From performance to ecosystem: what will determine the next decade for Layer 1 blockchain networks?

In July 2026, the crypto market is still in a structural adjustment cycle following a macro liquidity contraction. The Bitcoin price fell from an early-May peak of about $82,000 to around the June interim low of $59,000, with a maximum drawdown of nearly 24%. Against this backdrop, the Layer1 public chain track is undergoing a profound paradigm shift—competition has expanded from a single “transactions per second” race into a multidimensional contest across performance, ecosystem depth, capital efficiency, and compliance capability.

Layer1 activity in 2025 already showed clear role differentiation: Solana captured speculative capital flows, while Ethereum consolidated its positioning as a settlement and data availability layer through Layer2-driven growth and falling fees. Entering 2026, this differentiation is intensifying further. Stablecoins validated product-market fit, driving the emergence of “stable chains” as dedicated networks. Meanwhile, privacy-oriented, performance-optimized, and app-chain-oriented Layer1s each strengthened their value propositions.

This article will systematically analyze the evolving logic and future trajectory of the Layer1 competition landscape, drawing on the latest on-chain data and market performance across Ethereum, Solana, Avalanche, Cosmos, and Harmony, across three core dimensions: performance, ecosystem, and user growth.

Performance race: from theoretical peaks to practical usability

Performance is the most straightforward dimension in Layer1 competition, but the 2026 evaluation criteria go far beyond the theoretical transactions-per-second metrics found in whitepapers.

The throughput of roughly 7 transactions per second for Bitcoin and about 45 transactions per second for Ethereum reflects intentional trade-offs between security and decentralization. The core tier—Stellar (200 TPS), Cardano (250 TPS), Polkadot (1,000 TPS)—achieves scalability through different architectural trade-offs. The upper segment: XRP (1,500 TPS), BNB Chain (2,000 TPS), Tron (2,000 TPS). For reference, Visa’s average peak is about 1,700 TPS.

However, high throughput without infrastructure compatibility only produces isolated ecosystems. Ethereum Virtual Machine compatibility allows applications to migrate from Ethereum and other EVM networks with minimal code changes—the combination of high TPS and EVM compatibility is the real advantage; raw speed without integration capability has limited practical value.

Transaction finality time is often more critical in real scenarios than throughput. In exchanges, it determines deposit arrival speed; in decentralized finance, it defines the arbitrage window; in payment systems, it is the difference between instant service and visibly delayed service. Apertum at 0.15 seconds, BNB Chain at 1.1 seconds, XRP at 4 seconds, Stellar at 5 seconds, Polkadot at about 30 seconds, Tron at about 1 minute, Ethereum at about 13 minutes, and Bitcoin at about 1 hour. Networks with lower throughput but fast finality often provide greater practical value than networks with higher throughput but slow confirmation.

Solana is reshaping its performance narrative through the Alpenglow upgrade. This protocol redesign aims to dramatically cut transaction finality from around 12 seconds to about 150 milliseconds. The upgrade introduces Boneh-Lynn-Shacham public key registration—a cryptographic method that compresses votes from thousands of single-validator nodes into a single aggregated signature. A validator admission ticket system is expected to launch on the mainnet during the week of July 20, 2026. The full Alpenglow deployment is scheduled around the time of the Agave 4.3 client release in October 2026. As of July 23, 2026, Solana (SOL) is $77.44, with a market cap of about $45.14B, up 2.93% over the past 7 days and up 11.24% over the past 30 days. The Firedancer client has already pushed hardware efficiency to over 1 million transactions per second in testing environments.

Ecosystem building: a deep tug-of-war among developers, total value locked, and use cases

Performance gets you in the door—ecosystem is the moat.

Ethereum remains the dominant smart contract platform by total value locked. As of July 23, 2026, Ethereum (ETH) is $1,919.83, with a market cap of about $231.69B, up 5.49% over the past 7 days and up 7.65% over the past 30 days. Spot Ethereum ETF inflows in the first three days of July totaled $96 million, already exceeding last week’s $84 million inflow.

Ethereum is undergoing its largest-scale protocol transformation since the “Merge” in 2022. On July 5, 2026, Vitalik Buterin released a long-term roadmap called Lean Ethereum, positioning it as the third major evolution of Ethereum after the Merge—not a single upgrade, but a series of protocol improvements rolled out in stages over the next three to four years, covering almost every core module of the protocol, from verification methods and cryptography to finality and state storage, with comprehensive rebuilding. The roadmap lays out five long-term strategic goals: faster Layer1 finality; reaching Layer1 throughput of 1 gigagas per second (supporting on the order of ten thousand transactions per second in the extreme state); Layer2 scaling with a vision in the teragas range; fully defensive quantum cryptography security; and native privacy transfers on Layer1.

