In July 2026, the crypto market remains in a structural adjustment phase following a period of macro liquidity contraction. The Bitcoin price fell from its mid-May peak of around $82,000 to a June low near $59,000, marking a maximum drawdown of nearly 24%. Against this backdrop, the Layer1 public blockchain sector is undergoing a profound paradigm shift—competition is no longer just about "transactions per second," but has expanded into a multidimensional contest involving performance, ecosystem depth, capital efficiency, and regulatory compliance.
Layer1 activity in 2025 already showed clear role differentiation: Solana captured speculative capital flows, while Ethereum consolidated its position as the settlement and data availability layer through Layer2-driven growth and reduced fees. Entering 2026, these differences have intensified. Stablecoins have validated product-market fit, driving the emergence of "stable chains" as dedicated networks. Meanwhile, Layer1s focused on privacy, performance optimization, and application-specific chains have each strengthened their value propositions.
This article systematically analyzes the evolving logic and future trajectory of Layer1 competition from three core perspectives—performance, ecosystem, and user growth—drawing on the latest on-chain data and market performance for Ethereum, Solana, Avalanche, Cosmos, and Harmony.
Performance Race: From Theoretical Peaks to Real-World Usability
Performance is the most visible metric in Layer1 competition, but by 2026, evaluation standards have moved well beyond theoretical TPS figures in whitepapers.
Bitcoin’s throughput of about 7 TPS and Ethereum’s 45 TPS represent deliberate trade-offs between security and decentralization. Mid-tier networks—Stellar (200 TPS), Cardano (250 TPS), Polkadot (1,000 TPS)—achieve scalability through various architectural compromises. At the top end: XRP (1,500 TPS), BNB Chain (2,000 TPS), and Tron (2,000 TPS). For comparison, Visa’s average peak is about 1,700 TPS.
However, high throughput without infrastructure compatibility only creates isolated ecosystems. Ethereum Virtual Machine (EVM) compatibility allows applications to migrate from Ethereum and other EVM networks with minimal code changes—the real advantage comes from combining high TPS with EVM compatibility. Raw speed without integration capability offers limited practical value.
Transaction finality time often matters more than throughput in real-world scenarios. On exchanges, it determines deposit speeds; in DeFi, it defines arbitrage windows; in payment systems, it distinguishes between instant and delayed services. Apertum achieves 0.15 seconds, BNB Chain 1.1 seconds, XRP 4 seconds, Stellar 5 seconds, Polkadot about 30 seconds, Tron about 1 minute, Ethereum about 13 minutes, and Bitcoin about 1 hour. Networks with lower throughput but faster finality often deliver greater practical utility than those with high throughput but slow confirmations.
Solana is redefining its performance narrative with the Alpenglow upgrade. This protocol redesign aims to slash transaction finality from around 12 seconds to roughly 150 milliseconds. The upgrade introduces Boneh-Lynn-Shacham public key registration—a cryptographic method that compresses votes from thousands of individual validator nodes into a single aggregated signature. The validator admission ticket system is expected to launch on mainnet the week of July 20, 2026, with full Alpenglow deployment scheduled alongside the Agave 4.3 client release around October 2026. As of July 23, 2026, Solana (SOL) trades at $77.44, with a market cap of about $45.137 billion, up 2.93% over the past 7 days and 11.24% over the past 30 days. The Firedancer client has pushed hardware efficiency in test environments to over 1 million TPS.
Ecosystem Building: The Deep Contest of Developers, TVL, and Use Cases
Performance is the ticket to entry; ecosystem is the moat.
Ethereum remains the dominant smart contract platform by total value locked (TVL). As of July 23, 2026, Ethereum (ETH) is priced at $1,919.83 with a market cap of $231.69 billion, up 5.49% in 7 days and 7.65% in 30 days. Spot Ethereum ETFs absorbed $96 million in the first three days of July, already surpassing last week’s $84 million inflow.
Ethereum is undergoing its largest protocol overhaul since the "Merge" in 2022. On July 5, 2026, Vitalik Buterin unveiled the Lean Ethereum long-term roadmap, marking Ethereum’s third major evolution after the Merge—not a single upgrade, but a series of phased protocol improvements over the next three to four years, covering nearly every core module: from validation methods, cryptography, and finality to state storage—all being rearchitected. The roadmap sets out five long-term strategic goals: faster Layer1 finality, Layer1 throughput of 1 gigagas per second (enabling tens of thousands of TPS in extreme cases), Layer2 scaling with a teragas-level ecosystem vision, comprehensive quantum cryptography defense, and native Layer1 privacy transfers.
