New Public Chain Evolution: the key to victory comes from top-down

Produced by: LD Capital Research


1. The expansion of the new public chain follows a top-down path: from the upper-level application to the lower-level technology, and from the prosperity of ecosystem applications to the explosion of public chain use.

2. The change in the share of total market capitalization reflects the difference between the original narrative of Bitcoin and numerous narratives of new public chains and is also a demonstration of confidence by new capital from communities and institutions for principles and common grounds.

3. When the ecosystem has reached a certain scale, expanding the path for the ecosystem to export to the outside world is the final proposition. User retention and developer friendliness are the very blood for continuous renewal of the ecosystem, and the resulting protocol innovation and differentiation within the public chains will become the driving force for the long-term development of ecosystem.

4. The development of the new public chains is an evolution of the existing blockchain architecture rather than a rejection of the original system, as productivity innovation, transparency of production relations, and full freedom of competition are all the driving forces empowering the development of crypto world.


Let us imagine a city: the roads are spacious, well-equipped but empty. That is what the awkward period of public chain development looked like in early days. Either out of excessive attention to the “impossible triangle” game, or out of an obsession with the arms race of TPS, the neglect of the help of ecosystem application development means it is simply inevitable to build infrastructure in a perfectly empty city with no one ever settled in.

John Carmack, the father of FPS and a technical genius, once admitted that technology is always developed for certain products, and whether the technology can be employed for other purposes is the next thing to consider. The focus should always be on R&D for actual products rather than technical architectures or ideas. Premature consideration of technology popularization or long-term planning rarely brings real value, and may sometimes hinder later development.

Number of protocols on each public chain

universal. For instance, the evolution of DeFi paradigm has promoted the value discovery of Ethereum smart contracts and the burning of EIP-1559. The activity of GameFi promotes the prosperity and development of Binance Smart Chain;The paralysis of Ethereum caused by the popularity of CryptoKitties have led the Dapper Labs team to construct Flow. And the chain game leader Axie has also issued Ronin public chains based on its own ecosystem after achieving explosive success…

To conclude, the expansion of the new public chain always follows a top-down path: from the upper-level application to the lower-level technology, and from the prosperity of ecosystem applications to the explosion of public chain use.

As of November 19, each public chain TVL, source from Footprint Analytics

This article will elaborate on how to stand out in the fierce competition of new public chains. The main body of the article can be divided into the following three sectons:

· Ethereum Layer2 expansion solution and representatives of compatible EVM public chains, taking Avalanche, Fantom, and Polygon as examples;

· representatives of the new ecosystems, taking Solnan and Terra as examples;

· and new public chains with distinctive functions, taking Arweave, Mina, and Shimmer as examples.

The value potential of the new public chains is deduced mainly through their solutions and data demonstration. At the same time, we will dig into the underlying logic of how a new public chain evolves from creation to application, and explain how ecosystem and technology can be better employed to empower each other.

EVM expansion history

Ethereum, which accounts for 65% of all public chain TVLs, has dominance advantage in the industry. The Ethereum ecosystem includes a full-fledged architecture for smart contracts, a large developer community, and continuous innovations in concepts and applications.

As of November 19, the proportion of TVL in each public chain, source: Footprint Analytics

Given network congestion, limited block size, and excessive gas on board, Layer1 is responsible for solving the trust problem and Layer2 takes care of the performance problem. That seems to be the best available solution for the Ethereum ecosystem at the moment. On November 21st, Vitalik, the founder of Ethereum, also expressed his gratitude to the Arbitrum community for its contribution to the development of the core part of Ethereum Layer2.

Therefore, many new public chains choose to interface in the form of Ethereum sidechains or EVM-compatible forms and thus make use of Ethereum’s existing ecosystem advantages through quick module invocation and friendly development.

• Avalanche

Avalanche ecosystem map, from @avalancheavax

The Avalanche Protocol released a white paper document in 2018 and received US$6 million in financing from a16z, Polychain, and other institutions. After receiving US$12 million in private and public financing in 2020, it was launched on the mainnet in September of the same year. Recently, it has once again drawn the industry’s attention with its superb market performance.

Avalanche is a smart contract platform based on the POS mechanism and compatible with EVM. It adopts an original random sampling and metastable consensus protocol. Only the majority of N nodes are selected for comparison without the need for network-wide verification, so as to achieve high-performance transactions and settlement in seconds.

