Thread by @MTorygreen

Want to find the next $SOL or $MATIC?

Pay attention to a new breed of L1s known as "parallel processing” chains

Protocols like @Aptos_Network, @SeiNetwork and @SuiNetwork claim > 160K TPS and sub-second finality

Here are the 5 things you need to know to gain an edge

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This thread will cover:

• What are the problems with existing L1s?

• How does parallel processing fix these problems?

• What new L1s are using this technology?

• What are the problems with parallel processing?

• What’s the long-term potential?

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🔶 What are the Problems with Existing #L1s?

There’s no denying that #Ethereum has achieved tremendous success

In just a few years, it has:

• Created > $150B in value for DeFi

• Generated > $35B in NFT sales

• Supported > 11K DAOs

But it's not without its problems

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In particular, it has historically been limited by the “scalability trilemma”

This theory states that a blockchain cannot be simultaneously fast, secure and decentralized

Because #Ethereum chose security and decentralization, it limited its efficiency

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This has caused several problems:

• Low Throughput: Ethereum can only handle ~25 tps

• Cost: Fees often exceed $10

• Latency: Transactions can take minutes to hours

This is unacceptable for a network trying to replace the internet or serve as a form of payment

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While a newer generation of blockchains are trying to solve these issues, they come with their own set of problems

#Solana, for instance, is very fast but it has also proven unreliable at times (the protocol has had 9 outages)

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To be fair, #L1s are working hard to solve this problem

Ethereum is working on its own upgrade that uses rollups and a concept known as “danksharing” to increase efficiency

But a new crop of L1s are experimenting with a different solution known as parallel processing

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🔶 What is Parallel Processing?

Parallel processing is a novel solution to the “scalability trilemma”

Instead of processing transactions sequentially (i.e. one-at-a-time) like traditional L1s, parallel processing blockchains execute unrelated transactions simultaneously

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If successful, this technology could have many benefits including:

• High throughput: TPS > 160K

• Low cost: Fees of < $0.001

• Low latency: Sub-second finality

In short, parallel processing may replicate the “Web 2.0 experience”, helping introduce the public to #Web3

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🔶 Key Players

While several projects are experimenting with parallel processing, three stand out:

• Aptos

• Sui

• Sei

Let’s take a look at each…

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🔹 Aptos

@Aptos_Network was founded in 2021 by two ex-Meta employees – @moshaikhs and @AveryChing

The protocol raised $350M from @a16z, @binance, @cbventures, Mulitcoin, Apollo and Franklin Templeton

Its $APT token launched in late 2022

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#Aptos believes that its use of parallel processing will allow it to achieve speeds of up to 160K TPS with a sub-second finality

This is ideal as it provides internet-like speeds for a variety of use cases such as gaming, micropayments, remittances, etc…

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Another distinguishing feature of #Aptos is its use of the Move programming language

Move was created by Facebook engineers to support the failed Diem project

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Many engineers believe that Move is superior to both Solidity (used by Ethereum) and Rust (used by Solana), and much more secure

This could prove to be a game changer, as the crypto space has been plagued by hacks

(losses in 2022 alone were in the billions)

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While relatively new, #Aptos has achieved significant traction to date

It lists over 150 projects in its ecosystem including #DEXs, wallets, #DeFi, staking, #oracles, #NFTs, etc…

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🔹 Sui

@SuiNetwork was also founded by a cohort of ex-Facebook engineers including @EvanWeb3, @EmanAbio, and @b1ackd0g

The protocol raised $336M from @a16z, @binance, Apollo and Tiger

Sui has yet to release a token but there are always rumors of an airdrop

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The protocol has around 60 projects in its ecosystem, including #DEXs, #DeFi, #NFTs and wallets.

While #Sui is technically a general purpose blockchain, it is targeting the gaming, DeFi and e-commerce verticals

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The protocol also has a growing #NFT ecosystem

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#Sui has many similarities to #Aptos. Both projects:

• Are built using the Move programming language

• Use parallel processing to achieve high TPS

• Are targeting the next billion users

• Are backed by top tier VCs

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One of the major differences, however, is the underlying architecture.

#Aptos is a traditional #blockchain while #Sui is a directed acyclic graph (“DAG”).

This means that, on a technical level, the way they perceive and process transactions is fundamentally different

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Other notable differences include:

• Sui uses a different consensus protocol that allows for higher throughput and lower latency

• Sui uses a modified version of the Move language

• Aptos has more community traction

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🔹 Sei

@SeiNetwork was founded in 2022 by Jeff Feng and @jayendra_jog

The protocol raised $5M seed round from a consortium including @cbventures and Multicoin Capital and is rumored to be currently pursuing its Series A (at a speculated valuation of $400M)

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Like #Aptos and #Sui, #Sei uses parallel processing to achieve a finality of 600ms and 22K orders per second

Instead of pursuing a more general approach like other L1s, Sei is favoring a “sector specific” strategy

In particular, it’s focused on #DeFi applications

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This has caused many to label the protocol a “decentralized NASDAQ” that provides a CeFi trading experience with #DeFi tools

To this end, #Sei has onboarded more than 50 apps across multiple verticals

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🔶 Potential Problems

While #Aptos, #Sui and #Sei have many strong features, capturing share won’t be easy

Key challenges include:

• Protocols like ETH have an entrenched moat

• Competition from other high TPS chains like Solana

• Devs aren't as familiar with Move

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Indeed, we have seen many “Ethereum Killers” come and go

While competitors have definitely lessened the market share of Ethereum, no one has yet managed to knock the king from its mantle

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🔶 Long-Term Potential

Despite the challenges listed above, there is a bull case for #Aptos, #Sui and #Sei

In particular:

• There’s room for competitors as the future will likely be #multichain
• The potential value of L1s is immense

Let’s look at each of these...

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🔹Multi-chain

Many crypto analysts believe that the future will be “multi-chain”

In other words, it’s likely that many blockchains will co-exist, leaving room for new entrants

For more on this check out the following thread:

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🔹 Market potential

As a potential replacement for money, the market potential for #Aptos, #Sui and #Sei is in the tens to hundreds of trillions

For more on this check out the following thread:

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🔶 Recommended Resources

If you want to learn more about Aptos, Sui and Sei, I’d recommend checking out the following reports

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“Aptos and Sui - The New Kids on the Block” by Shivam Sharma of @BinanceResearch

research.binance.com/en/analysis/ap…

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“The Bear Necessities: 7 Trends and Theses Part 2” by Dustin Teander of @MessariCrypto

messari.io/report/the-bea…

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“The Case for Parallel Processing Chains” by @MohamedFFouda

medium.com/alliancedao/th…

I hope you've found this thread helpful.

Follow me @MTorygreen for more fundamental analysis on Web3 protocols.

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