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Layer-1 Tokens Rack Up Early February Gains – Avalanche, Cardano, Ethereum and Fantom Updates

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In a report focusing on burgeoning innovative technologies, digital assets and tech-focused investment company Ark Invest opined that smart contract-based ecosystems could boast a market valuation north of $5 trillion by 2030. This forecast, which the firm tied to the rising value of tokenized financial assets on-chain and diversified utility of these networks, formed part of the reviewed technologies which the asset management firm identified as promising. The Ark Invest analysts based the bold projection of smart contracts and public blockchains on the hypothetical scenario where these technologies track the same adoption rate as was witnessed in the tech bubble.

Meanwhile, in the markets this week, the majority of altcoins picked up the pace following a dull January close as Bitcoin preserved its upward trajectory.

L1 Platform Tokens Roundup

Layer-1 blockchain tokens generally returned better profits to holders in January, thriving on general sentiment, governance proposals, niche developments and other narratives.

Source: Twitter

This week, more blockchain ecosystems have shared updates on new and existing proposals leading to elevated interest.

Ethereum debuts Zhejiang, the first public testnet ahead of Shanghai

Ethereum developers on Tuesday introduced the first testnet to simulate withdrawals, as would be seen once the Shanghai upgrade executes on the mainnet this March. The public testnet, dubbed Zhejiang, went live on Feb 1 at 15:00 UTC, according to an update from Ethereum developer Barnabas Busa bringing the network closer to its awaited Shanghai update event. Ethereum DevOps engineer developer Parithosh Jayanthi confirmed that the Shanghai (a hard fork on the execution layer) and Capella (a hard fork on the consensus layer) upgrades will follow on Feb 7 at epoch 1350.

The six-day hiatus is to give an allowance for getting the lay of the land in terms of the user interface. At this point, users can, for the first time, actually test withdrawals, both partial and full. In addition to withdrawals,  the Zhejiang testnet will also be used to evaluate other features included in the Ethereum Improvement Protocols (EIPs) of the Shanghai upgrade, such as timestamp-based forking, PUSH0 opcode implementation, initialization of limits/meters, and changes in BLS execution at scale.

Etherscan data shows as much as 16.419 million Ether worth roughly $27 billion at the current price is held on the Beacon Chain deposit contract. Full withdrawal of staked will require complete exiting from validator status. The entire balance, comprised of 32 ETH principal and any rewards, would be released but can only be made accessible for spending after the successful gravitation from the exit queue and the entire withdrawal process. On the other hand, balances exceeding 32 ETH (including accumulated rewards) are transferred to a specified Ethereum address, which can be spent instantly in the case of partial withdrawals.

None of the withdrawals will be charged as they are gasless state changes and will only appear as a bump in the balance on the user's execution layer address. The validator node continues to operate within the Beacon Chain and perform its assigned validation tasks. The hype around the upcoming hard fork, alongside other recent ecosystem fundamentals, has provided a catalyst to the value of Ethereum's native token.

ETH/USD 1-month chart. Source: TradingView

Ether (ETH) price has established firm footing above $1,600 on the 7-day ETH/USD chart after securing $1,500 for almost three weeks now. Still, the premier altcoin has been outperformed by Bitcoin and other alts thus far in 2023.

ETH/BTC ratio

The ETH/BTC ratio chart, however, shows that Ethereum's price has started picking up against the market leader in the last two days after breaking down towards the end of January.

To learn more about Ethereum, check out our Investing in Ethereum guide.

More than 1.85 million of Cardano's premier stablecoin DJED tokens are now in circulation

Cardano's first-ever algorithmic overcollateralized stablecoin, DJED, also launched this week in collaboration with COTI Network. COTI CEO Shahaf Bar-Geffen confirmed that the stablecoin hit its overcollateralized peak of 800% some hours after it was launched, at which point SHEN holders benefited from delegation rewards, fees, LP, and farming rewards. DJED'S reserve ratio controls contribute towards stability and are meant to prevent a Terra-like collapse, using SHEN (22.5 million tokens in circulation) as a reserve token.

