Step By Step Guide: How To Research L1 Blockchains

Plus where to find useful research tools and data about major layer 1 blockchains.

Photo by Copilot from Microsoft

In this article, I will show you how to research layer 1 smart contract platforms. What is the point of examining Ethereum, Binance Smart Chain, Avalanche, and other base networks?

In short: It’s not just about determining the investment potential of an L1 blockchain itself. It also analyses the basic potential for layer 2 solutions in the given network.

Let me explain why.

A good layer 1 network is the basis for successful layer 2 solutions

We can view layer 1 blockchains as different nations. They are independent of each other, each of them has its own data, network, consensus mechanism, ecosystem, etc. They can validate and finalize transactions without other networks. The stronger a ‘nation’ is, the better the conditions for all projects developed as layer 2 protocols.

The law of multiplying by zero comes to mind: In some cases, a single critical mistake or deficiency can cause the whole system to collapse. Meaning that the most promising layer 2 crypto project will fail if the underlying L1 blockchain is a piece of junk.

OK.

With the basic understanding in place, let’s get to the meat of this guide and go through the individual steps of researching L1 blockchains.

How-to Research L1 Blockchains step-by-step

To determine the quality of a layer 1 network, you need to assess a couple of key aspects. Let’s look at them one by one.

1. Developer friendliness

This refers to how easy or difficult it is for others to build solutions on top of a given layer 1 network. The following points are of relevance here:

• What is the chain’s programming language? An easy-to-learn programming language (or a blockchain that supports multiple languages) is more likely to attract developers.
• How good is the online documentation and are there a lot of (up-to-date) tutorials available? This makes it easier for developers to learn to build on the chain.
• What tools does the blockchain provide for developers of layer 2 applications? Think of software development kits (SDK), sandboxes, benchmarking tools, block explorers, smart contract compilers, debugging tools, etc.

Neo blockchain’s developer tools’ site. Source: https://neo.org/dev#tooling

To figure these things out, go to the L1 network’s website, and read their whitepaper and documentation.

2. Decentralization

Decentralisation is essential for blockchain security and its trustworthiness. What does decentralisation in this context mean? 

Ethereum founder Vitalik Buterin differentiates between 3 kinds:

1. There is no single point of failure (architectural decentralisation).
2. no individual or single organisation controls the whole system (political decentralisation).
3. The network can be cut into half and each half functions like an independent unit (logistical decentralisation).

To summarise, you’d want to see a high degree of decentralisation. However, keep in mind, that there is no project that is 100% decentralised.

Moving on.

These are the things you should research to assess how decentralized a layer 1 blockchain is:

• How many nodes are there? The more the better.
• Where are they located? The further they are geographically distributed, the better.
• What’s the share of the hash rate that individual mining pools hold in proof-of-work (PoW) networks?
• How big is the share of coins held by the top wallets in a proof-of-stake (PoS) network?

If you want to understand this topic better, here is an in-depth article I wrote about the decentralization of some of the biggest blockchains such as Bitcoin and Ethereum.

3. Security

Another very important aspect is how immutable a blockchain is. Most of us are not IT security specialists. That’s why we have to rely on developers, contributors, white-hat hackers, and others to make sure the blockchain’s code is free from bugs and risks. However, there are several questions we can try to answer:

• Can the blockchain withstand various attacks such as a 51% attack, Sybil attack, distributed denial of service attack (DDoS), etc.?
• It is also important for us to understand how different consensus algorithms work theoretically and what their advantages and disadvantages are. This in turn can help us to understand what kind of threats or attacks the blockchain could be facing.

By the way, have you already checked out my article about how to research cryptocurrencies? It’s the most extensive guide for free on the net!

4. Active users and daily transactions

You can build the best software ever. But if nobody uses it then it is nothing. That is why it’s important to get an understanding of user activity. These are the stats you should focus on:

• What’s the long-term trend of user numbers? A steady increase in active users is a good sign.
• What can you learn from the number of daily transactions? Again, what you’d want to see here is an increase in daily transactions.
• How many hodlers are there? This plays into the former two stats. While a certain percentage of people just holding the blockchain’s native currency is a good thing you don’t want too many people just hoarding coins without ever using them.

The get this information check out the list of resources I am sharing at the bottom of this article.

5. Transaction fees

Ideally, transaction fees should be affordable for users. Too expensive fees could have a negative impact on the chain’s development. However, it could also reflect how much users are willing to pay for the block space. Premium = more security.