Avalanche’s design structure

In terms of structural design, Avalanche innovatively adopts a three-chain architecture, which achieves horizontal expansion and enhance network performance by dividing the functions among three chains in question. The Exchange-X chain is responsible for asset creation and transaction. The Platform-P chain is a metadata chain, responsible for platform governance, node setup, and subnet creation. Currently, it has 1178 validators/nodes. The C chain covers the functions concerning EVM compatible smart contract.

The total supply of Avalanche is 720 million tokens, and the number of tokens currently in circulation has already exceeded 377 million. On November 21st, AVAX quoted US1138, an increase of 124% within 30 days, with a market capitalization of US33 billion, ranking 10th among mainstream digital assets. In terms of TVL, there are currently about 12.9 billion US dollars in funds on the chain. As the price of AVAX has risen, TVL has also climbed, and the number of daily transactions has also reached about 170,000.

Head project and TVL status on Avalanche, data source: Footprint Analytics

Avalanche’s TVL has ushered in a significant leap since the day it announced the “Avalanche Rush” plan on August 18th. That is the official launch of a liquidity mining incentive plan with a total value of US 180 million. Before the announcement of the plan, TVL on Avalanche was only US265 million. One month after the plan was announced, TVL reached US33 billion. Within 30 days, TVL achieved a more than tenfold increase.

At the same time, the opening of the Ethereum cross-chain bridge Avalanche Bridge (AB), the successive rollout of mainstream DeFi protocols such as Aave, Curve, and Sushi Swap on Avalanche, and the continuous increase in AVAX prices have provided sufficient momentum for TVL’s growth. At present, Avalanche has more than 72 protocols in operation, and 6 of the top 10 TVL protocols are exclusive to the Avalanche ecosystems. Noteoworthy projects include Trade Joe (DEX), Benqi (loan), and Wonderland (Stake).

• Fantom

Fantom ecosystem map, data source: @FantomFDN

Fantom was founded in January 2018 by Korean developer Byung Ik Ahn. It is a smart contract platform based on DAG (directed acyclic graph), featuring that the more nodes are added, the more scalable and efficient the network is. The milestone in Fantom’s development is its compatibility with EVM at the end of 2019. Thanks to the modular configuration, developers can quickly port Ethereum-based dApps to Fantom’s Opera mainnet.

Fantom’s TVL changes and the proportion of mainstream projects, data source: Footprint Analytics

The total supply of Fantom is 3.175 billion tokens, and the current circulation reaches 2.54 billion. The quoted price on November 21st was US$2.04, an increase of -8.4% within 30 days, and the market capitalization exceeded US$5.1 billion, ranking 41st among mainstream digital assets. At present, the 71 protocols on Fantom have brought $4.8 billion of TVL. Anyswap, Geist Finance, and Spookyswap have brought TVL worth $230 million, $100 million, and $54 million respectively as the top three protocols. Fantom’s TVL has achieved a 70-fold increase in half a year. In addition to its own DAG architecture and the choice to be compatible with EVM, there are two unique reasons for the rise of the Fantom ecosystem.

Andre Cronje-founder of, chief DeFi architect of Fontom

First, Fantom is more well-known for its “chief DeFi architect” Andre Cronje. As the founder of, he blessed Fantom with his personal endorsement and led the “AC series” projects to be integrated into Fontom, such as Keep3r, Cream, Sushiswap, Year, etc. The celebrity effect has brought considerable flow and capital for Fantom’s ecosystem growth.

Second, the Fantom Foundation said on August 30th that it will invest 370 million FTMs to encourage ecosystem development, and nearly $260 million worth of funds will be used to reward ecosystem applications with a lock-up volume of TVL exceeding US$200 million. It can be seen that since the announcement of the plan, both Fantom’s market capitalization and TVL have begun to make a comprehensive breakthrough.

• Polygon

Polygon ecosystem map, data source: @0xPolygon

In 2017, three blockchain developers from India co-founded Matic, used off-chain computing of the sidechain to provide scalable solutions for Ethereum, and announced its change of name to Polygon on February 10th this year. Polygon is compatible with Ethereum EVM. It not only supports rapid migration of Ethereum developers, but also uses Plasma off-chain expansion and POS mechanism to ensure asset security. It is referred to as the “Indian version” of Ethereum.

