2021 Public Chain Landscape Review: A Year of Diversification and Multi-Chain Coexistence

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The year 2021 will undoubtedly be remembered as a landmark in the history of the crypto world. The combined effects of Bitcoin’s 2020 halving and unprecedented monetary easing by the Federal Reserve fueled a bull market unlike any before. The total market capitalization of cryptocurrencies surged from $779.5 billion at the start of the year to an all-time high of $3 trillion by November.

As new concepts such as DeFi, NFTs, meme coins, GameFi, Metaverse, and Web3.0 gained traction, the pace of innovation accelerated dramatically. Milestone events like Coinbase’s Nasdaq listing highlighted the sector’s growing legitimacy. Amid this boom, public blockchains—serving as foundational infrastructure for decentralized applications and user interaction—saw remarkable growth across key performance metrics.

The DeFi wave that began in late 2020 continued to drive user adoption throughout 2021. According to DeFi Pulse, the total value locked (TVL) in DeFi protocols across ecosystems surpassed $24.32 billion by December 27. Dune Analytics reported that the number of unique addresses interacting with DeFi protocols exceeded 4 million by year-end—an unprecedented surge that empowered emerging blockchains like Solana, Avalanche, and BSC to rise in prominence during the first half of the year.

In the second half, as NFTs took center stage, specialized chains such as Flow and Tezos gained attention. Meanwhile, major upgrades—including Ethereum’s London hard fork and Polkadot’s long-awaited parachain auctions—set the stage for long-term transformation in the public chain landscape.

Let’s explore the defining trends that shaped the public blockchain ecosystem in 2021.

Ethereum Maintains Dominance Despite Rising Competition

While new blockchains thrived amid market expansion, Ethereum retained its position as the industry leader. Among all public chains with TVL exceeding $1 billion, only Solana operates independently of Ethereum’s virtual machine (EVM). Most so-called “Ethereum killers” are, in fact, built on or closely integrated with Ethereum’s ecosystem—leveraging its developer tools, user base, and composability.

Ethereum’s native token, ETH, rose from around $750 at the beginning of 2021 to a peak of $4,860 on November 10. Its market share climbed from 11% to 21%, reflecting growing confidence in its long-term value proposition.

👉 Discover how Ethereum's shift to deflationary mechanics is reshaping its economic model.

Despite persistent issues with high gas fees and network congestion, Ethereum’s robust network effects continue to attract developers. Many choose it as their primary deployment platform before expanding to alternative chains—a strategy known as “multi-chain deployment.” However, rising costs have pushed Ethereum to evolve. The implementation of EIP-1559 during the August London upgrade marked a turning point: over 1.24 million ETH (worth ~$5 billion) were burned through transaction fee销毁, transitioning the network from inflationary to deflationary.

Additionally, Ethereum advanced its Layer 2 scaling roadmap. Major rollup solutions—Optimism, Arbitrum, zkSync, and StarkWare—secured significant funding and made substantial technical progress. L2BEAT data shows that Layer 2 TVL reached $5.6 billion by year-end, with Arbitrum leading at $2.52 billion (44.99% share).

Though these scaling solutions face criticism over technical limitations and centralization concerns, they represent critical steps toward sustainable growth. Ethereum remains the benchmark for security, decentralization, and ecosystem maturity—even as competitors challenge its dominance.

The Battle for Second Place Heats Up

While Ethereum leads by a wide margin, the race for second place intensified in 2021. According to Defi Llama, Terra claimed the #2 spot with $20.89 billion in TVL, followed by BSC ($17.27B), Avalanche ($12.27B), and Solana ($12.25B). Ethereum’s lead is clear—its TVL is nearly eight times that of Terra—but the competition below is fierce.

Binance Smart Chain (BSC) was among the first to benefit from Ethereum’s congestion. Backed by Binance’s massive user base and liquidity, BSC quickly rose to second place in Q2, attracting yield farmers and DeFi projects seeking lower fees.

Solana emerged as a strong contender by combining high throughput (50,000+ TPS) with low latency and cost. Its aggressive marketing strategy—including high-profile hackathons—drew over 300 new projects in May alone. Backed by FTX and its founder SBF, Solana built momentum through performance and community engagement.

Avalanche adopted a similar approach but emphasized interoperability. The launch of Avalanche Bridge (AB), powered by Intel SGX technology, enabled near-instant cross-chain transfers (under 10 seconds) at a fraction of Ethereum’s gas cost. In September, the Avalanche Rush initiative allocated $180 million in liquidity incentives, boosting adoption across DeFi platforms.

Fantom followed suit with aggressive yield farming rewards, seeing its TVL explode from under $1 billion to $5.78 billion in just days. Even prominent figures like Yearn.finance’s Andre Cronje voiced support.

However, these incentive-driven models raise sustainability concerns. Like early-stage tech startups relying on venture capital burns, such strategies risk creating fragile ecosystems vulnerable to collapse once rewards dry up.

Terra stood out by focusing on stablecoin innovation rather than just DeFi speculation. Its algorithmic stablecoin UST surpassed DAI in market cap, backed by a growing ecosystem of over 70 dApps including Anchor Protocol and Mirror Finance. With real-world use cases like Chai—a popular South Korean payment app—and rising daily active users (~3,200 new accounts/day), Terra demonstrated that utility-driven growth could compete with hype-based models.

