As the foundational infrastructure of the blockchain industry, public chains remain an unavoidable topic in the crypto space. With the evolution and rise of successive generations of public chains, ecosystem trends such as NFTs, DeFi, GameFi, and the metaverse have also surged. In turn, the explosive growth of projects in these sectors has further propelled the development and value appreciation of public chains.
It’s evident that over half of the top ten projects by market capitalization are public chains. Many next-gen public chains like Terra, Solana, and Avalanche have experienced explosive growth since last year, offering investors numerous opportunities. So, in 2022, can public chains continue to deliver impressive results? Which public chain projects deserve attention?
Why Does Ethereum Still Hold Significant Potential?
As the leading public chain, Ethereum (ETH) is one of the most closely watched projects by investors and industry participants. Over the past month, ETH has rebounded by approximately 41% from its lows, showing strong recovery despite geopolitical turbulence.
Ethereum, the oldest public chain, hosts the majority of ecosystem applications. Currently, its Total Value Locked (TVL) exceeds $120 billion, accounting for **54.19% of all public chain TVL**. Over five DeFi projects with market caps exceeding $1 billion operate on Ethereum, including MakerDAO, Convex Finance, AAVE, Uniswap, and Lido.
Ethereum’s robust and rapid ecosystem growth stems from its strong technical foundation, economic mechanisms, and unparalleled consensus in the blockchain space. This attracts most projects to prioritize Ethereum deployment, further enhancing its value. ETH has become a top choice for retail investors and increasingly garners institutional recognition.
Short-to-Medium-Term ETH Value Drivers
Holder Behavior:
- Long-term holders have accumulated over 4 million ETH (worth ~$13B) in recent weeks.
- Institutions like Three Arrow Capital (3AC) have aggressively increased ETH holdings, with 3AC alone adding 86,000+ ETH in a month.
Ethereum’s Native Mechanisms:
- EIP-1559: Since its implementation, 2.091 million ETH have been burned, creating deflationary pressure and upward price momentum.
- ETH2.0 Merge (PoS Transition): Expected in June 2022, this will reduce ETH issuance and increase staking demand. Currently, 11.26 million ETH are staked in ETH2.0, a record high.
These factors underscore Ethereum’s enduring appeal. However, beyond Ethereum, newer public chains like Terra and Cardano are gaining traction.
Rising Competitors: Cardano and Terra
Cardano (ADA): Technical Rigor Meets Ecosystem Growth
- Price Action: ADA rose 25.8% in March, reaching $1.17 by April.
Key Metrics:
- TVL: $298M (ranked #28 among public chains), up 97% in March.
- Staking Rate: 71.92% (4th highest), providing strong price support.
Catalysts:
- 886 projects are building on Cardano, with a surge expected post-Vasil hard fork (June 2022).
- Institutional adoption: CME plans ADA futures, while Grayscale and WisdomTree launched ADA-inclusive products.
Terra (LUNA): Stablecoin-Centric Innovation
- TVL: $192.5B (2nd highest), up 111.2% since February.
Unique Mechanism:
- Dual-token model (LUNA-UST) ensures ecosystem-growth feedback loops.
- Bitcoin Reserve Strategy: Terra holds 39,897 BTC (~$1.68B) to mitigate UST stability risks, targeting $10B in reserves.
- Price Performance: LUNA hit an ATH of $116.46 in April.
Public Chains: Diversified Value Assessment
The public chain sector thrives due to its role as blockchain’s foundational layer and the proliferation of DeFi, NFTs, and GameFi. Key trends:
- Market Share Shifts: Ethereum’s TVL dominance dropped from 96% (2021) to 55.38%, while Terra, Avalanche, and others gain ground.
- Layer 2 Impact: Ethereum’s upgrades (e.g., PoS merge) may reclaim scalability, but competition remains fierce with 103+ active public chains.
Investment Framework for Public Chains
- Economic Trilemma: Balance profitability, growth potential, and fairness.
- Technical Trilemma: Optimize decentralization, security, and efficiency.
Projects excelling across these dimensions (e.g., Ethereum’s security, Terra’s innovation) are best positioned for long-term success.
FAQ Section
1. Will Ethereum’s PoS transition affect its price?
Yes. Reduced ETH issuance and increased staking demand could create upward pressure.
2. Is Cardano a good investment despite its slower development?
Cardano’s rigorous approach and upcoming ecosystem expansions (e.g., Vasil upgrade) make it a strong contender.
3. How does Terra’s Bitcoin reserve protect against UST instability?
The reserve acts as a backstop, ensuring UST’s peg during market volatility by slowing LUNA minting.
👉 Explore top-performing public chains
👉 Dive deeper into Ethereum’s upgrades
Conclusion
Public chains remain a high-growth sector in 2022, with Ethereum leading and innovators like Terra and Cardano rising. Investors should weigh economic incentives, technical robustness, and ecosystem vitality when evaluating projects. The interplay of Layer 2 solutions, PoS adoption, and cross-chain interoperability will shape the next phase of public chain evolution.