This analysis is a guest contribution from Shane Neagle, Editor In Chief at The Tokenist.
While the crash of Terra (LUNA) unsettled the crypto market in May 2022, it was the FTX exchange failure that definitively burst the bubble by the end of the year. Since then, interest in blockchain technology has been overshadowed by a wave of AI enthusiasm. Additionally, the crypto sector found itself facing increased scrutiny and debanking under the Biden administration.
During a challenging time when digital assets needed to stabilize, innovate, and recover from the series of collapses throughout 2022, the crypto-friendly Trump administration now appears to be paving a viable path toward recovery through blockchain-based decentralized finance (DeFi), as evidenced by the increasing capital flowing into decentralized applications (dApps).
Currently sitting at $156 billion in total value locked (TVL), the DeFi sector is bouncing back to levels from early 2022. In parallel, Ethereum (ETH) has outpaced Bitcoin (BTC) significantly over the last month, rising by 53% compared to Bitcoin’s negligible 1% change. This trend indicates an impending altcoin season—so which primary Layer-1 chains should crypto investors eye for long-term investment?
Ethereum (ETH)
As the second-largest blockchain and the leader in DeFi, Ethereum is a clear contender. However, it merits attention for more than just its size, albeit with some caveats. There are two primary features of Ethereum that make it a compelling option for exposure to the DeFi narrative.
First, Ethereum’s first-mover advantage has spurred the highest developer engagement, ecosystem growth, and scaling through Layer-2 solutions like Base, Polygon, Unichain, Optimism, and Arbitrum.
Following the introduction of the token-burning mechanism under EIP 1559, Ethereum’s inflation rate aligns closely with Bitcoin post-fourth halving, hovering around 0.75%. Although Bitcoin’s inflation rate will eventually decrease with further halvings, ETH may be viewed as sound money, particularly when compared to the dollar’s target inflation rate of 2%.
In essence, while Ethereum features an elastic token supply influenced by staking practices—unlike Bitcoin’s fixed supply—it remains self-adjusting. As decentralized application activity increases on the mainnet, more ETH is burned. Furthermore, the Pectra upgrade has enhanced Layer-2 network efficiency via Blob Space, effectively doubling the burn rate.
Coupled with account abstraction and advancements in Ethereum scaling via sharding, Ethereum is positioning itself to manage DeFi transactions efficiently while maintaining low transaction costs. This also aligns with the ongoing stablecoin initiative under the GENIUS Act.
Ethereum boasts the most diverse stablecoin ecosystem, holding $138.6 billion in stablecoins, which constitutes half of the overall stablecoin market cap of $272.6 billion, according to DeFiLlama. Acting as the bridging currency that converts dollar familiarity into tokenized form, stablecoins serve as the initial point of interaction for many users, fostering broader DeFi participation.
Moreover, with Circle announcing its ARC blockchain for stablecoin operations, it’s noteworthy that this blockchain is EVM-compatible.
While this might superficially appear to pose a bearish outlook for Ethereum as stablecoin transactions could migrate elsewhere, it is actually a positive indicator of Ethereum’s integration with enterprise-grade liquidity through cross-chain capabilities and its Layer-2 ecosystem.
All these factors are driving an increase in Ether accumulation within treasuries. Data from the Strategic ETH Reserve tracker reveals the accumulation of 3.57 million ETH, valued at approximately $16.58 billion. Essentially, Ether treasuries are expected to exert a price influence on ETH akin to the impact that Bitcoin ETFs had on BTC.
But does this imply investors should go all in on ETH? Existing ETH holders might consider capitalizing on their profits in the coming months. Historically, a Market Value to Realized Value (MVRV) ratio above 3.0 for Ethereum indicates a peak before a market downturn.
Post the Fed’s anticipated interest rate reduction in September, Ethereum’s MVRV ratio may begin to ascend toward this critical threshold. Following market corrections, this is when new investors should seek ETH exposure. Recent predictions from FundStrat point towards an ETH price potentially hitting $10,000 by the year’s end.
Avalanche (AVAX)
Since its inception in 2020, this Layer-1 network has gained traction due to its innovative blockchain architecture. Specifically, Avalanche separates functionalities among X-Chain for asset exchanges, C-Chain for executing EVM-compatible smart contracts, and P-Chain for overseeing subnets, validators, and staking.
This unique architecture allows for seamless migration of Ethereum dApps and customized subnets. For organizations emphasizing financial privacy, custom governance and consensus rules for their subnet can be formulated, enabling diverse applications in banking, healthcare, supply chains, and private funds.
For instance, FIFA selected Avalanche in May for its NFT deployment. Most recently, the Avalanche Foundation launched a $50 million accelerator program to support blockchain gaming initiatives.
Concerning tokenomics, 90% of the AVAX token supply is unlocked from a total supply of 458.1 million, originating from the initial mining of 360 million AVAX. In Q2 2025, the annualization rate held steady at 3.8%, dictated by a dynamic schedule contingent on staked AVAX amounts and staking periods.
While this makes AVAX inflationary relative to Ethereum or Bitcoin, the AVAX token does retain a maximum limit of 720 million.
AVAX token prices are likely to increase alongside new service launches, including Euler Finance’s lending service, Nexpace (MapleStory N), VanEck’s VBILL treasury fund, Watr’s commodity trading, and Dinari’s tokenized securities.
This surge in activity has led to a 210% rise in average daily active addresses quarterly, as per Messari data. Over the past month, AVAX has appreciated by 18%, now trading at $25 per token. The prospects for gains remain robust, especially given that AVAX previously touched multiple peaks of $50 in 2024, even amid the crypto-unfriendly Biden administration.
Cardano (ADA)
Adopting an academic perspective on blockchain development, Cardano is linked closely to the inception of Ethereum, as its co-founder Charles Hoskinson established Cardano due to differing views on Ethereum’s organizational setup. Over time, Cardano has gained a reputation as the “left-behind” chain, especially as Solana (SOL) has ascended as a rival to Ethereum.
Nonetheless, Cardano’s roadmap is making strides, and its ecosystem is gradually developing. In early 2024, Cardano introduced its USDM stablecoin, issued by the fully compliant Moneta, even aligning with Europe’s stringent MiCA regulations. Similarly, the Norwegian Block Exchange (NBX) has integrated USDM.
On the scalability front, Cardano has progressed with Hydra Layer-2 technology for off-chain transactions and launched Mithril for lightweight node synchronization. By the end of this year, Ouroboros Peras is anticipated to significantly enhance transaction settlement times. Coupled with Ouroboros Leios, Cardano is likely to match Solana’s performance regarding transaction throughput.
Zero-knowledge (ZK) smart contracts are also slated for a mainnet debut by late 2025, promising to enhance privacy, scalability, and interoperability within Cardano’s framework. Additionally, the privacy-oriented Midnight project positions Cardano favorably amidst positive narratives.
From a sound money perspective, Cardano’s inflation rate is comparable to Ethereum’s, standing at 0.7% annually in Q1 and trending downwards due to the interplay of 5-day 0.3% expansion epochs, the 45-billion ADA hard cap, transaction fees, and staking participation.
Year-to-date, ADA has increased by 2.5%, remaining under a dollar per token. With an all-time high of $3.10 achieved in September 2021, it represents one of the most affordable blockchain investment options. Given Cardano’s history of skepticism, its potential for upside is considerable if its roadmap unfolds as intended. Similar principles of patience and compounding returns can be noted in the stock market, particularly in dividend growth investing.
