Layer-1 Public Chain Ecosystem: Specialized Division of Labor in Blockchain Space

Author: Tanay Ved, Senior Researcher at Coin Metrics; Translated by: Shaw Jinse Finance

Key Takeaways

• With the expansion of block space and the decrease in transaction costs, the differentiation between public chains is shifting from cost competition to scenario-based professional specialization.

• The 20 millionth Bitcoin token was mined in March. Meanwhile, the growing ecosystem of wrapped tokens and zero-knowledge (ZK) Rollup technology is gradually unlocking Bitcoin's programmability and practical value.

• The 20 millionth Bitcoin token was mined in March. At the same time, the growing ecosystem of wrapped tokens and zero-knowledge (ZK) Rollup technology is gradually releasing Bitcoin's programmability and practical value.

Ethereum is consolidating its position as an on-chain liquidity and settlement hub. As the Layer-2 network (L2) evolves from a scaling solution into a specialized execution environment, Ethereum Layer-1 (L1) fees have fallen to historic lows. Solana, through increased adoption in payment scenarios and the development of mature on-chain transaction infrastructure, is advancing its vision of an "Internet capital market." Its Alpenglow upgrade aims to achieve sub-second transaction final confirmation. Introduction With the continuous expansion of block space across networks, on-chain transaction costs have decreased significantly. Ethereum mainnet fees have fallen significantly after the recent upgrade, and Solana's single transaction cost is only a few cents. The Layer-2 network also provides a similarly low-cost execution environment. As transaction costs converge, the differentiation within the blockchain space increasingly depends on ecosystem liquidity, processing performance, and scenario specialization, rather than marginal cost advantages. In this article, we will explore how mainstream Layer-1 public chains are evolving towards differentiated positioning: Bitcoin is expanding its programmability and practical value, Ethereum is consolidating its position as a settlement and liquidity center for stablecoins, real-world assets (RWA), and decentralized finance (DeFi), while Solana focuses on high-frequency payment and trading scenarios. In March 2026, the 20 millionth Bitcoin was mined, leaving only 1 million BTC to be issued. Over 95% of the total Bitcoin supply is already in circulation, and after the halving in April 2024, the block reward decreased to 3.125 BTC, with the token issuance continuing to decrease according to the established mechanism.



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As block rewards continue to decrease, transaction fees are becoming an increasingly crucial component of miners' revenue. Aside from occasional peaks, transaction fees currently account for less than 1% of miners' total revenue. Since Bitcoin transaction fees belong entirely to miners, a long-term problem facing the Bitcoin security model is whether naturally generated transaction fee demand can sustainably fill the gap left by decreasing supply. Despite Bitcoin's market capitalization reaching approximately $1.3 trillion, about 60% of BTC has not been transferred in the past year; approximately 2.4 million BTC (about 11% of the total supply) are held on centralized exchanges, and another approximately 243,000 BTC circulate on other public chains as packaged tokens. The majority of Bitcoin's funds remain in an inactive economic state, with most transaction activity and fee revenue occurring outside the main chain. Bitcoin's functional positioning is evolving along two main lines: first, expanding the underlying programmability; and second, enhancing the productive and practical value of BTC. The growing ecosystem of sidechains, Lightning Network and other L2 solutions, Bitcoin token wrapping and liquidity staking protocols has significantly improved the utility of Bitcoin. However, these solutions also come with varying degrees of trust assumptions—ranging from fully custodial models to smart contract-based models.



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At the least trust end is Citrea, a zero-knowledge rollup (ZK-Rollup) that settles directly on the Bitcoin L1 mainchain. Citrea leverages the BitVM framework (which supports verification within Bitcoin's existing scripting system) to achieve compatibility with the Ethereum Virtual Machine (EVM) and is secured by Bitcoin's Proof-of-Work (PoW) mechanism.



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The number of daily active addresses and transaction volume on the Ethereum mainnet has roughly doubled year-over-year, exceeding 1 million and 2.4 million respectively. However, as we previously discovered, part of this growth stems from address poisoning attacks and an increase in addresses with no economic activity (wallet transactions below $1), which sometimes constitute a significant proportion of daily active addresses.



