<p class="is-style-lead">On-chain data released by Messari, focusing on the layer-1 blockchain ecosystem analysis during Q1 2023, show that the market capitalization of the leading chains rebounded by 83%. Ethereum and BNBChain emerged as the most deflationary networks in Q1 2023.</p>



<h2 class="wp-block-heading" id="ethereum-leads-rebound">Ethereum leads rebound</h2>



<p>The cryptocurrency market experienced a rebound in Q1 2023, witnessing an average increase of 83% quarter-on-quarter (QoQ) in the market capitalization of the featured layer-1 blockchains. However, despite this recovery, their market cap remains down by 58% year-on-year (YoY), the researchers note.</p>



<p>Among the featured L1s, <a href="https://crypto.news/ethereum-developer-says-now-anyone-can-launch-a-token-in-less-than-a-minute/">Ethereum</a> emerged as the clear leader, boasting a market cap over twice the combined total of the other networks.&nbsp;</p>



<p>The high usage and gas fees propelled Ethereum to generate the highest revenue in the quarter, totaling a staggering $457 million, nearly 2.8x the combined revenue of all other featured L1s. Notably, <a href="https://crypto.news/hedera-hbar-new-hashgraph-consensus/">Hedera</a> also experienced significant revenue growth, with a 489% increase QoQ, primarily driven by its consensus service.</p>



<p>The report delves into the financial ratios of the analyzed level-1s, shedding light on their respective market positioning. With a price-to-sales (P/S) ratio of 16x, Tron held the highest ratio, followed closely by Ethereum at 188x. </p>



<p>An interesting outlier was WAX, a network outside the top 20 in market capitalization, yet its P/S ratio stood out due to the revenue generated from NFT marketplace fees.</p>



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<h2 class="wp-block-heading" id="bnbchain-and-ethereum-remain-deflationary">BNBChain and Ethereum remain deflationary&nbsp;</h2>



<p>In terms of token inflation rates, only BNBChain and Ethereum emerged as the blockchains with the most deflationary tendencies in Q1 2023, with rates of -5.4% and -0.2%, respectively. </p>



<p>The deflation was a result of burning a portion of their transaction fees. Other networks displayed varying inflation rates due to proof-of-stake (PoS) reward issuance. </p>



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<p>Additionally, the report notes that most of the featured networks&#8217; tokens have fully vested, with the exceptions being Avalanche, Hedera, NEAR Protocol, and Harmony. Each network has distinct percentages of unlocked genesis supply, excluding staking rewards.</p>



<p>While the overall transaction activity of the blockchain networks in the review did not witness significant growth in Q1 2023, stacks (STX) stood out with a notable 34% increase. Conversely, Avalanche&#8217;s C-Chain activity experienced a decline attributed to the launch of <a href="https://crypto.news/crypto-knowledge-a-beginners-guide-to-avalanche-subnet/">subnets</a>. </p>



<p>Furthermore, the report highlights that all networks witnessed an increase in validator counts and staked tokens during the quarter. </p>



<p>Ethereum boasted the largest security budget, with a substantial $32.6 billion worth of <a href="https://crypto.news/price/ethereum/">ETH</a> staked. The Nakamoto coefficient, measuring the number of entities capable of causing a network halt, typically refers to Ethereum&#8217;s figure as 1 or 2.</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">1/ <a href="https://twitter.com/ph0rt0n?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@ph0rt0n</a> compares the financial, network, and ecosystem analyses of 14 Layer-1s (L1) in Q1&#39;23.<br><br>Featured L1s include <a href="https://twitter.com/avax?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@avax</a>, <a href="https://twitter.com/BNBCHAIN?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@BNBCHAIN</a>, <a href="https://twitter.com/Cardano?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@Cardano</a>, <a href="https://twitter.com/ethereum?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@Ethereum</a>, <a href="https://twitter.com/harmonyprotocol?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@harmonyprotocol</a>, <a href="https://twitter.com/hedera?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@Hedera</a>, <a href="https://twitter.com/NEARProtocol?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@NEARProtocol</a>, <a href="https://twitter.com/Polkadot?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@Polkadot</a>, <a href="https://twitter.com/0xPolygon?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@0xPolygon</a>, <a href="https://twitter.com/solana?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@Solana</a>, <a href="https://twitter.com/Stacks?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@Stacks</a>, <a href="https://twitter.com/tezos?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@tezos</a>, <a href="https://twitter.com/trondao?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@trondao</a>, and <a href="https://twitter.com/WAX_io?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">@WAX_io</a>. 👇🧵 <a href="https://t.co/EqHxrnsF6x" target="_blank">pic.twitter.com/EqHxrnsF6x</a></p>&mdash; Messari (@MessariCrypto) <a href="https://twitter.com/MessariCrypto/status/1664361226531659777?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">June 1, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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<p>The researchers also examined the growth of the decentralized finance (<a href="https://crypto.news/novum-launches-hyfi-conference-showcasing-synergies-between-traditional-and-decentralized-finance-2/">DeFi</a>) ecosystem,  using their total value locked (TVL) as a crucial metric. Ethereum, BNB Chain, and Tron emerged as the dominant players in Q1 2023, witnessing an increase in TVL during the market rebound.</p>



<p>However, Stacks and Cardano experienced significant growth in TVL, showcasing their potential as emerging players in the DeFi space. While Ethereum boasted a diverse DeFi ecosystem, other networks exhibited a more concentrated distribution.</p>



<p>In related news, a <a href="https://crypto.news/the-top-3-next-generation-layer-1-blockchain-protocols/">report</a> published by crypto.news last Feb. shed light on a wave of scalable alternatives that are poised to disrupt the established order and propel the crypto industry to new heights. </p>



<p>According to the report, the contenders, <a href="https://getradix.com/" target="_blank" rel="noreferrer noopener">Radix</a>, Polkadot, and <a href="https://cardano.org/" target="_blank" rel="noreferrer noopener">Cardano</a> have the best chances of solving the long-standing blockchain scalability issue, while also offering promising solutions that can potentially revolutionize the way cryptocurrencies function.</p>



<p>The future adoption and success of these protocols will shape the landscape of the crypto industry and pave the way for a new era of decentralized applications (dApps) and financial systems.</p>



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Crypto markets rebounded by 83% in Q1 2023 data shows

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