Financial markets are in a rough patch, as the triple threat of inflation, rising interest rates, and geopolitical uncertainty send investors scampering towards a sell-off. The cryptocurrency market, down 22 percent to $1.7 trillion (roughly Rs. 2,200 crore) year to date, is not immune to these challenges. So if you were to ask yourself the ominous question of which are the blockchain networks that might survive a crash in its current scale, you'd need to do a bit more digging.
The short answer to this question is - three.
In the medium to long term, only 3 DeFi Blockchains will remain - Bitcoin Blockchain, Ethereum Mainnet, and BNB Smart Chain.
Now for the long answer.
Today we have a bunch of public blockchains for decentralised finance (DeFi). There are 11 which have a TVL (Total Value Locked) of over a billion dollars:
- BNB Smart Chain
The Great Crypto Crash of 2022 has brought DeFi TVLs and crypto prices to their knees. Now is a good time to analyze which public blockchains are likely to succeed in the medium to long term. And I think there are only 3 Blockchain ecosystems that will survive:
BNB Smart Chain
The oldest and most-tested blockchain is that of Bitcoin. While proof-of-work has its fair share of haters, it's the only consensus mechanism that has withstood the test of time. And if ransomware creators choose to take their money in Bitcoin, I think it proves that Bitcoin is technologically the strongest.
Many people don't know that you can run smart contracts, non-fungible tokens (NFT), and decentralised applications (dApps) on Bitcoin!
That's the magic of:
Liquid Network Omni Layer Stacks Merged mining blockchains
Liquid Network is a sidechain-based settlement network that enables faster, more confidential Bitcoin transactions and digital assets issuance.
Omni Layer is a software layer on top of the Bitcoin blockchain for creating and trading custom digital assets and currencies.
Stacks is an open-source blockchain that leverages Bitcoin for decentralised apps and smart contracts. Since Stacks uses Bitcoin as a base layer, everything that happens on Stacks is settled on the Bitcoin Blockchain. Stacks connects directly to the Bitcoin blockchain through its proof-of-transfer (PoX) consensus mechanism.
Merged mining (technically called auxiliary proof of work) is the process of mining two or more blockchains at the same time. Essentially the same proof of work can be used on multiple chains.
Bitcoin merged mining blockchains include RSK, Elastos (ELA), Myriad (XMY), Unobtanium (UNO), Syscoin (SYS), Terracoin (TRC), and Blast (BLAST). RSK enables smart contracts on top of Bitcoin, near-instant payments through RIF Lumino, and greater scalability for Bitcoin.
Ethereum Mainnet remains the most mature and popular blockchain for DeFi.
It is expected that over the next few months, the Ethereum Mainnet will "merge" with the Beacon Chain.
The Beacon Chain is the base on which the Ethereum ecosystem hopes to become secure, sustainable, and scalable. As of now, the Beacon Chain runs in parallel to the Mainnet and uses proof-of-stake.
And when the merge happens, Ethereum Mainnet will move to proof-of-stake.
In a proof-of-work blockchain, miners usually sell some of the newly mined cryptos to pay their bills. But in a proof of stake blockchain, holders can get paid to validate transactions. This incentivises the "holding" of crypto and is good for the price.
Ethereum mining will stop and this will save the world a lot of energy. It is predicted that the Ethereum energy consumption will reduce by 99 percent.
Once the environmental impact of Ethereum reduces, more financial institutions will want to use the Ethereum ecosystem.
BNB Beacon Chain, the first blockchain from Binance, is optimized for fast decentralised trading but lacks smart contracts and strong programmability.
That's why BNB Smart Chain was created. It runs parallel to the original BNB Beacon Chain, has smart contract functionality, and is compatible with the Ethereum Virtual Machine (EVM). Its block time is around 3 seconds.
BNB Smart Chain is an independent blockchain and is not a layer two or off-chain scalability solution.
I expect that once we recover from the Great Crypto Crash of 2022, most DeFi blockchains will die a slow death and only the big 3 will remain.
Rohas Nagpal is the author of the Future Money Playbook and Chief Blockchain Architect at the Wrapped Asset Project. He is also an amateur boxer and a retired hacker. You can follow him on LinkedIn.
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