Meanwhile, the Glamsterdam upgrade is set for mainnet launch in the second half of 2026 and entered final developer network testing by the end of June. Core developers describe it as the largest protocol change since the Merge. The proposal-builder separation included in the protocol splits block consensus from processing; block-level access lists pre-map dependencies for faster syncing, parallel execution, and parallel disk reads.
Solana stands out in ecosystem activity. As of July 23, 2026, Solana accounts for about 20% of global DEX spot trading volume, with weekly trading volume reaching $10.29 billion—surpassing the NYSE American’s weekly volume of about $6 billion. DEX dominance has moved beyond meme coins: tokenized assets on Solana hit $5.77 billion in Q2, up 114% from the previous quarter, with stock trading overtaking meme coins as the main use case on June 23.
Avalanche is pursuing a differentiated institutional strategy. 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 its narrative from retail to enterprise use cases. On-chain data confirms the initial success: average daily transactions rose from about 300,000 in Q2 2025 to a peak of 6.2 million in July 2026, and even after a pullback, still maintain around 2.62 million daily transactions. Stablecoin balances on Avalanche recently topped $2 billion. On July 15, 2026, Aave deployed its V4 protocol on Avalanche, offering decentralized lending for tokenized real-world assets. Japan’s Progmat recently migrated $2.7 billion in tokenized securities to an Avalanche subnet.
However, the divergence between ecosystem growth and token price has become a core issue for Avalanche. As of July 23, 2026, AVAX trades at $6.549, with a market cap of $2.828 billion, down 72.66% in the past year. Despite sustained improvement in on-chain fundamentals, AVAX’s price hasn’t followed suit. Debate over developer growth peaked in mid-June—developer activity is a core valuation driver for Layer1 tokens. Avalanche’s subnet architecture was once seen as a key differentiator for enterprise and gaming use cases, but now faces questions about adoption speed.
User Growth: From Speculation to Real Demand
The quality of user growth is now more important than sheer numbers.
In 2025, Layer1 retail demand was still largely driven by speculation, with the meme coin supercycle as its clearest expression. High throughput, deep liquidity, and low fees made Solana and BNB Chain the natural venues for these capital flows. However, as the meme coin momentum faded, Solana’s DEX dominance gave way to a more balanced distribution among Ethereum and BNB Chain, highlighting the network’s reliance on a narrow meme-driven catalyst.
Entering 2026, the drivers of user growth are undergoing structural change. Stablecoin supply has become a key indicator of genuine on-chain demand. On July 9, 2026, the circulating supply of USDT on TRON officially surpassed $90 billion. Excluding stablecoins, the on-chain tokenized real-world asset market has climbed to about $34 billion, up more than fivefold from a base of about $5.4 billion 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 base. The most notable shift in the 2026 cycle is warming attitudes from traditional finance—J.P. Morgan has moved toward direct integration, with its digital asset division actively supporting spot and derivatives trading for institutional clients. Spot Bitcoin and Ethereum ETFs saw a net inflow of $239.42 million on July 14, marking a clear break from the prior two months of investor withdrawals. Since its launch in October 2025, Solana spot ETFs have accumulated over $1 billion in inflows.
Regulatory framework evolution will be the next catalyst for user growth. The U.S. Securities and Exchange Commission is expected to announce a crypto asset regulatory proposal under "Regulation Crypto" in July, providing temporary exemptions for crypto developers, allowing limited fundraising, and establishing safe harbor provisions for issuers. Senate Republicans have published the full text of the CLARITY Act, aiming to establish a clear regulatory framework for the crypto industry.
Within this macro context, Cosmos and Harmony represent another Layer1 competitive logic—interconnectivity and long-tail ecosystems.
Cosmos builds a "blockchain internet" through its Inter-Blockchain Communication protocol; its core value lies not in single-chain performance but in the network effects of cross-chain interoperability. Cosmos recently released its 2026 roadmap, including authority-based solutions and privacy products, targeting improved performance and enhanced interoperability. As of July 23, 2026, Cosmos (ATOM) trades at $1.453 with a market cap of $757 million.
