Blockchains (L1)

A space to discuss the ‘Blockchains (L1)’ market sector available on Token Terminal.

What are Blockchains (L1)?

Blockchains (L1) are smart contract execution environments that allow for the permissionless creation of smart contract-based businesses or DAOs.

What problems do Blockchains (L1) aim to solve?

The time and money it takes to incorporate your business varies greatly between countries and jurisdictions, and it’s often extremely time consuming and costly to sell products and services across borders. For blockchain-based businesses, many parts of their business operations are global from day one.

How do Blockchains (L1) solve those problems?

Blockchains (L1) bring down the cost of incorporation to one function call. Once a DAO is deployed on a blockchain, it inherits the advantageous features of blockchains: access to global capital markets, global participation from contributors and customers, transparent and highly automated rules of operation, and an immutable audit trail.

Why is now the right time to build and invest in Blockchains (L1)?

The Blockchain L1 market was initially dominated by Bitcoin, an extremely simple and limited contract execution environment. With the launch of Ethereum, it became possible to (in theory) deploy arbitrarily complex contracts or programs on a blockchain. Now, with application-specific blockchains and cross-chain bridges, pioneered by projects like Cosmos and Polkadot, it has become possible to deploy arbitrarily complex contracts also in practice (scalability no longer a limitation). We’re seeing increasing interest in blockchains that have embedded onchain privacy and other features not found in the 1st generation of blockchains.

What is the business model of Blockchains (L1)?

The primary business model for Blockchains (L1) is to generate revenue by taking a cut of the transaction fees paid by users. That is, the Blockchain (L1) takes a portion of the miners’ or validators’ revenue.

Where can I view the current and historical (financial) performance of Blockchains (L1)?

Blockchains (L1) dashboard: Blockchains (L1) | Markets | Token Terminal

Methodology for Blockchain (L1)-specific metrics

Total value locked: sum of the assets deposited into applications that run on the Blockchain (L1).
Transaction volume: transfer volume of tokens on the Blockchain (L1).
Fees: total transaction fees paid by users.
Supply-side fees: share of transaction fees that goes to the miners or validators.
Revenue: share of transaction fees that goes to the protocol (and its tokenholders).
Token incentives: value of governance tokens distributed to miners or validators.
Daily active users: daily distinct sender addresses on the Blockchain (L1).

Example project documentation

Relevant links