On Tuesday, CoinDesk Research will drop its Quarterly Review for Q3, featuring 60 slides jam-packed with insights, analysis and data. For me, one of the takeaways is that like it or not, we live in a multi-chain world.
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For example, the report notes that in September bitcoin dominance – that is, the original cryptocurrency’s share of total crypto market capitalization – was 42%. That’s the lowest it’s been at that point in the year in any of the previous four years.
The report’s authors, CoinDesk Research analysts George Kaloudis and Teddy Oosterbaan, are careful to note this is due to an explosion in growth of other networks rather than a lowering of bitcoin’s power.
“BTC losing dominance does not imply that it is losing, especially as it continues to cement itself as a sound money and global monetary network,” they write. “Waning dominance for bitcoin more accurately suggests that there is money flowing into other projects with different use cases, as typically occurs during times of optimism in digital assets.”
And flow it has. Note that while Ethereum’s share was higher in the most recent September than at any time in the series since 2017 – the heyday of initial coin offerings and CryptoKitties – the share for all other blockchains was the highest of any of the last five Septembers.
As Kaloudis and Oosterbaan note throughout the report, alternative “layer 1″ (L1) blockchains gained popularity as the congestion and high fees on Ethereum spurred demand for networks with similar smart contract capabilities but faster throughput. At least, faster for now. Baseball legend Yogi Berra’s quote comes to mind: “Nobody goes there anymore. It’s too crowded.”
You see this demand reflected in the market capitalizations of these L1 networks’ native currencies and the total value locked (TVL), or money invested, in their decentralized finance (DeFi) protocols. Cardano’s ADA, Binance Smart Chain’s BNB, Solana’s SOL, Avalanche’s AVAX and Terra’s LUNA are now in the top 12 coins by market cap.
While Ethereum remains king among DeFi host networks, look at how diverse these bars measuring TVL have become:
Again, bitcoin remains the crypto market’s bellwether, the coin with the greatest institutional adoption and network effect, with an unparalleled level of security hard-won by miners’ politically incorrect energy consumption. (Disclosure: It’s the only coin I own.) That seems unlikely to change.
But the Bitcoin network’s scaling limitations, along with those of its largest competitor, Ethereum, mean neither can count on becoming the only game in town any time soon.
The CoinDesk Quarterly Review for Q3 also covers NFTs, stablecoins, BTC’s performance relative to gold and stocks and more. Mark your calendars for Oct. 5 and be sure to bookmark the CoinDesk Research page.
On Tuesday, CoinDesk Analysis will drop its Quarterly Evaluate for Q3, that includes 60 slides jam-packed with insights, evaluation and information. For me, one of many takeaways is that prefer it or not, we stay in a multi-chain world.
You’re studying Crypto Lengthy & Quick, our weekly publication that includes insights, information and evaluation for the skilled investor. Enroll right here to get it in your inbox each Sunday.
For instance, the report notes that in September bitcoin dominance – that’s, the unique cryptocurrency’s share of complete crypto market capitalization – was 42%. That’s the bottom it’s been at that time within the yr in any of the earlier 4 years.
The report’s authors, CoinDesk Analysis analysts George Kaloudis and Teddy Oosterbaan, are cautious to notice this is because of an explosion in progress of different networks reasonably than a decreasing of bitcoin’s energy.
“BTC dropping dominance doesn’t indicate that it’s dropping, particularly because it continues to cement itself as a sound cash and international financial community,” they write. “Waning dominance for bitcoin extra precisely suggests that there’s cash flowing into different tasks with totally different use instances, as usually happens throughout occasions of optimism in digital belongings.”
And circulation it has. Observe that whereas Ethereum’s share was greater in the latest September than at any time within the collection since 2017 – the heyday of preliminary coin choices and CryptoKitties – the share for all different blockchains was the very best of any of the final 5 Septembers.
As Kaloudis and Oosterbaan observe all through the report, different “layer 1″ (L1) blockchains gained recognition because the congestion and excessive charges on Ethereum spurred demand for networks with related good contract capabilities however sooner throughput. A minimum of, faster for now. Baseball legend Yogi Berra’s quote involves thoughts: “No person goes there anymore. It’s too crowded.”
You see this demand mirrored available in the market capitalizations of those L1 networks’ native currencies and the overall worth locked (TVL), or cash invested, of their decentralized finance (DeFi) protocols. Cardano’s ADA, Binance Good Chain’s BNB, Solana’s SOL, Avalanche’s AVAX and Terra’s LUNA are actually within the prime 12 cash by market cap.
Whereas Ethereum stays king amongst DeFi host networks, have a look at how various these bars measuring TVL have change into:
Once more, bitcoin stays the crypto market’s bellwether, the coin with the best institutional adoption and community impact, with an unparalleled degree of safety hard-won by miners’ politically incorrect vitality consumption. (Disclosure: It’s the one coin I personal.) That appears unlikely to vary.
However the Bitcoin community’s scaling limitations, together with these of its largest competitor, Ethereum, imply neither can depend on turning into the one recreation on the town any time quickly.
The CoinDesk Quarterly Evaluate for Q3 additionally covers NFTs, stablecoins, BTC’s efficiency relative to gold and shares and extra. Mark your calendars for Oct. 5 and be sure you bookmark the CoinDesk Analysis web page.