Harmony focuses on scalability and cross-chain bridging, with over 8.3 million wallet addresses. As of July 23, 2026, Harmony (ONE) trades at $0.001324 with a market cap of $19.6882 million, up 19.60% in 7 days and 0.45% in 30 days. Despite its relatively small absolute market cap, recent price resilience reflects the market’s periodic focus on long-tail Layer1 assets.
Reconstructing Valuation Logic: Layer1 Pricing in the Fee Compression Era
By 2026, the market no longer prices Layer1s solely on "fee capture." Price drivers for Ethereum and Solana are shifting from Layer1 fee logic to staking yields, ETF fund flows, real-world asset narratives, protocol upgrade expectations, and macro liquidity conditions.
There are deep structural reasons for this shift. Layer1 public blockchains cannot sustainably capture stable fee income at scale over the long term. Every major income source—from transaction fees to maximal extractable value—has been systematically arbitraged and depleted by ecosystem participants. Once Layer1 income reaches a significant scale, competitive forces in the market squeeze and eventually eliminate these profits through new mechanisms. Bitcoin’s fee income is almost entirely driven by on-chain congestion, but whenever the Bitcoin price surges and fees spike, the increase is increasingly marginal despite higher economic activity.
This means Layer1 valuation frameworks are shifting from "income capture ability" to "ecosystem moat width" and "capital efficiency." Ethereum’s Layer2 ecosystem, Solana’s DEX liquidity depth, Avalanche’s institutional partnership network, and Cosmos’s cross-chain connectivity—these structural advantages, which are difficult to arbitrage away, are becoming the key variables for long-term value.
Conclusion
Layer1 public blockchain competition has entered a new stage where there is no single winner. Ethereum, with its deep developer ecosystem, institutional capital inflows, and ongoing protocol upgrades, solidifies its role as the settlement layer of the crypto world. Solana, through extreme performance and expanding use cases, builds a moat in high-frequency trading and tokenized assets. Avalanche, with its subnet architecture and institutional partnerships, is taking the lead in the tokenization of real-world assets. Cosmos and Harmony are carving out differentiated positions in cross-chain interoperability and long-tail ecosystems.
Performance is the foundation, ecosystem is the moat, and user growth is the ultimate test—but the weighting of these factors is being reshaped by regulatory frameworks, macro liquidity, and institutional participation. Key variables for the second half of 2026 include: the real-world impact of Ethereum’s Glamsterdam upgrade, Solana’s delivery of 150-millisecond finality post-Alpenglow, quarterly adoption data for Avalanche subnets, and the legislative progress of the U.S. CLARITY Act. The outcome of these events will largely determine the next phase of Layer1 public blockchain competition.
FAQ
Q: What are the core metrics for Layer1 public blockchain competition?
Performance (throughput and finality), ecosystem depth (developer count, TVL, DEX trading volume), and user growth (active addresses, stablecoin supply, tokenized real asset scale) are the three main dimensions. In 2026, compliance capability and institutional adoption rate must also be considered.
Q: Is Ethereum losing its edge in Layer1 competition?
Ethereum still leads in TVL and tokenized asset scale (holding $16.3 billion in tokenized assets), but daily transaction activity is migrating heavily to Layer2. Ethereum’s strategic positioning has shifted from "transaction execution layer" to "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 maintain its competitive advantage?
Solana shows strong performance in DEX trading volume (20% global share) and tokenized asset growth ($5.77 billion in Q2, up 114% quarter-over-quarter). If the Alpenglow upgrade achieves its 150-millisecond finality target by October, it will further strengthen Solana’s position in high-frequency trading scenarios. The challenge lies in diversifying revenue streams 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 up from 300,000 to a 6.2 million peak), but the AVAX token price has dropped 72.66% in a year. The core issue is the persistent divergence between ecosystem growth and token price. Subnet adoption speed and developer growth will be key variables in resolving this tension.
Q: Do small-cap Layer1 public blockchains still have a chance?
Layer1s like Cosmos and Harmony maintain competitiveness through differentiated positioning. Cosmos focuses on cross-chain interoperability; Harmony saw a 19.60% price increase in 7 days. As Layer1 competition becomes increasingly dominated by top players, survival for smaller projects depends on their ability to establish irreplaceable network effects in specific verticals (such as cross-chain bridging, privacy, or regional markets).
