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Terra, Avalanche and Osmosis Lead L1 Recovery as Bitcoin Seeks Support

Terra, Avalanche and Osmosis Lead L1 Recovery as Bitcoin Seeks Support

The first layer (L1) ecosystem has received increased attention in recent months as users search for new investment opportunities in Cosmos (ATOM), Fantom (FTM) and NEAR.

After the January market sell-off, where the price of Bitcoin (BTC) fell to a low below $34,000, much of the L1 field struggled to regain momentum.

Price performance of L1 tokens since January 24. Source: Delphi Digital

According to data from Delphi Digital, since BTC bottomed on Jan. 24, the only L1s that have seen a noticeable price gain are Terra (LUNA), Avalanche (AVAX), and Ethereum (ETH).

Growth of the Terra ecosystem

The price growth seen in LUNA was largely due to the Luna Foundation Guard’s announcement that it had raised $1 billion to form a Bitcoin reserve for the ecosystem’s Terra USD (UST) stablecoin.

Terra also saw the launch of its second lockdown event and the Mars protocol helped boost demand for the LUNA token.

The $1 billion in reserves for UST has also been a boon for Anchor Protocol (ANC), the Terra-based platform that is the main avenue to hit UST by promising LUNA or Ether. Anchor also increased its price after announcing that the developers are integrating AVAX as a warranty option for creating USTs.

Data from Cointelegraph Markets Pro and TradingView shows that since hitting a low of $1.18 on January 28, the price of ANC has catapulted 268% to a daily high of $4.35 on March 2, where it stopped at a major resistance level.

ANC/USDT 1-day chart. Source: Trading View

In addition to its integration with Anchor, Avalanche has seen several notable developments that have helped its growth since late January, including the integration with Wirex and the announcement of the launch of DeFi Kingdoms on the Avalanche network.

According to Delphi Digital, based on its recent price performance, “AVAX appears to be moving with a higher correlation to BTC compared to other L1s.”

Related: Which Layer 1 protocols will perform better in 2022? | Login now to The Market Report

Osmosis and Cosmos Ecosystem

Data from Delphi Digital shows that Osmosis, a decentralized exchange in the Cosmos ecosystem, has “outperformed other major peers in recent months by a substantial margin.”

OSMO/USDT performance compared to other cryptocurrencies. Source: Digital Delphi

The strength shown by OSMO is partly due to the success of Cosmos, which had a strong end to 2021 as its “thesis of interoperable application chains finally began to come to fruition in recent months.

Osmosis is now the largest decentralized exchange in the Cosmos ecosystem and supports 37 separate IBC chains with a total locked value of $1.75 billion, according to to Defi Llama data.

Total value locked to Osmosis. Source: Llama Challenge

Osmosis also increased its price and trading volume following the release of cross-chain and superfluous staking on March 1, which allows liquidity providers (LPs) on the Osmosis DEX to also earn staking rewards for assets for which they provided liquidity making it early adopters can do both staking and LP at the same time.

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