Cross-Chain Bridges Surge Amid Growing Demand

As multi-chain usage became the norm, cross-chain bridges experienced explosive demand. By December, over 100 bridge projects existed—up from just 40 in September—according to Zenith Ventures’ Dmitriy Berenzon.

Dune Analytics reports that total assets locked in Ethereum bridges reached $25.23 billion. Top performers included:

Two main types of bridges emerged:

  1. Native bridges operated by chain teams (e.g., Arbitrum Gateway, Avalanche Bridge)
  2. Third-party protocols like Multichain (formerly Anyswap), cBridge, and Hop Protocol

Multichain raised $60 million from top-tier investors including Sequoia Capital and Three Arrows Capital—signaling strong belief in cross-chain infrastructure. cBridge reduced transfer times to under 20 minutes across seven major chains and enabled L2-to-L2 and L2-to-non-Ethereum transfers.

Yet security remains a major concern. High-value asset concentration makes bridges prime targets for hackers—a risk underscored by several high-profile exploits in late 2021.

Polkadot and Cosmos: Cross-Chain Giants Facing Challenges

Polkadot and Cosmos—often dubbed “cross-chain titans”—failed to meet lofty expectations despite technical promise.

Polkadot launched its parachain auctions in late 2021 after years of anticipation. Winning a slot grants projects access to shared security and interoperability within the Polkadot network. However, the high cost of DOT staking—estimated at $30 million annually per chain—limited participation and dampened developer enthusiasm. As a result, DOT’s price declined following auction launches.

Cosmos took a different path via its Inter-Blockchain Communication (IBC) protocol. By year-end, IBC had facilitated over 5.8 million transactions across 25 connected chains. Notably, Terra—the year’s breakout success—was built using Cosmos SDK.

👉 Explore how IBC is unlocking true interoperability across blockchains.

With plans to connect Bitcoin, Ethereum, Avalanche, and others in 2022, Cosmos may yet fulfill its vision of an “internet of blockchains.”

Vertical Blockchains Emerge: NFT-Focused Chains Gain Traction

As NFTs moved beyond niche art markets into mainstream culture, specialized blockchains tailored for digital collectibles gained prominence.

Flow, developed by Dapper Labs, became widely known through NBA Top Shot—a platform where only ~20% of buyers were crypto natives. Other notable projects include Chainmonsters (MMORPG) and Genies (digital avatars).

WAX, founded by the team behind OPSkins, positioned itself as the “King of NFTs.” With support for up to 200 million transactions per week and 27 NFT games live on-chain, WAX proved scalable infrastructure matters.

Tezos stood out for sustainability and affordability. Its carbon-efficient PoS consensus earned praise from institutions like PwC. Platforms like Hic Et Nunc offered low-cost NFT minting and trading—appealing to artists and collectors wary of environmental impact.

KardiaChain, promoted as Southeast Asia’s first public chain, gained attention through games like My DeFi Pet and partnerships with local communities inspired by Axie Infinity’s success.

These vertical chains highlight a shift: instead of trying to replicate Ethereum’s general-purpose model, builders are creating optimized environments for specific use cases.

Emerging Trends: Innovation Beyond the Headlines

Beyond headline-grabbing chains, several projects advanced meaningful innovation:

Meanwhile, once-prominent platforms like EOS faded into irrelevance—losing not just users and developers but also narrative relevance.

Final Thoughts: A New Era of Multi-Chain Coexistence

The public chain landscape in 2021 was defined by diversification:

This era of "multi-chain coexistence" reflects maturation: instead of one chain ruling all, we’re moving toward a pluralistic ecosystem where different chains serve different needs.

👉 See how next-generation blockchains are redefining scalability and user experience.

Frequently Asked Questions (FAQ)

Q: What made 2021 significant for public blockchains?
A: 2021 saw unprecedented growth in TVL, user adoption, and innovation driven by DeFi expansion, NFT mania, and rising interest in Web3 and Metaverse applications.

Q: Why did Ethereum maintain its lead despite high fees?
A: Strong network effects, developer tools, ecosystem maturity, and the transition to a deflationary model via EIP-1559 helped sustain confidence in Ethereum’s long-term value.

Q: Which public chains ranked highest in TVL?
A: As of late 2021: Ethereum (~$159B), Terra (~$20.9B), BSC (~$17.3B), Avalanche (~$12.3B), Solana (~$12.3B).

Q: What are cross-chain bridges used for?
A: They enable users to transfer assets between different blockchains—essential for multi-chain strategies and unlocking liquidity across ecosystems.

Q: Are high-yield incentives sustainable for new blockchains?
A: Short-term gains are clear, but long-term viability depends on building real utility beyond token rewards—otherwise risk collapsing when incentives end.

Q: What role did NFTs play in blockchain development?
A: NFTs drove mass adoption beyond crypto circles—especially via platforms like NBA Top Shot—and spurred demand for specialized chains optimized for digital collectibles.

Core Keywords: public blockchain, Ethereum, DeFi TVL, cross-chain bridge, NFT blockchain, Layer 2 scaling, multi-chain ecosystem