Layer by Layer 2021 Review: Part 1

One of the prevailing trends of 2021 has been the growth of layer-1 (L1) blockchains and their ecosystems, particularly in relation to the growth of the current leading smart contract platform, Ethereum. L1s this year saw a dramatic increase in quantifiable user activity, largely driven by the emergence of DeFi ecosystems across the various L1 platforms. With a continually growing list of DeFi protocols to choose from, users deposited a record amount of capital into decentralized applications like decentralized exchanges (DEXs), lending protocols, yield aggregators, and derivatives exchanges.

In this first part of a two-part series, we summarize the competitive landscape of L1 platforms in 2021, taking a look at the impact of incentives and funding on the rapid growth of L1 ecosystems and their underling protocols.