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Market Mapping Crypto – Ash Egan

The crypto-native category is comprised of the actively forming crypto stack and its ancillary pieces: Layer 1 (L1), Layer 2 (L2), Layer 3 (L3), miners, stakers, and crypto-native accessories.

L1 or base layer protocols cover a wide range within the crypto-native stack, varying by account-based or UTXO, consensus mechanisms, flexibility, amongst other criteria. There are more than 60 smart contracting L1 protocols, as of September; ultimately I believe there will be no more than a dozen L1 protocols, but I’ll save that for another post.

L2 are protocols built atop L1, from privacy-focused, to domain-focused, to scalability-focused; these protocols allow dapps to scale to billions of users. Additionally, L2 may offer increased liquidity amongst dapps, effectively making on-chain activity higher in the stack more secure.

L3 — (d)apps are loosely defined given their interconnectivity to lower layers, especially Layer 2. There are interfaces built on top of an existing protocol (Veil:Augur, Expo:DyDX), and applications leveraging their own unique of smart contracts (DyDx). As L1 infrastructure increases transaction throughput and crypto education increases, I expect to see a wave of decentralized applications. Today, dapps often feel clunky for the average user, nowhere near the mobile app experience we’ve grown accustomed to. CryptoKitties, Radar Relay, Expo and others have made strides in making the user experience better —2019 will be an inflection point for crypto native adoption.

Offerings within the mining/staking segment (responsible for block production and transaction validation) will be fascinating to watch as Ethereum inches towards Proof of Stake, and highly anticipate protocols such as Dfinity, Algorand and Coda launch in the coming months. Bitmain and Bitfury will continue to be dominant in powering PoW protocols, where PoS infrastructure is just forming with Bison Trails and Staked as early contenders.

Crypto-native ...

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