto winter”, pointing to savings and opportunity, according to analyst Jordan Finneseth.
Altcoins of Layer-1 projects draw attention
Layer-1 (L1) protocols such as Bitcoin (BTC) and Ethereum (ETH) form the foundation on which most of the cryptocurrency ecosystem is built and enable many of the other sectors of the market to exist. However, there aren’t many options for launching other protocols on the Bitcoin network at the moment. Ethereum has limitations in terms of scalability that can lead to high transaction costs and slow transaction times.
Because of these factors, there is a significant opportunity for other L1 protocols to establish themselves and create a good slice of market share. The total revenue generated by a protocol is a metric that can be used to determine which networks see the most usage. In the chart below, you can see examples of some layer-1 altcoin protocols and their total revenue:
According to Token Terminal data, the top five L1 protocols in terms of total revenue over the past 180 days excluding Bitcoin and Ethereum are ranked as BNB Smart Chain (BNB), Avalanche (AVAX), Helium (HNT), Phantom (FTM) and Solana (SOL).
Layer-2 protocols
As mentioned above, the Ethereum network has limitations in terms of scalability that will not be resolved during the upcoming “Merge”. It leaves an opening for layer-2 protocols to fill the need, helping to reduce the activity that occurs directly on the Ethereum Blockchain. According to L2Beat, which tracks statistics on top Ethereum L2s, Arbitrum is number one in terms of total locked value (TVL), followed by Optimism and dYdX.
One network left out of the list provided by L2Beat, but which remains the most adopted L2 in terms of active wallets and launched protocols, is Polygon (MATIC), which currently has a TVL of $1.59 billion, according to data from DefiLlama. As for the Bitcoin network, the main L2 solution currently seeing increased entries is the Lightning network. However, there are no tokens associated with the protocol. Instead, users can choose to run a node if they want to support the network and generate passive income.
Altcoin projects of gaming platforms
The gaming sector of the cryptocurrency ecosystem has proven to be one of the more resilient in terms of keeping users engaged in the current crypto winter. The emergence of play-to-win games like Axie Infinity (AXS) has helped shed light on Blockchain-based gaming possibilities during the 2021 bull cycle. It has spawned a branch of multiple “play-to-win” type protocols.
Data from DappRadar shows that some of the best games for active users include Alien Worlds, Splinterlands and Farmers World, all running on the WAX network, while Axie Infinity is the best game for the value of assets held on its smart device. There are also a number of other games still in development but still gaining a lot of attention, including Illuvium and Aavegotchi, as well as tokens representing gaming ecosystems such as Enjin Coin (ENJ), Gala (GALA) and Ultra (UOS).
Altcoin projects for social platforms
One sector of the cryptocurrency landscape that has yet to be appreciably established but represents a good opportunity to help drive adoption is social engagement platforms similar to Twitter, Facebook or Reddit. Previous pioneers in the social media landscape include Steem and its community-focused branch, Hive. However, neither protocol has been truly widely adopted to date.
While no other protocol currently in operation has succeeded in cracking the code that attracts many users with long-term interactions, events in the wider world, including the ongoing drama about Elon Musk’s acquisition of Twitter, show what social media needs. Openly accessible community driven platform.
Metaverse and NFT launchpads
A final industry to consider is the Metaverse, as it is widely appealing to mainstream society, including efforts already underway to integrate it into everyday life. While the concept of the metaverse is still in its infancy, it’s a popular topic of conversation in the crypto world. It already attracts large investments from some of the world’s most recognizable and recognizable brands.
In addition to Metaverse, platforms specializing in the creation and release of NFTs are also worth considering, as the NFT industry has been shown to be popular with the general public. Some of the most advanced and adopted Metaverse and NFT platforms currently in operation include The Sandbox (SAND), which has recently partnered with Playboy to launch a MetaMansion social game on the platform, as well as Decentraland (MANA) and ApeCoin (APE).
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