Introduction
Ethereum's monumental success has positioned smart contract public blockchains as coveted targets for capital investment. While Ethereum remains the largest and most critical platform in the smart contract blockchain space, its low performance and high fees render it unsuitable for hosting a vast array of applications.
Emerging public blockchains have seized this opportunity by leveraging their superior performance and cost advantages to meet the demand spilling over from Ethereum. The 2021 bull market witnessed an explosion of applications across new blockchain ecosystems—from BNB Chain and Polygon to Solana—with Avalanche, Fantom, and Terra also experiencing substantial growth. As Vitalik Buterin tweeted, "The future will be multi-chain." This bull market's blockchain growth patterns may offer insights into the evolving multi-chain landscape.
01. Market Performance of Public Blockchains During the 2020–2022 Bull Market
Public blockchains constitute the backbone of the crypto market. This analysis covers 21 public blockchains, categorized as smart contract platforms and cross-chain platforms. Selection criteria included top-100 market capitalization, established ecosystems, and notable visibility.
LUCIDA Blockchain Index Components
To facilitate analysis, we standardized and preprocessed the data.
1.1 Formulating the Blockchain Price Index
Given the volatile and disparate price movements of the 21 blockchains, we developed a Chain_Index using a weighted algorithm:
Chain_Index Price = ∑ (Daily Closing Price * Weight Coefficient)
Weight Coefficient = 30-Day Average Trading Volume / ∑ 30-Day Average Trading VolumeThe index was visualized using a logarithmic scale for clearer trend observation.
1.2 Public Blockchains Outperformed Bitcoin in Returns and Risk-Adjusted Metrics
- Peak Return: The Chain_Index surged by 3013%, hitting its lowest point on March 16, 2020 ("312 Crash") and peaking on May 11, 2021.
- Max Drawdown: 36.4% (February 18–28, 2021).
- Bear Market Decline: 72.5% (as of June 20, 2022).
Compared to Bitcoin, public blockchains demonstrated superior risk-adjusted returns without exhibiting excessive bear market vulnerability—though prolonged downturns could trigger catch-up declines.
1.3 Wide Dispersion in Peak Returns: From 144,198% to All-Time Highs at Launch
Top Performers:
- Fantom (144,198%)
- Solana (50,152%)
- Polygon (35,434%)
- Mid-Tier: Binance Smart Chain (BNB), Avalanche, Ethereum (<100x).
- Underperformers: Internet Computer, Moonbeam (peaked at launch).
Investment Takeaway: Selective investment is crucial—poor choices risk significant losses.
1.4 BNB Emerged as the Most Resilient Blockchain
- Average Drawdown: 60% over two months.
- BNB's Edge: Just 36.9% drawdown, recovered within nine days.
02. Growth Dynamics of Public Blockchains
Ethereum’s Dominance and Challenges
Despite Ethereum’s >50% market share, its TVL and capitalization shares began eroding in February 2021, as BNB Chain, Solana, and others capitalized on scalability issues.
Key Trends:
- BNB Chain’s Rise: Driven by EVM compatibility and Binance’s ecosystem incentives.
- Polygon’s Surge: Fueled by a $150M incentive fund, attracting Aave and other Ethereum DeFi protocols.
- Solana’s Strategy: Prioritized ecosystem growth over decentralization, fostering NFT and DeFi adoption.
03. Drivers of the Public Blockchain Boom
3.1 DeFi Congestion on Ethereum
- Gas Fees Skyrocketed: From $447K/day (June 2020)** to **$49.55M/day (February 2021).
- DeFi Transactions Dominated: Over 50% of Ethereum’s gas consumption.
3.2 BNB Chain: First Mover Advantage
- Launched September 2020, surpassed Ethereum in daily transactions by February 2021.
- Leveraged Binance’s CeFi-DeFi synergy and BNB token utility.
3.3 Incentive Programs Fueled Growth
- Polygon: $400M fund → 68x TVL growth.
- Avalanche, Fantom: Followed with similar strategies.
3.4 Solana’s “Ecosystem-First” Approach
- Centralized but Fast: Prioritized developer incentives (hackathons, grants).
- NFT Boom: Magic Eden captured 97% of Solana’s NFT volume.
3.5 NFT Expansion
- Solana became the #2 NFT ecosystem after Ethereum, despite market downturns.
3.6 Cosmos & Polkadot’s Struggles
- Technical Hurdles: Slow adoption due to complex cross-chain bridges.
- Low Returns: Ranked 12th/15th in peak gains.
04. Competitive Moats Post-Bull Market
4.1 Ethereum’s Unmatched Network Effects
- Security & Decentralization: Leader in developer activity and DApps.
- L2 Solutions: Optimism, Arbitrum scaling adoption.
4.2 BNB Chain’s Centralization Trade-Offs
- Pros: Binance’s resources, high throughput.
- Cons: Frequent hacks (e.g., PancakeBunny), centralization risks.
4.3 Solana’s Performance Issues
- Downtime: Repeated outages (e.g., September 2021).
- Valuation Concerns: Low fee revenue questions sustainability.
Conclusion
Public blockchain tokens offer high upside with defensive attributes, making them core portfolio assets. The bull market highlighted that ecosystem incentives, EVM compatibility, and killer apps drive success—while overhyped chains faltered.
Future Outlook:
- Ethereum’s L2s may reclaim market share.
- Application-Driven Chains: Projects like Solana’s NFTs or Avalanche’s DeFi could dominate.
👉 Explore the Future of Multi-Chain Ecosystems
FAQs
Q1: Which blockchain had the highest return during the bull market?
A: Fantom (FTM) at 144,198%, followed by Solana (50,152%).
Q2: Why did BNB Chain outperform Ethereum temporarily?
A: Lower fees, EVM compatibility, and Binance’s ecosystem incentives.
Q3: What’s Solana’s biggest weakness?
A: Network instability—multiple outages in 2021–2022.