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The Shift in the Relationship Between L1 and L2

As transaction costs on the L1 network have significantly decreased, the role of the Ethereum L2 network is being redefined. The L2 network was initially designed as Ethereum's core scaling solution, reducing transaction costs by stripping execution layer tasks. Now, this positioning is changing. According to a recent blog post by the Ethereum Foundation, the core mission of the L2 network has shifted to providing differentiated functionality, customized services, and a specialized execution environment, while additional scaling capabilities have become a secondary value. Blob storage space (the dedicated data availability layer used by the L2 network to submit transaction data to Ethereum) is currently underutilized at less than 30%; even after recent capacity expansions, the average number of blobs per block is only about 3. Blob utilization is concentrated in a few L2 projects, and blob fees account for a negligible percentage of overall transaction fee revenue. The scaling speed of the L1 network has outpaced the settlement needs of L2, and for most L2 projects, settlement costs on Ethereum no longer constitute a substantial competitive advantage.



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The L2 projects that truly gain sustainable development momentum are those with more clearly defined and unique value. Base has established a distribution advantage by leveraging Coinbase's consumer-grade products, while Arbitrum has gained a foothold thanks to its deep DeFi liquidity. New-generation specialized public chains such as MegaETH, Lighter, Robinhood Chain, and Ink are focusing on specific application scenarios or launching innovative business models and distribution methods.



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Payments and High-Frequency Small-Amount Payments

Solana's low-cost network environment makes it a leading public chain in the payment and consumer-grade value transfer field. Daily USDC transfers under $1000 remain stable at approximately 3 million transactions, with the median transaction size consistently below $100.



Source: Coin Metrics Network Data Pro


Trading Infrastructure

Solana's processing power has also attracted professional-grade on-chain trading infrastructure to set up operations there. Proprietary Automated Market Makers (propAMMs) built by professional trading institutions using non-public off-chain pricing models operate more like dark pools than ordinary decentralized exchanges (DEXs). The pricing curves of automated market makers (AMMs) like Uniswap are vulnerable to front-running and arbitrage attacks. In contrast, proprietary market makers update prices off-chain and settle on Solana, making them resistant to MEV (Mean Ever-Earned Transaction) extraction. Alpenglow and Other Upgrades Upcoming infrastructure upgrades will further strengthen Solana's advantages in these areas. The Alpenglow upgrade will replace the existing Tower BFT and Proof-of-History (PoH) mechanism with the lightweight voting aggregation protocol Votor, aiming to reduce block final confirmation time from approximately 12 seconds to 100–150 milliseconds. The Block Assembly Market (BAM) developed by Jito allows trading applications to control transaction ordering, supports features such as priority cancellation, and improves execution fairness. Conclusion As blockchain space expands and transaction costs decrease, the core competition among public blockchain networks is shifting from cost to specialized division of labor. Mainstream L1 public blockchains are leveraging their architectural advantages to meet diverse scenario needs; meanwhile, public blockchains focused on specific applications are optimizing around niche requirements—such as Hyperliquid focusing on transactions, Canton for institutional finance, and Arc and Tempo serving enterprise-level stablecoin payments—making clear trade-offs in access permissions, compliance, and execution design. The core question for the future is: how will the industry landscape evolve as on-chain demand grows at scale? The on-chain infrastructure industry still faces a common risk: a white paper released by Google's Quantum AI team on March 31st indicated that the number of physical qubits required to crack the elliptic curve cryptography algorithm that secures Bitcoin, Ethereum, and most blockchains may be less than 500,000, only about 1/20th of the previous estimate of 20 million. Early solutions such as Bitcoin's BIP-360 proposal and Ethereum's post-quantum cryptography roadmap have gradually taken shape. However, a deeper challenge lies in how to coordinate community consensus and promote voluntary adoption in decentralized networks, a process that is often slower and more uncertain than that of centralized institutions.