Will the merge kill alt layer 1's?
Ethereum's "the Merge" is coming in June 22'.
A lot of people are wondering, "What's going to happen to all the alternative layer 1's like Solana and AVAX?" Is all the money in DeFi going to be flowing over to Ethereum? I share my thoughts below.
Today I'll be covering:
- The Merge. It's coming in June. What does this mean for Alt L1's?
- Yuga Labs. The creators of Bored Ape Yacht Club have raised $450m to build the metaverse.
- Felix Exchange. They will make onboarding to FTM easier.
What's Happening in DeFi
Will Ethereum's Merge Kill Alternative Layer 1's?
Ethereum is running on Proof of Work which is inefficient energy wise.
They have a test chain called the "Beacon Chain." That has been running Proof of Stake since December 2020.
"The Merge" means the merger of the two chains. After it's done, there will not be anymore proof of work. There will only be one chain. This isn't a Ethereum vs Ethereum classic situation where there will be two protocols.
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It's kinda like Dragon Ball Z when the Saiyans would do a fusion dance. There'd only be one left after the merge.
Here's a misconception: this will not reduce gas fees.
Ethereum mainnet will still be expensive! The gas fees is being addressed right now through Layer 2 solutions such as Arbitrum, Metis, and others. Ethereum is working on Sharding to lower gas fees which is planned for 2023.
So the big question is...what's going to happen to Alt Layer 1s such as Avalanche, Solana, Terra Luna, Fantom, and others?
Here are some of my takes:
- Ethereum's going to be expensive for at least another year. Sharding's estimated to come in 2023, but it could take longer judging by The Merge being delayed.
Alt L1's are capturing more and more TVL in DeFi, and they'll have at least another year of capturing more.
The Layer 2 solutions are starting to gain some traction - Arbitrum is at $3.41B TVL.
- We don't know how much lower the gas fees will be. Even with Sharding, gas prices could still remain high in USD terms due to increased demand for ETH. There's always going to be cheaper alternatives (though you could argue it's because no one's using them as much)
- Alt Layer 1's are finding their own lane. Terra Luna is competing in a different arena altogether - they're focused on stablecoins and real world adoption. Secret Network is focused on privacy. And let's not forget that each Layer 1 has its own ecosystem with unique dapps.
- Tribalism. Fantom Fanboys and Lunatics are hardcore. It reminds me of people who are hardcore fans of bad sports teams. Even if their sports teams are losing, they'll have their undying loyalty.
- People chase the money. There's always going to be new alternative Layer 1's. The newer generation feel as if they missed the best gains on Ethereum, and Solunavax. There will always be people chasing "the next big thing."
Ethereum will kill off some of the weaker Alternative Layer 1's. For example, I'm not confident on the future of Harmony One. It was always meant to be a "faster and cheaper" Ethereum, but it doesn't have too much going on other than DeFiKingdoms (which is coming to Avalanche).
By the way, Ethereum's one of my biggest holdings.
However, I'm not a fan of the narrative that Ethereum's going to kill all the alt Layer 1s once the merge + sharding are here.
Bored Ape Yacht Club is Building out the Metaverse
I don't cover too much NFT or metaverse news, but this one's too big to ignore.
Yuga Labs (Creator of Bored Ape Yacht Club) has raised $450m with a valuation of $4 billion.
If you haven't heard, they acquired the rights to Cryptopunks & Meebits form Larva Labs last week.
It looks like they're building a gaming project.
Regardless, this is fantastic news. GameFi / NFTs are how we gain mainstream attention and access.
And a prestigious VC like a16z investing this much shows how much interest there is.
We's so early.
Felix Exchange is Coming
FTM isn't easily available on too many central exchanges. Harry Yeh, owner of Tomb Finance, wants to change that.
He is launching Felix Exchange this year, and is asking for suggestions on which tokens to launch with.
I voted for $boo, $spirit, and $beets
This is def some strong tailwind for the FTM ecosystem.
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