Meanwhile, the Glamsterdam upgrade is planned to formally go live on the mainnet in the second half of 2026, and by the end of June it had entered the final test stage on the developer network. Core developers say this is the largest-scale protocol change since the Merge. The proposed separation of proposers-builders separates block consensus from execution; block-level access lists pre-map dependencies to enable faster syncing, parallel execution, and parallel disk reads.

Solana stands out on ecosystem activity. As of July 23, 2026, Solana accounts for about 20% of global decentralized exchange spot trading volume, with weekly trading volume reaching $10.29 billion—surpassing the New York Stock Exchange American’s weekly trading volume of about $6 billion. The dominance of decentralized exchanges has gone beyond meme coins. Tokenized assets on Solana hit $5.77 billion in the second quarter, up 114% quarter-over-quarter. Of that, stock trading replaced meme coins on June 23 as the main application scenario.

Avalanche is taking a differentiated institutional route. On June 24, 2026, Avalanche launched a new brand positioning—“blockchain for business.” This Layer1 aims to capture growing institutional demand for digital asset infrastructure, shifting the narrative from retail to enterprise use cases. On-chain data validated the early effectiveness of this shift: average daily transactions rose from about 300k in the second quarter of 2025 to a peak of 6.2 million in July 2026, and even after the pullback it still maintained about 2.62 million daily transactions. Stablecoin balances on Avalanche had at one point surpassed $2 billion recently. On July 15, 2026, Aave deployed its V4 protocol on Avalanche to provide decentralized lending services for tokenized real-world assets. Japan’s Progmat recently migrated $2.7 billion in tokenized securities to the Avalanche subnets.

However, the divergence between ecosystem growth and token prices is becoming Avalanche’s core issue. As of July 23, 2026, AVAX is $6.549, with a market cap of about $300k, down 72.66% over the past year. Despite continuous improvements in on-chain fundamentals, the AVAX token price has not risen accordingly. The controversy around the developer growth trajectory peaked in mid-June—developer activity is a core valuation driver for Layer1 tokens. Avalanche’s subnet architecture was once viewed as a key differentiation for enterprise and gaming application scenarios, but it is now facing doubts about adoption speed.

User growth: shifting from speculation-driven to real demand

The quality of user growth is replacing quantity as a more important metric.

In 2025, Layer1 retail demand was still mainly driven by speculation, with the meme coin supercycle providing the clearest expression. High throughput, deep liquidity, and low fees made Solana and BNB Chain natural venues for hosting these capital flows. However, as meme coin momentum faded, Solana’s decentralized exchange dominance yielded to a more balanced distribution across Ethereum and BNB Chain, highlighting the network’s dependence on a narrow class of meme catalysts.

Entering 2026, the drivers of user growth are undergoing a structural shift. Stablecoin supply has become a key indicator for measuring real on-chain demand. TRON’s on-chain USDT circulating supply officially broke $90 billion on July 9, 2026. Excluding stablecoins, the scale of tokenized real-world assets on-chain has risen to about $34 billion, up more than five times from the roughly $5.4 billion base at the start of 2025. As of mid-July 2026, Ethereum holds $16.3 billion in tokenized assets.

Institutional capital inflows are reshaping Layer1’s user structure. The most notable change in the 2026 cycle is a warming of traditional finance sentiment—JPMorgan has shifted toward direct integration, and its digital assets division is actively providing spot and derivatives trading support for institutional investors. Spot Bitcoin and Ethereum exchange-traded funds absorbed a total of $239.42 million in net inflows on July 14, marking a clear break from the prior two-month phase in which investors withdrew. Solana spot exchange-traded funds have seen cumulative inflows exceed $1 billion since launching in October 2025.

The evolution of the regulatory framework will be the next catalyst for user growth. The U.S. Securities and Exchange Commission is expected to publish a crypto asset regulatory proposal under “Regulation Crypto” in July, providing temporary exemptions for crypto developers, allowing limited fundraising, and establishing a safe harbor for issuers. U.S. Senate Republicans have released the full text of the “CLARITY Act” bill, aiming to establish a clear regulatory framework for the crypto industry.

Against this macro backdrop, Cosmos and Harmony represent another Layer1 competition logic—interoperability and long-tail ecosystems.

Cosmos builds a “blockchain internet” through the Inter-Blockchain Communication protocol; its core value is not single-chain performance, but network effects from cross-chain interoperability. Cosmos recently released its 2026 updated roadmap, including solutions based on verifiable credentials and privacy products, aiming to enhance performance and strengthen interoperability. As of July 23, 2026, Cosmos (ATOM) is $1.453, with a market cap of about $2.83B.

