Alt Layer 1 Trade Unravels as Ethereum Killers Sink Below ETH
Solana, Fantom and Other Layer 1s Ride the Storm
By: Samuel HaigDeFi News
The would-be Ethereum killers are getting killed.
Fantom, Solana, Avalanche, Cardano… These Layer 1 networks are getting walloped by the gravitational pull of the crypto crash this week with Terra’s implosion. They are down between 40% and 60% in the past five days, while Ethereum’s ETH outperforms them all, falling by a still eye-popping 26% in that time.
Ethereum, Solana, Cardano, Fantom, Avalanche Prices. Source: TradingView
In 2021, alternative Layer 1s, or blockchain networks other than ETH and BTC, captured the imagination of investors. They have been dubbed Ethereum killers because they aimed to be faster, cheaper, and more efficient than the original smart contract platform.
Users and investors piled in, sending the likes of Solana, Fantom, and Avalanche soaring while capturing billions in total value locked (TVL). They played a huge role in taking decentralized finance to the next level. Now they’re falling prey to the bears just like everything else in crypto, while ETH and BTC hold up better.
Fantom has tumbled 69% in the last seven days, according to CoinGecko. Its FTM token was already struggling prior to the collapse of LUNA and UST, Terra’s coins. Speculation mounted that the network’s on-chain liquidity may be pushed to the brink by the liquidation of a whale that borrowed $37M in stablecoins against a stash of 59M FTM, which had previously been valued at more than $90M. But bears took a toll on Fantom, and the position was liquidated.
Fantom’s TVL of $2.26B has dropped 82% since tagging an all-time high of $12.8B in late January.
Fantom TVL. Source: DeFi Llama.
Meanwhile, Solana is hemorrhaging value, with the bearish trend compounded by the network’s persistent outages. The network has crashed more than half a dozen times, including a seven-hour interruption last week.
SOL last changed hands for $41.6, marking a nearly 70% dive in five weeks, and an 84% retracement from its November all-time high of $259. Its TVL similarly evaporated, sitting at $4.12B after reaching highs of $15B seven months ago.
SOL/USD. Source: CoinGecko
It appears that the moment in the sun for Avalanche (AVAX), a fork of Ethereum, has passed. AVAX has shed three-quarters of its value in less than six weeks. Its TVL also sank by half since early December, crashing to $6.15B from $13.6B.
AVAX/USD. Source: DeFi Llama
The recent surge of Near Protocol, a sharded network supporting smart contract execution, has been brought to a halt. NEAR is currently trading for $5.4 after crashing 69% in just three weeks. It is also down 73.5% from its record January high. The TVL of Near’s EVM-compatible sister chain, Aurora, fell by one-third in a fortnight amid the turmoil, sliding to $833M.
The old guard of ‘Ethereum killers’ are also reeling. The price of Binance Coin (BNB) has been chopped in half since early April, with the token last changing hands for $229. BNB is also down 55% since the year began. Binance Smart Chain’s TVL has also been in persistent decline since rocketing to $31.7B last May, currently representing $9.11B worth of assets.
Binance Smart Chain TVL. Source: DeFi Llama
Charles Hoskinson’s Cardano (ADA) shed 50% of its value in just one week, last changing hands for just $0.41. And Eos, one of the earliest efforts to ‘kill’ Ethereum, is also tumbling amid the broader crypto bloodbath. EOS is trading for $1.23 after crashing 60% this year, and is down 94.2% from its April 2018 high despite ranking among the top 60 crypto assets by market cap.
EOS/USD. Source: CoinGecko