6. DApps and ecosystem

This is a great indicator, because if we view each L1 blockchain as a nation, then the DApps built on them are like the economic sectors in the nation. For a nation to thrive, diversified industries and economic activities are essential. Also, a big and diverse ecosystem attracts investments and new solutions.

Go to dappradar to see the popular DApps for every L1 blockchain. This website also lists the number of users of each DApp.

But DApps are just part of the whole ecosystem. Other aspects include exchanges (centralized and decentralized), and infrastructure such as bridges, oracles, APIs, etc.

7. Developer activity

This information can be found from the project’s Github page. It’s a great source for insights, even if you have zero knowledge about programming. Here you can learn about the following things:

• How many active developers are contributing to the chain?
• How many commits are there per day?

Let’s take Solana as an example:

Solana Github page (Source: https://github.com/solana-labs/solana/graphs/contributors)

On the ‘Contributors’ page, you can see the contribution activity over time as well as who are the main contributors and during which time frame they are active.

In the ‘Commits’ and ‘Code frequency’ sections, you can check more details about the number of commits, additions, and deletions every week.

PS: the website Cryptomiso.com also summarizes Github commits information of 300 popular crypto projects.

8. Is the L1 network backed by VCs?

Institutional money is one of the easy to verify key indicators that tell you if a project is good or not. That’s because normally, VCs do their own in-depth research before they invest. However, being backed by a VC does not guarantee a project will be successful. The recent Terra debacle is a reminder of this.

9. Social media activity

To wrap things up, always take some time to check out a network’s social media accounts. Here’s what you can learn from taking a look at their Twitter, Telegram, Discord, etc.

• What are they talking about? Just shilling the project or discussing problems and improvements?
• Do they offer insights into road maps, development progress, etc.?
• It is not a good sign if the official social media accounts have not been updated for some weeks. It could be a sign that the team is running into problems or has abandoned the project.

Summary + Useful links of major L1 blockchains:

It is challenging to find all the information I have listed in this guide. For example, there is no website listing the active addresses of certain projects. Don’t worry too much if some information is too hard to dig up. Just try to gather as much data as possible in order to make a well-founded statement about the status of a project.

Here are some great resources you can use when researching some of the top layer 1 blockchains:

Ethereum:

1. https://etherscan.io/charts
2. https://messari.io/asset/ethereum/charts
3. https://www.ethernodes.org/countries

Solana:

1. https://solscan.io/
2. https://analytics.solscan.io/public/dashboard/8d888828-baae-47b9-948b-d087e5de1411
3. https://solanabeach.io/
4. https://explorer.solana.com/

Binance Smart Chain:

1. https://www.bscscan.com/charts

Avalanche:

1. https://stats.avax.network/dashboard/overview/
2. https://explorer-xp.avax.network/validators

Cardano:

1. https://messari.io/charts/cardano/act-addr-cnt
2. https://messari.io/charts/cardano/fees

Polkadot:

1. https://messari.io/asset/polkadot/chart/act-addr-cnt

Fantom:

1. https://ftmscan.com/charts

Algorand:

1. https://algoexplorer.io/top-statistics
2. https://metrics.algorand.org/#/

Cosmos:

1. https://atom.tokenview.com/en/charts

I hope you found this guide useful. Let me know in the comments about your thoughts and if you have any additions.

Cheers!For more articles I wrote on how to research crypto projects, please check out my list: https://ren-heinrich.medium.com/list/how-to-research-crypto-projects-5fd393fd0be8

10 Reason Why, Now is the Best time - You invest in Learning about Cryptocurrencies

 Hello everyone and welcome to my Blog - Tchize Matias the blog author. 

Today I will talk about 10 reasons why you should learn about cryptocurrencies. Cryptocurrencies are digital or virtual currencies that use cryptography to secure their transactions and prevent counterfeiting.

They operate on decentralised networks that are not controlled by any central authority, such as a government or a bank.

Cryptocurrencies have become very popular in recent years, and there are many benefits to learning more about them. Here are 10 reasons why you should learn about cryptocurrencies:

1. It creates career opportunities. Cryptocurrencies are not only a form of money, but also a technology that can be applied to various fields and industries. By learning about cryptocurrencies, you can gain valuable skills and knowledge that can help you find jobs or start your own business in the crypto space.  Many roles and positions require crypto expertise, such as developers, analysts, traders, marketers, educators, and more.

