September Layer 1 Landscape Recap

Layer 1 (L1) blockchains often serve as useful indicators of the state of crypto markets overall. For example, high trading volumes on exchanges tend to translate to higher volume and user activity on L1 networks as well. Similarly, activity on L1s is typically correlated with transaction fees paid by users, which can then be used to estimate demand for block space on specific chains over time. One major reason for this close relationship between L1 activity and general participation in crypto markets is that L1s continue to comprise the bulk of liquidity in decentralized finance (DeFi) protocols today, commonly gauged in terms of total value locked (TVL). 

Over the past two years, Layer 2 (L2) scaling solutions have carved out an increasingly larger share of DeFi TVL as developers continue to experiment with various ways to maximize blockchain throughput. Nonetheless, as of this writing, about 92.3% of DeFi TVL still resides on L1s, highlighting their enduring importance for financial activity in the crypto economy. In this report, we review some of the key metrics across the L1 landscape in September to uncover insights into specific blockchain ecosystems, as well as crypto markets overall.