Polygon’s technical structure developed around Ethereum

Polygon’s mainnet was launched in May 2020, with a total supply of 10 billion tokens, and the current circulation has exceeded 6.8 billion. On November 21st, the price was $11.61, an increase of 7.4% within 30 days, and the market capitalization was $11 billion, ranking 20th among mainstream digital assets. The number of Polygon unique addresses is 114 million, which is a 40-fold increase from the volume half a year ago. In terms of TVL, the current funds on the chain are about $4.6 billion, but they have been declining in the past three months.

The top 16 TVL projects on Polygon and their proportions, data source: Footprint Analytics

At the same time, most of the top 10 projects by TVL accounting are DeFi mainstream asset protocols. Only 3 are exclusively owned by Polygon. Due to the continuous emergence of various new public chain competitors and the lack of independent star projects in Polygon to put into practice differentiated competition, challenges remain for the long-term stable development of the Polygon’s overall ecosystem.

The network effect of the new ecosystems

A new public chain competition makes up almost half of the history of EVM expansion. The huge ecosystem of Ethereum and the aggregation of Matthew effect will daunt the development of other emerging public chains. However, the congested network and high interaction costs of Ethereum also provide them with opportunities to break through.

Metcalfe’s law is a law of network value. He pointed out that the more users a network has, the greater the value of the entire network is. As a Chinese proverb goes, a great idea always derives from somewhere unperceivable. Multi-chain ecosystems, represented by Solana, Avalanche and Terra, are building their network effects respectively. This kind of multi-chain differentiation is also the engine for the industry’s continuous innovation

• Solana

Solana ecosystem project map, data source: @SolanaProject

Solana was established in 2017. The founder and former Qualcomm engineer Anatoly Yakovenko chose to launch the Solana mainnet at the bottom of market after the stock market crash in March 2020: “It was an interesting period because it was lower than everyone’s expectations.” Solana announced in June of this year that it has obtained a $314 million financing led by a16z and Polychain, and the ecosystem has achieved a further leap forward. At present, there are nearly 500 projects built on Solana, covering DeFi, Web3 applications, games, and NFT.

Solana is committed to building a decentralized, high-performance, and extendable public chain. The core technological innovation is to adopt the PoH historical proof mechanism, which eliminates the need for timestamps for node broadcasts through decentralized time clocks, and controls the average block time to 500 Milliseconds. The whole network has 1207 verification nodes in total. The high degree of extendability also makes the transaction cost for developers and users down to less than 0.01 U.S. dollars, and currently there are more than 40 billion transfers.

The total supply of Solana is 500 million tokens, and the current circulation has exceeded 300 million. On November 21st, SOL quoted at US$213, an increase of 13% in 30 days, with a market capitalization of US$64 billion, ranking 5th among mainstream digital assets. In terms of TVL, the current capital on the chain is about $15 billion and has been constantly on the rise.

Top 10 TVL projects on Solana and their proportions, data source: Footprint Analytics

Compared to other new public chain ecosystems, Solana’s uniqueness and differentiation are obvious. It has formed its own ecosystem, represented by Serum and Raydium (DEX), Saber (AMM), Marinade (Stake), and the TVL on the chain ranks on top. The top ten TVL projects on the chain are all projects exclusive to Solana’s ecosystem. FTX’s endorsement and resource support fuels, to a large degree, Solana’s development. FTX’s investment institutions such as Alameda Research and the Solana Foundation are the main investors in Solana’s ecosystem projects. At the same time, SBF’s personal influence and Solana’s continuous hackathons have also attracted a large number of outstanding developers and continuously injected fresh vigor and vitality into the ecosystem.

• Terra

Terra ecosystem project map, data source: @Terrians_

Terra was launched in 2018, and in August of the same year it received $32 million of investment from Binance, Polychain, and other institutions. Terra is developed based on the Cosmos SDK framework and is committed to providing a stable and widely adopted algorithmic stablecoin system. Terra has two main endogenous assets: Luna is responsible for governance and pledging; TerraUSD (UST) is an algorithmic stablecoin pegged to the US dollar, and there are also other coins pegged to baskets of currencies. Every dollar worth of UST needs to be burnt down to one US dollar equivalent of Luna. Through the dynamic balance of the arbitrage mechanism, the UST is pegged to the U.S. dollar equivalent.