Harmony, on the other hand, focuses on scalability and cross-chain bridging, with more than 8.3 million token-holding addresses. As of July 23, 2026, Harmony (ONE) is $0.001324, with a market cap of about $19.6882 million, up 19.60% over the past 7 days and up 0.45% over the past 30 days. Although its absolute market cap is smaller, its recent price elasticity reflects the market’s staged attention to long-tail Layer1 assets.

Rebuilding valuation logic: Layer1 pricing in the era of fee compression

In 2026, the market no longer uses “fee capture” alone to price Layer1s. Price drivers for Ethereum and Solana are shifting Layer1 value logic from Layer1 fee mechanisms toward staking yield, ETF fund flows, real-world asset narratives, expectations of protocol upgrades, and the macro liquidity environment.

Behind this shift are deep structural reasons. Layer1 public chains cannot sustainably and at scale capture stable fee revenue. From transaction fees to maximum extractable value, each major revenue source they once produced will be systematically arbitraged away and drained by participants within the ecosystem. Once a Layer1’s revenue scale becomes large enough to attract competition, competitive forces in the market will compress—and even eliminate—that portion of收益 via new models. Bitcoin’s fee revenue is almost entirely driven by on-chain demand causing congestion, but whenever Bitcoin’s price rises and drives fee spikes, even as economic activity increases, the growth rate of fees shows diminishing returns each time.

This means Layer1 valuation frameworks are shifting from “ability to capture revenue” to “the width of ecosystem moats” and “the height of capital efficiency.” Ethereum’s Layer2 ecosystem, Solana’s liquidity depth in decentralized exchanges, Avalanche’s institutional cooperation network, and Cosmos’s cross-chain interconnection capability—these structurally advantaged factors that are difficult to arbitrage are becoming key variables determining long-term value.

Conclusion

Layer1 public chain competition has entered a new phase where there is no single clear winner. Ethereum is strengthening its position as the settlement layer of the crypto world through a deep developer ecosystem, institutional capital inflows, and ongoing protocol upgrades. Solana is building barriers in high-frequency trading and tokenized assets with extreme performance and a continuously expanding set of application scenarios. Avalanche is taking the lead in tokenizing real-world assets through its subnet architecture and institutional partnerships. Cosmos and Harmony, meanwhile, are searching for differentiated positioning in cross-chain interoperability and long-tail ecosystems.

Performance is the foundation, ecosystem is the moat, and user growth is the final test—but the weights among the three are being reassigned by the regulatory framework, macro liquidity, and institutional participation. Key observation variables for the second half of 2026 include: the real-world impact of Ethereum’s Glamsterdam upgrade; whether Solana’s Alpenglow upgrade delivers 150-millisecond finality as promised; quarterly data on Avalanche subnet adoption rates; and the legislative progress of the U.S. “CLARITY Act.” The direction of these events will largely determine the final shape of the next-stage Layer1 competitive landscape.

FAQ

Q: What are the core metrics for Layer1 public chain competition?

Performance (throughput and finality), ecosystem depth (number of developers, total value locked, decentralized exchange trading volume), and user growth (active addresses, stablecoin supply, tokenized real-world asset scale) are the three core dimensions. 2026 evaluations also need to include compliance capability and institutional adoption rate.

Q: Is Ethereum losing its advantage in Layer1 competition?

Ethereum still leads in total value locked and tokenized asset scale (holding $16.3 billion in tokenized assets), but daily trading activity is shifting heavily to Layer2. Ethereum’s strategic positioning has shifted from an “execution layer” to a “settlement and data availability layer.” The Lean Ethereum roadmap aims to increase Layer1 compute capacity by hundreds of times over the next three to four years.

Q: Can Solana sustain its competitive advantage?

Solana performs strongly in decentralized exchange trading volume (about 20% share globally) and tokenized asset growth (second quarter: $5.77 billion, up 114% quarter-over-quarter). If the Alpenglow upgrade completes the 150-millisecond finality goal on schedule in October, it will further strengthen its competitiveness in high-frequency trading scenarios. The challenge lies in diversifying revenue sources and reducing reliance on meme coin trading activity.

Q: Can Avalanche’s institutional positioning translate into token value?

Avalanche’s on-chain fundamentals continue to improve (daily transactions rising from 300k to a peak of 6.2 million), but the AVAX token price is down 72.66% over one year. The core contradiction is the ongoing divergence between ecosystem growth and token prices. Adoption speed of subnets and developer growth will be key variables in whether this contradiction can be resolved.

Q: Do mid- and small-cap Layer1 public chains still have opportunities?

Mid- and small-cap Layer1s such as Cosmos and Harmony maintain competitiveness through differentiated positioning. Cosmos focuses on cross-chain interoperability, and Harmony’s 7-day price increase recently reached 19.60%. As the Layer1 track becomes increasingly top-heavy, the survival space for smaller projects depends on whether they can build irreplaceable network effects in specific verticals (such as cross-chain bridging, privacy, or particular regional markets).