Layer 1 Blockchains Take Center Stage in the Current Bull Run, but Can They Prove Their Utility Beyond Speculation?

$2.8 trillion

Layer 1 (L1) blockchains have taken center stage in the ongoing crypto bull market, notching remarkable gains that have propelled them to the forefront of the narrative. But beyond the price action and buzz, are these platforms genuinely showcasing their utility and value proposition? Let's delve into some key metrics to assess their performance and uncover the factors driving their adoption.

Total value locked (TVL) serves as a barometer of trust and activity within a blockchain ecosystem. As of November 29, Ethereum remains the undisputed leader in this space, boasting over $70 billion in TVL — a significant 44% increase from $47.5 billion on November 5.

A substantial portion of Ethereum's growth stems from Lido (LDO), Ethereum’s premier liquid staking platform, which now accounts for nearly $35 billion of the network's TVL. Liquid staking allows users to stake their ETH while maintaining liquidity via derivative tokens, enabling further participation in DeFi activities.

Solana has also shown notable progress, with its TVL climbing over 50% to $9.17 billion, bringing it tantalizingly close to its all-time high of $10 billion, last achieved in November 2021.

In contrast, Binance Smart Chain (BSC) has seen more modest growth. Its TVL increased by 17% over the past 30 days to $5.57 billion. However, this figure is still significantly lower than its November 2021 peak of over $22 billion.

Meanwhile, Cardano has reached a milestone with its TVL hitting an all-time high of approximately $619 million. This marks a dramatic improvement from its sub-$1 million TVL levels in January 2022.

Blockchain fees have long been a vital metric for assessing the activity, utility, and adoption of L1 platforms. They represent not only the cost users are willing to pay to transact but also the demand for block space and the overall health of the ecosystem.

During the bull run of 2020 and 2021, Ethereum dominated this space. Its fee revenue highlighted its position as the premier blockchain for dApps and DeFi.

In late 2020, Ethereum consistently generated over $1 million in daily fees, leaving competitors like Tron (TRX), which managed only a few thousand dollars a day, far behind. At that time, Binance Smart Chain and Solana had yet to emerge as key players in this metric.

By 2021, Ethereum's fee revenue averaged between $20 million and $50 million daily during the second-half of the year. Meanwhile, BSC generated $3 million to $10 million in daily fees, while Tron followed with a more modest $300,000 to $800,000. Solana, still in its infancy as a competitor, collected a relatively minor $100,000 to $200,000 daily in fees.

Fast forward to November 2024, and a striking shift has occurred. Solana outperformed Ethereum in daily fees throughout the month — a gigantic milestone reflecting its growing adoption and increasing network activity.

As of November 28:

Solana’s relative decline in fee dominance is perhaps the most revealing shift. While it remains a powerhouse, several factors have contributed to its reduced share of the fee market.

The growing adoption of layer 2 and layer 3 scaling solutions has starkly lowered the fee burden on Ethereum's mainnet. Additionally, waning interest from retail investors in recent months has further dampened activity.

What was once high fees justified by Ethereum’s unparalleled DeFi ecosystem are now being bypassed as users seek alternatives that offer comparable utility at a fraction of the cost.

The dApp ecosystem serves as the ultimate proving ground for L1 platforms, showcasing their ability to drive activity and engage users. By analyzing transaction volumes and key contributors, we can uncover what fuels these networks and how they stack up. The data is as of November 29.

Ethereum: Dominating volume, not value

Ethereum remains the heavyweight in DeFi, generating $175 billion in transaction volume across 4,844 dApps in the past month. Two standout platforms, Uniswap (UNI) V3 and 1inch, account for the majority of this activity.

Uniswap V3 alone processed $85 billion, solidifying its position as the cornerstone of liquidity provision and token swaps. Meanwhile, 1inch (1INCH) contributed $11 billion, attracting users with its efficient aggregation across multiple liquidity pools.

The data suggests that Ethereum continues to appeal to institutional and high-net-worth users who value its reliability and deep liquidity. However, with only 1.76 million unique active wallets, it’s evident that high fees and scalability limitations are driving smaller users toward L2