2021 will undoubtedly be remembered as a landmark year in the crypto world. Building on the momentum of Bitcoin's halving and the Federal Reserve's expansive monetary policies, an unprecedented bull market emerged. The total market capitalization of cryptocurrencies surged from $779.5 billion at the beginning of the year to a record-breaking $3 trillion by November.
Key Highlights of 2021
Ethereum: The Unshakable Leader
Despite rising gas fees and scalability challenges, Ethereum maintained its dominance in the public blockchain arena. Key developments included:
- ETH Price Surge: From $750 in January to an all-time high of $4,860 in November.
- EIP-1559 Implementation: Transitioned Ethereum to a deflationary model, burning 1.243 million ETH (~$50 billion).
- Layer2 Expansion: Solutions like Arbitrum and Optimism gained traction, with Layer2 TVL reaching $5.6 billion.
The Battle for Second Place
Emerging blockchains competed fiercely to capture Ethereum's overflow:
- BSC: Leveraged Binance's ecosystem for rapid growth.
- Solana: Focused on high-speed transactions and developer incentives.
- Avalanche: Introduced low-cost cross-chain bridges and liquidity rewards.
- Terra: Rose to prominence with its UST stablecoin ecosystem.
Cross-Chain Bridges: Rising Demand
Over 100 cross-chain bridge projects emerged, facilitating asset transfers across blockchains. Notable players:
- Ronin Bridge: $6.776 billion TVL.
- Polygon Bridges: $6.658 billion TVL.
- Avalanche Bridge: $6.14 billion TVL.
NFT-Focused Blockchains
Specialized chains like Flow (NBA Top Shot) and WAX ("King of NFT") gained traction by catering to digital collectibles and gaming.
FAQ Section
Q: Which blockchain had the highest TVL in 2021?
A: Ethereum led with $1.598 trillion, followed by Terra ($208.9 billion) and BSC ($172.7 billion).
Q: What made Solana stand out?
A: Solana's high-speed, low-cost transactions and strong ecosystem support from FTX propelled its growth.
Q: Are cross-chain bridges safe?
A: While innovative, cross-chain bridges face security risks due to their complexity and high-value transactions.
Conclusion
The public blockchain space in 2021 was marked by:
- Diversification: From DeFi to NFTs and gaming.
- Innovation: Layer2 solutions, cross-chain interoperability, and stablecoin ecosystems.
- Competition: A dynamic race for market share behind Ethereum.
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This multi-chain landscape sets the stage for continued evolution in 2022 and beyond.