SparkDAO is an investment research group focusing on the field of digital encryption, with members distributed all over the world. We are keen to explore the underlying logic and cutting-edge tracks in the field of digital encryption. Welcome to our Twitter: sparkdao_io

*This article is only a personal subjective opinion, does not promise any income, assumes no legal liability, and does not constitute any investment opinion.

In 2021, DeFi grew at an unprecedented rate, with DEX volume tripled and the Total Lock Value (TVL) doubling.As Ethereum trading fees have soared, the new L1 public chain, which has traded faster and had cheaper fees, has dropped Ethereum's market share by more than a third in a year.Crypto users are attracted by a vibrant new public chain ecosystem and cheap fees, especially by EVM-compatible public chains.Over the past year, for example, the BSC's TVL rose 31,000%, to $21 billion, from $62 million.As the new public chain gains opportunities, and the release of Ethereum L2 expansion solutions, and Ethereum 2.0 approaches, the importance, complexity, and interoperability across chains will continue to increase.

The formation of a multi-chain world

Over the past year, Ethereum has been a huge success (far more fees than Bitcoin).According to January 18,2022, Ethereum earned $46.3 million daily, compared with Bitcoin's just $380,000 daily.In terms of transactions, Ethereum traded about 1.28 million times daily, reflecting the phenomenal growth of —— over the past year in late 2020; Ethereum has increased more than 50 times, while its daily revenue fell by 66%.

Although Bitcoin remains the undisputed leader in the cryptocurrency industry.But market interest and demand for smart contract-driven decentralized applications is clearly stronger than value storage demand, with applications such as DeFi, NFT, and GameFi all driving Ethereum growth.However, the direct demand is also greatly raised the ethereum block space premium, users to pay fees in May last year average fee reached a record high of $68.72 —— this is the simplest token transfer average cost, if complex interaction, such as DeFi protocol support smart contract, fee costs may be much higher.

The high transaction cost of Ethereum has led many users to look for cheaper alternatives.In the beginning of 2021, TVL on applications on the Ethereum blockchain accounted for 98.2% of the DeFi protocol.The figure has now fallen to 67%.The biggest winners were BSC, Solana, Terra, Avalanche, Fantom, and Polygon.

Growth of L1 public chain address

Ethereum: The number of daily active addresses on January 1,2021 was 426,000, and it peaked at 800,000 in May. It is currently about 558,000 and $ TVL153000 million.

BSC: The number of daily active addresses on January 1,2021 was 49,500, and the peak reached 1.624 million in mid-October. It is currently about 1.313 million and $70 million.

POLYGON: The number of daily live addresses on 1 January 2021 is 759, and its peak was 566,000 in October. It is currently 367,000 and TVL 45 is $90 million.

AVALANCHE: The number of daily active addresses for January 1,2021 is 22, currently reaching $67,000, and the T V L is US $8.2 billion.

These new public chains all have their own advantages over Ethereum.However, there is no perfect solution for blockchain's impossible triangle, that is, unable to balance both speed, security and decentralization.The PoW mechanism of about 2,500 main network nodes performing intensive network security protection makes hacker attacks extremely expensive, ensuring security and decentralization, but at the expense of speed, manifested as limited transaction throughput and high transaction costs.

The BSC employs 21 trusted PoSA verifier consensus mechanisms that greatly increase speed and reduce transaction costs at the cost of decentralization.The ects of this mechanism are decentralization and weak safety.Last September, for example, Solana, with a similar consensus mechanism, was hit by DDoS and went down for more than 18 hours.Still, as most retail investors cannot afford dozens or even hundreds of dollars, the new public chain that supports affordable and fast trading has become an alternative for many retail investors.While there is much debate about the design and advantages of each public chain, the current boom of multiple public chains shows that they may occupy a place in the future as long as it is a project in demand in the market.

Users who attach importance to decentralization and security insist on choosing to pay the necessary high fees for transactions, while users who are more sensitive to the transaction speed and costs will choose to embrace the new public chain.In 2021, although Ethereum's dominance in DeFi has decreased significantly, its fee revenue and TVL are still growing significantly, which is a positive signal for industry health, as the rise of the new public chain will promote continuous innovation in the public chain industry.

After June 2022, Ethereum will switch to PoS, but according to the team roadmap, Ethereum will take several more years of upgrades to complete the fragmentation, the ultimate form of ETH2.0.Moving to PoS is an important step in ETH2.0, but the growing number of users will continue to put great pressure on Ethereum L1 to the same speed as fees as the new public chain (users sensitive to speed fees may still not choose Ethereum), and Ethereum L2 is still needed to help expand capacity.Therefore, in 2022, the new public chain will not compete more with Ethereum, but with the Ethereum L2s.In addition, as the multi-chain pattern of the whole industry forms, cross-chain interoperability will become more important.

*The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of SparkDAO. Every investment and trading move involves risk, you should conduct your own research when making a decision.