Arthur Hayes, co-founder of BitMEX, expresses concerns about the future of most layer 1 blockchain tokens. He specifically highlights that only Ethereum and Solana are likely to succeed, while other projects, including Monad—a layer 1 recently backed by Coinbase Ventures—are predicted to falter significantly.
Hayes articulates that the initial price increases seen with new layer 1 projects often do not correlate with long-term success. He estimates that Monad's token, MON, could plummet by 99% due to an inflated valuation that does not align with its fundamental value. Currently, MON trades around $0.037, having seen a 45% rise from its initial coin offering price, resulting in a market cap close to $398 million.
Investors may often be tempted by the immediate success of newly launched layer 1 blockchains in hopes of repeating Ethereum's early surge. Hayes cautions that while these tokens may experience initial enthusiasm, the subsequent reality is often a stark contrast, leading to substantial declines.
In discussing the future of cryptocurrencies, Hayes identifies his top five picks: Ethereum, Solana, Bitcoin, Zcash, and Ethena. This selection underscores a belief that these established tokens are more resilient against the volatility that afflicts newer projects.
When focusing on Ethereum, Hayes perceives it as the frontrunner for institutional adoption, suggesting that major financial institutions are recognizing the limitations of private blockchains. He argues for Ethereum's potential to become integral to traditional finance (TradFi), facilitated through layer 2 solutions like Arbitrum and Optimism to enhance privacy and scalability.
For Solana, while it maintains its position as a leading layer 1 blockchain, Hayes notes that it requires innovative strategies to reignite its momentum following a decrease in meme-driven activity. He mentions the need for Solana to discover new opportunities that can sustain and potentially surpass its current standing. Hayes concludes that while Solana remains a substantial player, it is unlikely to outpace Ethereum in the long term.