5 of the most promising “Infrastructure” Blockchains

After the success of Bitcoin, many crypto projects began in 2013 with the aim of competing with this new type of asset, such as Litecoin, Dogecoin and Monero. Many others have emerged since then. But many have been overlooked and sometimes even completely forgotten by the general public.

In 2015, Ethereum was born, a so-called “infrastructural” blockchain, which has met with resounding success in a few years. Faced with this success and leveraging the democratization of cryptocurrencies, new projects are emerging with their own blockchain in hopes of developing the infrastructure that will be used in the world of tomorrow.

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What is an infrastructure blockchain?

An infrastructure blockchain refers to a crypto-asset that has its own blockchain on which various applications can be developed. Sometimes called layer 1 or layer 0 in the case of ATOM or Polkadot, these blockchains are therefore not based on an existing network as in the case of a layer 2.

A level 2 is a secondary level of a network that allows transactions to be made outside the main (off-chain) blockchain. This allows transactions to be faster and cheaper than the main network, as is the case with Level 2 Polygon, Arbitrum or Optimism on Ethereum, or with the Lightning network on Bitcoin.

In the case of a layer 1, the blockchain network will not depend on anyone else. A level 0 will allow the creation of a completely independent blockchain and can serve as the basis for the creation of your own blockchain.

With infrastructure blockchains, there are many promises: a different and less energy-intensive consensus model, millions of transactions per second at very low cost, interconnected blockchains, etc.

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Outside of Bitcoin and Ethereum, several infrastructure blockchains have compelling value propositions and can be a source of diversification, particularly due to their potential returns and growing adoption in the crypto ecosystem.

Cosmo Network (ATOM)

Istari Ventures

Cosmos Network presents itself as the Internet of blockchains. Today it is not possible to transfer bitcoins (BTC) directly to Ethereum because the two blockchains are not compatible with each other. Cosmos Network therefore proposes solutions to combat this problem such as the IBC (InterBlockchain Communication) protocol, the Cosmos SDK or Tendermint (recently renamed Ignite), which are tools that allow anyone to create a blockchain and interconnect it with others.

Cosmos Network also has its own blockchain and therefore has its own governance token, ATOM. It is interesting to keep ATOM because it is not uncommon for new projects that emerge on the Cosmos network to distribute tokens to ATOM owners to make themselves known. With a market capitalization of 3.6 billion, ATOM is today the 23rd crypto asset in terms of valuation. ATOM therefore remains much less valued than some infrastructural blockchains, despite having a greater number of users and a real usefulness.

Pois (DOT)

Polka project

Created in 2017 by Ethereum co-founder Gavin Wood, Polkadot’s value proposition remains more or less the same as Cosmos: enabling interoperability between blockchains. On the other hand, the model is slightly different because it is based on the creation of parachain, or parallel chain in French. Where every blockchain created is independent via Cosmos, on Polkadot, a parachain uses the security of the Polkadot network.

Another difference is that, unlike Cosmos, where new projects have gotten used to distributing tokens to ATOM holders, on Polkadot DOT holders must in most cases contribute to crowdloan or available auctions if they wish to hold the token. of a new parachain. Crowdloans are an auction system for determining which blueprints get parachain slots, which exist in limited numbers.

With $ 8.3 billion in capitalization, Polkadot is now the 10th largest crypto asset. Down 77% year-on-year, this is an attractive entry price for those who would like to participate in potential mass lending in the future and gain exposure to certain interoperable infrastructure parachains or blockchains.

Solana (SOL)

Solanians

For Solana, the value proposition is not interoperability like the two previous blockchains, but rather the speed of transactions and their low costs. With the popularity of cryptocurrencies and limited block sizes, Bitcoin or Ethereum transactions can sometimes take a few hours and cost several hundred dollars.

Taking advantage of the NFT craze in 2021, SOL has seen a rapid rise, with the price of its token going from under $ 1 in April 2020 to over $ 250 in November 2021.

Since then, the SOL has dropped well, as it has dropped 88% from its high and is now trading around $ 30. With a dynamic ecosystem, backed by several renowned investment funds and investors, it could be that in the future Solana will be one of the blockchains on which many projects decide to build. Furthermore, its programming language (Rust) is more mainstream than Solidity, Ethereum’s programming language.

Tezos (XTZ)

Tezo

Tezos was one of the first blockchains after Peercoin to democratize the Proof of Stake mechanism. Created in 2017 by Arthur Breitman and his partner, the Tezos blockchain is defined as an evolutionary blockchain. Therefore, each XTZ owner can participate in governance issues and decide on the future of the protocol and on any updates to be made. This allows Tezos to constantly adapt to innovations and quickly incorporate protocol updates through decentralized governance decisions.

Very popular in France, Tezos has managed to establish partnerships with Société Générale, Ubisoft and the Casino group. On the other hand, this blockchain seems for the moment to be less popular among private individuals than some of its competitors such as Solana, possibly due to its lack of interoperability with other blockchains.

With a capitalization of 1.3 billion, much lower than some of its main competitors, Tezos could still prove to be one of the most important infrastructure blockchains of the future.

Avalanche (AVAX)

symbolic knowledge

The latest infrastructure blockchain in this selection is Avalanche. Despite recent rumors denied by the CEO of the company behind Avalanche – which would use a law firm to attack its competitors and put a spanner in the works – Avalanche is still one of the most complete blockchain ecosystems.

Its ease of use and speed of transactions make it a great alternative to Ethereum and the other blockchains mentioned above. Another positive point for Avalanche: the sometimes high returns on some applications that launch on this protocol. With a valuation of around $ 5.5 billion currently, AVAX is trading at less than $ 20 per token, 87% below its highs of $ 145.

There are still plenty of other blockchains that aspire to become the infrastructure blockchain of tomorrow. Between Elrond, Cardano, Algorand, Near and many others, a multitude of different blockchains have their own community, their own tokenomics and their own governance rules.

Messari

Today, interoperability is possible between most of these new infrastructure blockchains and you can transfer resources from one chain to another via so-called bridges. Additionally, most current infrastructure blockchains use proof of participation as a consensus mechanism, which can allow you to earn from it, via staking.

On the other hand, while these blockchains can prove to be attractive investments in the future, they are also very risky. For example, some time ago the price of one of the most important blockchain tokens in infrastructure (Terra Luna) plummeted by 99% in a few days despite a large number of users, increasing adoption day by day and a prominent place in the crypto universe. So be careful if you decide to invest in these assets, and remember that we do not yet know if a blockchain will dominate the market or if on the contrary we will live in a multi-chain world.

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