The usage of stablecoin UST are divided into two scenarios, on-chain and offline. For offline usage, Terra connects the encrypted world with offline payments through the mobile payment application Chai, and is regulated by the South Korean government. At present, Chai has 2.5 million users in total, accounting for 5% of South Korea’s overall population, and the daily transaction volume reaches 68 million Korean won. Similar applications include Kash, MEMEPAY, PAYWITHTERRA, BUZLINK, etc. On the chain, Terra constantly develops protocol applications for its ecosystem. For example, Anchor (lending), Mirror (synthetic stock), and Terra (DEX), are inseparable from UST as a native stablecoin. The rising demand for the use of the stablecoin UST will directly increase the consumption of Luna, and as the market value of UST grows, the price of Luna also rises.

Top 10 TVL projects on Terra and their proportions, data source: Footprint Analytics

The total supply of Luna is 870 million tokens, and the current circulation has exceeded 390 million. On November 22nd, Luna quoted US$42.3, an increase of 5.9% in 30 days, with a market capitalization of US$17.3 billion, ranking 14th among mainstream digital assets. In terms of TVL, the current funds on the chain are about $10 billion and are still on the rise. At the same time, TerraUSD (UST), the stablecoin issued by Terra, currently has a market value of more than US$7.1 billion, ranking 5th in the stablecoin sector.

Terra officially announced on July 7th that it will launch of an eco fund with the market value of USD 150 million to support projects built on Terra ecosystem. At present, among the top 10 projects with Terra ecosystem by TVL accounting, 8 of them are exclusive to Terra, including characteristic DeFi projects such as Mirror, a synthetic stock protocol, and Anchor, a high-interest-rate lending protocol,which are further expanding the application scenarios of UST. The real-life channels opened up by payment applications such as Chai have gradually constructed a moat for the UST ecosystem, and the adoption of UST on different chains has also enabled the Terra ecosystem to expand.

Born for applications

In addition to the now large-scale Ethereum Layer2 and the new multi-chain ecosystems, large TVL and the number of nearly 100 protocols are their characteristics. Moreover, there are some new public chains with distinctive functional applications. Chains play a role in the crypto world in their respective application fields.

• Mina: Private and Lightweight

Mina aims to be a lightweight blockchain, using Zk-Snarks zero-knowledge proof technology as the bottom layer to keep the node size at 22 KB, while the block size of other blockchains is often around 20 GB. This kind of lightweight approach does not require complex computer hardware, so anyone can easily run nodes and maintain network security.

The total supply of Mina is 870 million tokens, and the current circulation has exceeded 300 million. On November 22nd, Mina quoted a price of US$4.4, an increase of 5.5% in 30 days, with a market capitalization of US$1.3 billion, ranking 105th among mainstream digital assets.

Lightweight node design enables Mina to implement decentralization to a maximum degree. It can also work as a plug-in, working with other public chains on privacy as a bridge of middleware. We expect that after the launch of the SDK next year, it will allow developers to deploy Snapps and launch Mina’s ecosystem building.

Currently, Mina has successively announced its cooperation with the Ethereum Foundation, Polygon, and Teller Finance on privacy protection applications. Mina Foundation committee member Tess Rinearson is also leading the encryption technology team formed by Twitter.

• Arweave: permanent storage

Arweave ecosystem project map, data source: @joselitommutuc

Arweave was launched in 2017, and the main network came online in June 2018. In 2019 and 2020, it has respectively received US$5 million and US$8.3 million in financing led by a16z. The core feature of Arweave is its decentralized permanent storage. According to the characteristic that storage costs will decrease year by year, users are always charged a one-time prepaid fee for permanent storage, and random access is used to prove that Spora motivates nodes to store data permanently.

The total supply of AR is 66 million tokens, and the current circulation has exceeded 50 million. On November 22nd, AR quoted at US$60.8, an increase of 11% in 30 days, with a market capitalization of US$3 billion, ranking 63rd among mainstream digital assets.

With the prosperity of the NFT industry, Web2.0 storage providers are vulnerable and there are incidents where NFTs disappeared from the network. Therefore, many popular NFT projects choose Arweave as the storage layer to achieve permanent storage. At the same time, the market expects that Arweave will become the basic storage layer of the future metaverse. Massive storage demand has directly contributed to the exponential growth in Arweave’s protocol revenue and market price.