2. It is are silent technology. Cryptocurrencies are based on blockchain technology, a distributed ledger system that records and verifies transactions without the need for intermediaries. Blockchain technology is very secure, transparent, and efficient and can withstand attacks, censorship, and corruption. By learning about cryptocurrencies, you can understand how blockchain technology works and how it can be used to solve real-world problems.

3. It is an investment opportunity. Cryptocurrencies are not only a medium of exchange, but also a store of value and an asset class. By learning about cryptocurrencies, you can discover the potential and risks of investing in them. You can also learn how to diversify your portfolio, analyze market trends, and make informed decisions based on your own research and judgment.

4. It enables instant settlement. Cryptocurrencies allow you to send and receive money across the world in a matter of minutes or seconds, without the need for intermediaries or fees. This makes them faster, cheaper, and more convenient than traditional payment methods. By learning about cryptocurrencies, you can benefit from their speed and low cost and also learn how to protect your privacy and security online

5. It enhances online security. Cryptocurrencies use cryptography to encrypt and authenticate their transactions and data. This makes them very difficult to hack or tamper with, unlike conventional systems that rely on passwords or personal information. By learning about cryptocurrencies, you can learn how to use cryptography to safeguard your online activities and data.

6. It is an alternative to corporations. Cryptocurrencies are not issued or controlled by any central authority, such as a government or a corporation. They are created and governed by the people who use them, through a process of consensus and democracy. By learning about cryptocurrencies, you can participate in their creation and governance, and also support their social and environmental causes.

7. It is a global phenomenon. Cryptocurrencies are used by millions of people around the world, from different countries, cultures, and backgrounds. They transcend borders, languages, and barriers, and create a global community of users and enthusiasts. By learning about cryptocurrencies, you can join this community and connect with people who share your interests and values.

8. It is a source of innovation. Cryptocurrencies are constantly evolving and improving, thanks to the creativity and ingenuity of their developers and users. They introduce new features, functions, and applications that challenge the status quo and offer new possibilities for the future. By learning about cryptocurrencies, you can witness and contribute to their innovation and progress.

9. It is a form of education. Cryptocurrencies are not only a technology, but also a discipline that encompasses various fields of study, such as mathematics, computer science, economics, finance, law, sociology, psychology, and more. By learning about cryptocurrencies, you can enrich your knowledge and broaden your perspective on these subjects.

10. It is fun and exciting. Cryptocurrencies are not only useful and practical, but also fun and exciting to learn about. They offer a lot of entertainment value through their games, memes, art, culture, humour, and more. By learning about cryptocurrencies, you can enjoy their fun side and have a good time.

These are 10 reasons why you should learn about cryptocurrencies. I hope you found this blog article helpful and informative. If you did, please like, share, subscribe, and comment below on what you think about cryptocurrencies or what topics you want me to cover next time.

Thank you for reading my blog post, I truly hope this content is useful for you.

🔔Everything You need to Know about Ethereum ETF🔔

 

🌐Today seems to be the time to decide about the Ethereum ETF. (⚠️The cryptocurrency market may get excited when the result is announced, so be careful with your positions⚠️).

🔔Let's take a look at what happened to Bitcoin when the Bitcoin ETF was adopted.

When the Bitcoin ETF was approved, Bitcoin corrected about ➖20% and this correction lasted about 12 days. This happened seemed to express the proverb, "Buy the Rumor, Sell the News".👇

💡So there is a possibility that if Ethereum ETF is approved, Ethereum will be corrected for a while like Bitcoin.

📊Now let's check the Ethereum chart.

🏃‍♂️Ethereum has managed to break the 🔴Heavy Resistance zone🔴 (now the 🟢Heavy Support zone($3,580-$2,930)🟢) of Ethereum with the help of the Classic Falling Wedge Pattern. It is currently moving near the 🔴Resistance zone($4,380-$3,950)🔴.

🌊According to the Elliott wave theory, Ethereum seems completed the microwave 3 of main wave 3. Ethereum seems to be completing microwave 4 of the main wave 3 right now.

📈Let's look at the ETHBTC chart and see how much Ethereum will be affected by the growth or decline of the cryptocurrency market.

📈ETHBTC seems to be trying to break the important Resistance line and Resistance zone, and this is a good sign for Ethereum and most altcoins. If the cryptocurrency market starts to increase, it seems that Ethereum will get a larger share of this increase. It could be a sign for Altseason.

📈But right now it seems that ETHBTC should have a correction to the Support zone or Fibonacci lines.👇

🔔According to the above explanations, it seems that if you want to add Ethereum and other Altcoins that are on the Ethereum network to your portfolio, it is better to wait for Ethereum to reach the 🟢Heavy Support zone($3,580-$2,930)🟢, if ETHBTC also corrects at the same time, it will be a more suitable situation.

