Tokens of Near (NEAR) and Cosmos (ATOM) were among the only gainers among major cryptocurrencies in the past 24 hours as the broader market extended its slide.
Prices of Near and Cosmos have almost doubled in the past month amid increased interest in layer 1 blockchains. Layer 1 refers to blockchain platforms such as Ethereum or Avalanche over which developers can deploy applications or services.
NEAR posted gains of as much as 25% from Monday’s lows to trade at over $16.62 in afternoon Asian hours on Tuesday before dropping back. Prices are down 6% from last week’s highs of $17.67, having breached the resistance level around $17. A support level exists at the $13 mark, and if NEAR drops through that, the token could slump to as low as $10.
The protocol gained favor among investors as a layer 1 play and was the third-largest crypto ecosystem by developer activity, a report from crypto venture firm Electric Capital said last week.
ATOM added as much as 8% to over $39.33 in the past 24 hours before a brief sell-off saw it lose 35 cents at the time of writing. Prices were as low as $32 on Monday evening. The tokens are trading around a resistance-turned-support level of $37 at the time of writing, with a prominent buying zone until the $30 level if historic price action is considered.
Crypto developers say newer blockchains create avenues for the development of new protocols, which contribute to their appeal among investors. “If Cosmos becomes EVM compatible it’s great news for the DeFi space because companies will be able to extend the reach of their dapps [decentralized applications] to a new network and develop new ones on top of it too,” Asaf Naim, co-founder of crypto management app Kirobo, said in a Telegram message with CoinDesk.
EVM stands for Ethereum Virtual Machine, the part of Ethereum that executes the blockchain’s rules and makes sure a submitted transaction or smart contract follows them.
Layer 1 blockchains such as Avalanche, Terra and Solana surged to highs in 2021 – posting yearly returns of as high as 3,800% to token investors – as users moved away from Ethereum to cheaper and faster blockchains.
Capital has since rotated to previously lesser-known blockchains, such as Fantom, Harmony, Near and Cosmos. Fantom emerged as one of the top performers in the last week of December, posting returns of as high as 77% in a little over 14 days.
But some, like Naim, say Ethereum remains the top dog: “It’s great to see Ethereum competitors doing well because it widens the ecosystem, but I’d also say that the fact that we measure their characteristics in terms of Ethereum shows the extent to which Ethereum is still the gold standard in the industry,” he said.