FutureProof Insight #62

Layer 1s provide a plug-and-play blockchain platform to build on but the value of their native assets is difficult to understand?

The term Layer 1 is used to describe the base protocol of a blockchain technology stack, some examples are Solana (asset: SOL), Ethereum (asset: ETH), Binance Smart Chain (asset: BNB)

An analogy for native assets:?

- It’s the early 1900s and you are bullish on gas-powered cars being an important part of the future

- To express this opinion, you could invest in 1) car manufacturers and their suppliers, 2) gasoline producers or distributors, 3) buying up the supply of the finite gasoline available

- Investing in the native assets of Layer 1s is most like number 3

- As cars (blockchains) become popular, everyone will need gas (SOL/ETH/BNB) to run, and you will be holding a finite asset that is in high demand from users

The token economics are more complex but this analogy of supply and demand can help understand why the use of a Layer 1 may drive value for their native assets

Disclaimers:?https://bit.ly/p21disclaimers

Not any type of advice. Conflicts of interest may exist. For informational purposes only. Not an offering or solicitation. Always perform independent research and due diligence.