May Layer 1 Landscape Recap

Layer 1 (L1) ecosystems are often influenced by changing narratives and shifting capital movements in the crypto industry. Last month, in our recap of the L1 landscape in April, we highlighted the effects of several major events, including the Ethereum Shapella upgrade, the rise of a memecoin trading frenzy, and the withdrawal of institutional market maker liquidity. Today, we will reflect on the developments that shaped the L1 landscape in May and delve into the most notable trends from month to month. 

Back in April, we witnessed an apparent consolidation of value to the largest L1s, wherein Ethereum, BNB Chain, Solana, and Tron all saw month-over-month (MoM) gains in their market caps while smaller L1s such as Aptos, Fantom, and Canto saw a general decrease in valuation over the same period. L1 valuations declined across the board in May, with the exception of Tron, which saw an MoM gain of ~11%. Tron’s outperformance was likely influenced by rumors that began circulating from an unofficial Tron community account on Twitter around May 21st that its native TRX token could potentially become legal tender in Hong Kong in June, though this has not yet occurred or been officially confirmed as of this writing.