In the event that the reserve ratio falls below the 400% threshold, users are restricted to executing only burn operations on DJED and minting on SHEN. Conversely, if the reserve ratio grows above the 800% mark, the operations are reversed, and SHEN cannot be minted until the ratio retreats. The algorithmic stablecoin project took off after launch and has fairly maintained this pace.

DJED's tracker website shows about 1.856 DJED million tokens are in circulation, overcollateralized at a 633% ratio. The DJED offering on Cardano, combined with annualized yield rewards offered by decentralized exchanges (DEXs), attracted investors in the hours after its launch. The total value locked (TVL) on Cardano rose sharply from $98.99 million on Jan 31 to slightly over $123 million at press.

To learn more about Cardano, check out our Investing in Cardano guide.

Fantom thrives on multiple narratives

Fantom has also made headlines among blockchain platforms thus far in 2023. Last month, the project unveiled an Ecosystem Vault to support developers “by offering a decentralized avenue for funding projects, ideas, and creations,” according to the announcement post. Fantom shared on Sunday vague updates of the network's plans to release v2 of its fUSD stablecoin at an unspecified timeline this year. The migration to fUSD v2 requires that version 1 of fUSD go through liquidations before the scalable layer-1 network can move forward.

Notably, Fantom is backed by veteran decentralized finance architect Andre Cronje who, in a Feb 1  blog post, reiterated he is optimistic  about the project in the long term. Among others, the popular DeFi builder cited the network’s legacy, fast confirmation times (sub 900ms finality), proactive security, friendly UX for dapp development, and uptime record as reasons for betting on the project. Cronje further extended an invitation to other developers at the end of the post, which mainly sought to address the frustrations of dapps developers.

“Our aBFT consensus engine has true finality (no longest chain rule), once a transaction is finalized, it cannot be rolled back. Consensus is also reached in sub-second (average 700ms — 900ms). This allowed us to be able to make our RPC's synchronous. With Fantom RPC's once you send the request and receive a response, the transaction has been finalized, included, and cannot be rolled back, all in a few milliseconds,” Cronje remarked on the UX experience for both developer and end user.

FTM price has been responsive to the niche developments, climbing higher fueled by these bullish narratives. Despite the mild correction towards the end of the week, FTM price is still up 24% in the last five days. Fantom has plans to introduce gas subsidies and native smart wallets in the second half of the year.

To learn more about Fantom, check out our Investing in Fantom guide.

Canto's January returns take the market by storm

Fantom's gains across January were significantly exceeded by other tokens, including Aptos (APT), which arguably emerged as a winner.

FTM, CANTO, APT gains in 2023

On the other hand, Aptos' terrific rally in January was dwarfed by Canto (CANTO), whose price octupled across January from a monthly low of $0.068 to $0.571 on the last day of the month. The surge came on the heels of a bulge in user activity as well as trading volume. The DeFi-focused Layer 1 blockchain, which launched in the third quarter of 2022, has received backing from several big names, including crypto venture fund Variant.

Though the CANTO/USDT pair has dipped from a local high above $0.62 to $0.51 at writing, it remains within profit zone for holders that got in at the start of the rally. Canto's decentralized nature has contributed to the interest in the CANTO token, but beyond that, the hype around the token could be key for keeping it in the green.

To learn more about Aptos, check out our Investing in Aptos guide.

Avalanche welcomes Banff 8 upgrade and Intain as the first institutional subnet

Layer 1 network Avalanche announced on Thursday an update to its protocol, Banff 8, whose launch propelled the AVAX token. Avalanche (AVAX) wrapped up January with modest gains of 80% but has taken off this month on the back of the upgrade release, recording a price uptick of 18.36% in the last seven days. Market data shows the token soared to a five-month high of $22.71 but has since cooled to around $21.30.

The Avalanche native token has also benefitted from other milestones around its ecosystem that have not necessarily been of appeal to traders. Late last month, Avalanche unveiled IntainMarkets, a digital marketplace for tokenized asset-backed securities, as a subnet in a joint venture with the structured finance platform Intain. The development followed its partnership with Amazon in the first half of January.

To learn more about Avalanche, check out our Investing in Avalanche guide.