🔔If you want to open a position on Ethereum, it is better to have a short position, because if Ethereum ETF is approved, the same scenario as Bitcoin may happen to it, and if it is not approved, the possibility of a fall is very very high, so the risk of a short position may be less now. What is your idea❗️❓

❗️⚠️Note⚠️❗️: If the Ethereum ETF is not approved, you better wait because Ethereum is likely to lose the 🟢Heavy Support zone($3,580-$2,930)🟢, and this shock will also affect Bitcoin and other Tokens.

❗️⚠️Note⚠️❗️: An important point you should always remember is capital management and lack of greed.

Ethereum Analyze ( ETHUSDT ), 4-hour time frame ⏰.

- Do not forget to put Stop loss for your positions (For every position you want to open).

Please follow your strategy; this is just my Idea, and I will gladly see your ideas in this post.

Please do not forget the ✅' like'✅ button 🙏😊 & Share it with your friends; thanks, and Trade safe.

Ethereum is likely to touch the Heavy Support zone($3,580-$2,930) once again.

Follow this ascending channel in a one-hour time frame.

Fibonacci lines work well.
May 27
Comment:

In my opinion, Ethereum will go down to at least $3869 and touch the Uptrend line again.
13 hours ago
Trade closed: target reached:

Ethereum was able to touch $3869, as I expected, and break the Uptrend line; the next target could be $3750.

What Do We Call the Tokenization of Real-World Assets Like Bonds, Stocks, and Vouchers?

 

What Do We Call the Tokenization of Real-World Assets Like Bonds, Stocks, and Vouchers?

Have you ever heard of turning a physical stock certificate into a digital token? Or maybe fractional ownership of a valuable painting through a blockchain platform? If these concepts pique your interest, then you're entering the exciting world of asset tokenisation.

Asset Tokenization: The Process Behind the Buzzword

While cryptocurrency might be the first thing that comes to mind when you hear "tokenisation," asset tokenisation is a broader concept. It refers to the process of converting ownership rights of real-world assets into digital tokens stored on a blockchain. These tokens can represent a wide variety of assets, from traditional financial instruments like bonds and stocks (high search demand, lower competition) to vouchers, loyalty points, and even physical assets like real estate or artwork.

The magic lies in blockchain technology. This secure, decentralised ledger system allows for transparent and efficient recording of ownership information. Each token acts as a digital record on the blockchain, securely linked to the underlying asset and its ownership history. This eliminates the need for physical documentation and intermediaries, streamlining transactions and boosting security.

Real-World Examples: From Fractional Art to Streamlined Investments

Imagine a world where a multi-million dollar painting can be divided into smaller, tradable tokens, allowing a wider pool of investors to participate in the art market. Or, consider a scenario where tokenised shares of a company offer increased liquidity and easier access for smaller investors compared to traditional stock exchanges. These are just a few examples of the potential applications of asset tokenisation.

Unlocking the Benefits: Increased Accessibility and Efficiency

The potential benefits of asset tokenisation are vast. One key advantage is the democratisation of investment opportunities. By fractionalising ownership, even high-value assets become accessible to a broader investor base. Additionally, blockchain technology fosters increased transparency and efficiency in transactions, potentially reducing costs and streamlining processes. Asset tokenisation also opens doors for innovative financial products and services within the burgeoning DeFi (Decentralized Finance) space.

Challenges and Considerations: A New Frontier with Growing Pains

It's important to acknowledge that asset tokenisation is still a nascent technology. Regulatory frameworks are still evolving, and security concerns regarding blockchain-based platforms require ongoing vigilance. Additionally, widespread adoption will depend on overcoming technical hurdles and building trust within the traditional financial sector.

The Future of Asset Tokenization: A Promising Path Forward

Despite the challenges, the potential of asset tokenisation is undeniable. As the technology matures and regulatory frameworks adapt, we can expect to see increased innovation and wider adoption in the years to come. Asset tokenisation has the potential to revolutionise the way we own, trade, and manage real-world assets, paving the way for a more inclusive and efficient financial future.

Looking to learn more about asset tokenisation and its impact on specific asset classes? Stay tuned for our upcoming blog posts where we'll delve deeper into the tokenization of bonds, stocks, and other real-world assets.

Ref: Further read

Asset Tokenisastion: https://chain.link/education/asset-tokenization