Following the rise of the Decentralized Finance (DeFi) ecosystem, the war on which Layer-1 platform will emerge victorious has been waging on for some time. While Ethereum is still the frontrunner with a market cap of $239 million according to Coingecko, alternative Layer-1 chains such as Binance Chain (BNB), Avalanche, and the new kid on the block, Metatime’s flagship hybrid network Metachain, are hot on its heels.
But with all the development going on, it can be hard to decipher which Layer-1 ecosystem will carry the day. For context, the current market cap of Layer-1 chains stands at $944 million, which translates to over 70% of the entire crypto market cap. Obviously, Bitcoin remains the undisputed king, but the dilemma lies in the smart contract building environment, where so-called ‘futuristic’ blockchains are popping up every other day.
So, how can an interested investor or Web3 user go about scanning potential Layer-1 projects? Of course, there are many ways to identify value-oriented innovations in any market, but for the crypto ecosystem in particular, one approach is proving to be quite successful: tracking patents and analyzing in detail the underlying opportunity.
Web3 Patents: The Key to Spotting Value
Although a controversial topic that has previously pitted Ethereum’s Founder, Vitalik Buterin, against prominent figures in the crypto industry such as Craig Wright, the most prudent thing for any innovator in today’s digital age is to secure their intellectual property. However, Vitalik holds a different opinion, stating that blockchain patents don’t really matter in the crypto space.
But does his argument really hold water? To some extent, yes and no. The main idea behind blockchain technology is to introduce distributed platforms that are owned and run by the public, in this case, a decentralized community. However, when you consider the different applications and their unique value, it becomes evident that patents are indeed necessary, even in the crypto industry.
And what better way to leverage the publicly available patent information than to track or identify the next big thing? While there are over 10,000 blockchain patents globally, spanning innovations in the Layer-1 ecosystem, only a handful will materialize into massively adopted innovations.
Layer-1 Ecosystems with Real Value
As mentioned in the introduction, Ethereum’s dominance is currently being challenged by several Layer-1 chains that offer a superior value proposition in factors such as transaction speed and costs.
But before diving into some of these Layer-1 ecosystems that have patented their niche products, it is worth noting that Consensus, the provider for the blockchain development suite Infura and the digital wallet Metamask, is among the significant players building on Ethereum who have applied for over 3 patents in the topics of cryptography, cryptocurrencies, and alternative currencies.
As for the Layer-1 ecosystem, Avalanche, which emerged as a serious challenger to Ethereum, touts 8 patents filed through its parent company, Ava Labs. What’s noteworthy about this Layer-1 chain founded by Turkish-American scientist Emin Gün Sirer is that it can facilitate up to 4,500 transactions per second (tps). This is possible because of Avalanche’s novel algorithm which leverages randomized voting to enhance the speed of transaction confirmation.
While the ongoing bear market has not spared Avalanche’s DeFi ecosystem, there is close to $1 billion still locked according to DeFi Llama metrics.
Another emerging Layer-1 ecosystem with a rich suite of patented products is Metatime. Founded back in 2019, this Web3 project features a blockchain network called MetaChain, an exchange named MetaExchange, an NFT Marketplace called MetaNFT, and a Launchpad known as MetaLaunchpad, among other innovative features.
While still a nascent project compared to the likes of Avalanche, Metatime’s value proposition in removing barriers to exploring Web3 and blockchain innovations has attracted $3 million in funding from private investors, with the team growing to over 200 people. In the future, Metatime plans to establish itself as the go-to supplier of blockchain technology to transform companies, nations, and the retail market, offering over 70 products, some of which are already patented while others are awaiting approval.
These few examples of Layer-1 ecosystems and the associated patents are just a glimpse of the solid value addition happening in the crypto ecosystem. But, most importantly, the fact that they are all promising goes to show how important scouting patented Web3 projects is for any market participant. After all, amidst all the noise, one has to narrow down the list of potential investments. Patent information could evidently play a significant role here.
Summary
As we have seen over the past two years, transformation in the blockchain ecosystem is happening at lightning speed, and keeping up can be quite a task. Well, that doesn’t have to be the case anymore. With patents in the picture, serious players can easily be distinguished from the jokers and speculators.
But what’s even more paradoxical is that blockchain itself, as a technology, could improve how today’s companies track or value their patents. This is already happening through a collaboration between IBM and IPwe, where the two have pioneered a blockchain and AI-powered platform to assist firms in valuing their patents and managing risks more efficiently.
In conclusion, patents are among the best ways to track upcoming blockchain stars. However, this is not to say they are a sure bet of value, but rather an indication that a given Web3 project is potentially serious about their innovation.