• Shimmer: Internet of Things + Web3.0

On November 17th, IOTA, the public chain of the IoT, announced the launch of Shimmer, a first-of-its-kind test network, to help IOTA promote complete decentralization and optimize the utility of sharding. Users can help them start a new token economy by staking IOTA, and they can be rewarded from the newly launched Shimmer network and applications.

IOTA is a public distributed ledger based on DAG. Its Tangle architecture is designed for smart cities to realize micro-payments and machine-to-machine value transfer on the Internet of Things and provide infrastructure for the urban Internet of Things through services without transaction fees.

As IOTA’s official and incentivized pilot test chain, Shimmer will help developers flexibly build dapps through EVM compatibility and Layer2 composable smart contracts. Developers can explore the construction of future programmable dapps through IOTA’s existing ecosystem and IoT technology foundation, as well as the underlying development path of the Internet of Things and Web3.0 public chain.


Performance comparison of mainstream public chains, data source: @rareliquid

Summarizing the development paradigms of several new public chains, in addition to explaining the top-down path for development, from the upper-level application to the lower-level technology, and the explosion of public chain use cases boosted by the prosperity of ecosystem applications, we have also drawn the following inferences:

  • The change in the share of Bitcoin’s market capitalization reflects the distinction between the fundamentalist and the new public chain narratives. Since Bitcoin emerged from the early wilderness, the total market capitalization ratio increased from the initial 100% to the current 42%. The reason is that a number of new public chains and their protocols such as Ethereum are not only expanding the ecosystems of the crypto world to the outside, but are also inwardly competing for technological edge and the throne of ecosystem value. The change in the proportion of its total market capitalization reflects the distinction between the original narrative of Bitcoin and the narratives of the new public chains. At the same time, it is also the vote of new capital from communities and institutions on the fundamentalist view and the new consensus.
  • The inner lifecycle of the new public chain ecosystem has been gradually improved, and the trend of asset decoupling is beginning to show. the asset decoupling of the new public chain and many conceptual sectors from Bitcoin has become more and more obvious. The maturity and improvement of the ecosystem and the independence of the user base have broken the strong correlation with fluctuations in Bitcoin prices. However, the development of the new public chains is an evolution of the existing blockchain architecture rather than a rejection of the original system, just as product innovation, transparency in productivity relations, and full freedom of competition are the driving forces for the development of the crypto world.
  • On how the overall improvement of the new public chain ecosystem will play out: First of all, the institutional endorsements and celebrity effects of the crypto world will draw industry attention and resources to early public chain ecosystem; then, lucrative ecosystem incentive policies will drive the rapid start-up of the overall TVL of the public chain ecosystem, and it will often reap TVL capital retention and market value increase that are several times higher than the reward amount. At this time, it will also test the public chain’s own ability to precipitate and activate assets; when the ecosystem has reached a certain scale, the expansion path will allow the ecosystem and protocol to expand and export to the outside (other public chains or the real world), which is the final proposition; user retention and developer friendliness are key to continuous ecosystem renewal, and the resulting protocol innovation and differentiation within the public chain, will become the driving force for long-term development of the ecosystem.

Reference Materials

Keynote presentation by John Carmack at Connect.

Data sources: Defillama, Footprint, Coingecko.

Disclaimer of Warranty

The information in this research report comes from publicly disclosed materials, and the opinions in this article are for research purposes only and do not represent any investment opinions. The opinions and forecasts issued in the report are only for analysis and judgment on the date of issuance and have no permanent validity. In addition, under any circumstance, the organization and the author shall not be responsible for any loss caused by anyone using any content in this report.

LD Capital is a leading crypto fund who is active in primary and secondary markets, whose sub-funds include dedicated eco fund, FoF, hedge fund and Meta Fund.

LD Capital has a professional global team with deep industrial resources, and focus on develivering superior post-investment services to enhance project value growth, and specializes in long-term value and ecosystem investment.

LD Capital has successively discovered and invested more than 300 companies in Infra/Protocol/Dapp/Privacy/Metaverse/Layer2/DeFi/DAO/GameFi fields since 2016.




We are one of earliest VC investors in the Blockchain field in Asia. We focus on : Innovation projects within finance, games, content publishing and IOT

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LD Capital

We are one of earliest VC investors in the Blockchain field in Asia. We focus on : Innovation projects within finance, games, content publishing and IOT