The past year has been one of unprecedented growth and transformation across the crypto ecosystem. With so many developments across various sectors, it has become increasingly challenging to keep up. This article breaks down the major Layer 1 (L1) and Layer 2 (L2) blockchains, assesses their potential, and categorizes them based on their current standing and future outlook.
We can group public blockchains into four distinct tiers based on their current influence, adoption, and potential:
- Tier Zero: Ethereum — The established leader
- Tier One: High-adoption L1s and L2s with proven network effects — Solana, Avalanche, Terra, Polygon
- Tier Two: Chains with solid tech and funding but lower traction — including NEAR, Cosmos, Harmony, and others
- WTF Tier: Projects with surprisingly high valuations but little visibility or clear use cases
Tier Zero: Ethereum
Ethereum continues to evolve, but its narrative remains fragmented. Some expect sharding to solve scalability, others see it becoming a foundational settlement layer for L2s, and some even believe it could rival Bitcoin as a store of value. This lack of a unified vision suggests Ethereum is still searching for its core value proposition.
While Ethereum debates its future, other blockchains are gaining ground. Many already offer sophisticated scaling solutions, such as Avalanche’s subnets, NEAR’s appchains, or Cosmos’ zones. The crypto world isn’t waiting for Ethereum to figure things out — and it’s unclear whether Ethereum can reclaim its innovative edge.
Tier One Blockchains
These projects have achieved significant adoption, and their growth trajectories remain strong. They currently offer some of the best risk-reward profiles in the crypto space.
Solana
Solana has emerged as a major contender among next-generation L1s. It adopts a monolithic architecture — meaning it scales as a single chain rather than relying on a modular approach. This has advantages and drawbacks.
Strengths:
- Solana is virtually alone in pursuing monolithic scaling, allowing it to offer uniform standards and full composability.
- Its architecture means all value accrues to the SOL token, avoiding the value fragmentation seen in modular ecosystems like Cosmos.
- Solana has one of the highest staking rates among major blockchains, reflecting a strong and committed community.
Challenges:
- Its design limits flexibility. Solana isn’t well-suited for enterprise or private chain use cases.
- The modular camp benefits from more contributors, faster iteration, and shared innovation.
Ultimately, a blockchain is only as strong as its applications. Solana’s low costs and high throughput have helped it build a lead in both ecosystem development and public awareness. Still, it lacks breakout DeFi successes — which is concerning, given that decentralized finance was one of its supposed strengths.
Raydium, a fairly standard decentralized exchange, still dominates Solana’s Total Value Locked (TVL). The absence of more sophisticated DeFi applications raises questions about Solana’s staying power as competition intensifies.
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Avalanche
Avalanche is currently the second most popular emerging L1. It launched later than Solana but has greater short-term growth potential due to its subnet architecture, which offers more flexibility and customization.
Its Ethereum Virtual Machine (EVM) compatibility has allowed it to onboard Ethereum developers quickly. I see Solana and Avalanche as the Android and iOS of Web3 — each with distinct advantages.
Avalanche’s ecosystem is growing healthily, with strong developer engagement and increasing subnet adoption. Its DeFi scene has already produced more standout applications than Solana.
The main challenge for Avalanche will be competing with other flexible, EVM-compatible chains like NEAR and Algorand, which are also accelerating. Technology alone isn’t a moat — Avalanche must continue attracting high-quality projects to maintain momentum.
Terra
Terra is less a general-purpose ecosystem and more a product suite centered around its stablecoin, UST, and applications like Anchor and Mirror.
This approach has been incredibly effective — Terra is now a top-10 project by market cap. However, its reliance on a few applications makes it vulnerable. Anchor alone accounts for over 40% of Terra’s TVL.
The protocols in Terra’s ecosystem are relatively easy to replicate, which raises questions about its long-term defensibility. Investing in Terra is akin to investing in a concentrated economy — it may perform well, but it carries higher risk due to lack of diversification.
Polygon
Polygon has seen impressive growth by positioning itself as Ethereum’s internet of blockchains. Most of its activity comes from projects ported over from Ethereum, so native innovation is still limited.
Polygon’s strategy is pragmatic: it experiments with multiple scaling solutions and adapts quickly. This agility may help it compete as more L2s emerge.
Although its potential may be lower than Avalanche’s, Polygon deserves a spot in the top 10 due to its existing adoption and forward momentum.
Tier Two Blockchains
These projects have strong fundamentals — funding, technology, and teams — but have yet to achieve significant adoption. Some may rise to Tier One; others may fade away.
NEAR Protocol
NEAR is one of the more promising Tier Two chains. It started slowly but is gaining momentum, especially with the growth of its EVM-compatible Aurora network.
Its Octopus Network enables app-specific chains and cross-chain communication, similar to Avalanche’s subnet approach. Whether NEAR can continue growing will depend on the quality of applications built on it.
Cosmos
Cosmos has built influential technology, but its token (ATOM) captures limited value. The ecosystem is growing, but ATOM’s role remains unclear.
Harmony
Harmony has benefited from the multi-chain trend in DeFi, but it remains largely a destination for yield farmers. Its path to differentiation is still unclear.
Algorand
Algorand has a strong narrative and technical foundation, but it needs more killer applications. Occasional partnership announcements aren’t enough — it must foster organic growth and retention.
Elrond
Elrond has excelled at marketing but hasn’t yet achieved proportional adoption. Its path forward may require attracting established projects from other chains — much like a developing economy leveraging foreign investment.
WTF Tier
This tier consists of projects that rank in the top 100 by market cap but have little public awareness or apparent utility. While not necessarily bad investments, they come with higher risk and less transparency. It’s often wiser to avoid these until they prove their value.
Frequently Asked Questions
What makes a blockchain high-tier?
Adoption, network effects, developer activity, token utility, and technological innovation are all key factors. Tier One blockchains excel in several of these areas.
Is Ethereum still a good investment?
Ethereum remains the dominant smart contract platform, but it faces scaling challenges and growing competition. Its future depends on the successful rollout of Ethereum 2.0 and L2 integration.
Which blockchain has the best technology?
This is subjective. Solana offers speed and low cost, Avalanche emphasizes flexibility, and Ethereum prioritizes security and decentralization. The best choice depends on user needs.
How important is EVM compatibility?
Very. EVM compatibility allows projects to easily port over from Ethereum, accelerating ecosystem growth. Avalanche, Polygon, and Harmony have benefited significantly from this.
Can Terra sustain its growth?
Terra’s growth has been driven largely by a few applications. Its ability to diversify will determine its long-term success.
What is the most promising underdog blockchain?
NEAR Protocol shows strong potential due to its technology, gradual adoption increase, and developer-friendly approach.
Conclusion
The blockchain space moves quickly. Today’s leaders may not be tomorrow’s, and some underdogs will certainly rise. The projects mentioned in Tiers Zero and One have strong short-term prospects, but the landscape can change in 12–24 months.
Avoid maximalism — stay informed, diversify wisely, and be ready to adapt. The most successful investors are those who learn continuously and avoid emotional attachment to any single project.