• Polkadot, Cosmos, and Tezos are likely to follow in Solana’s footsteps

  • Over the last few months, the popularity of Layer-2 blockchain protocols has skyrocketed. Tokens associated with the respective networks, on the other hand, have performed admirably in 2021. However, Ethereum-compatible Layer-1 chains like Cosmos, Tezos, and Polkadot have recently taken the spotlight.

    Over the last month, the aforementioned alts have also provided solid returns to their HODLers. For starters, the value of Cosmos has increased by more than 92 percent in the last 30 days. Tezos and Polkadot have increased by 73% and 41%, respectively, over the same time period.

    So, which alternative is a better choice?

    To answer the aforementioned question, it is critical to examine the status of a few metrics. Consider the Stock-to-Flow ratio. At the time of writing, the reading of this ratio was 10.01 [DOT], 13.76 [XTZ], and 16.33 [ATOM]. The S2F model quantifies scarcity of a specific asset by considering parameters such as total supply and annual production.

    A higher value denotes less supply entering the market and, in retrospect, more scarcity. The asset’s price eventually rises as a result of this. Based on the aforementioned readings, ATOM clearly led the race, followed by XTZ and DOT, in that order.

    If risk-adjusted returns are taken into account, Cosmos once again leads the pack, followed by Tezos and Polkadot. Having said that, it should be noted that the Sharpe Ratios of the alts were 5.6, 4.6, and 3.9 at the time of writing.

    Furthermore, the 30-day average volatility of all three alts remained well below 2, indicating a favorable environment for long-term growth. A highly volatile market usually allows for a dramatic price move in either direction, but moderate levels tend to favor an uptrend over a downtrend.

    Furthermore, recent development activity on the respective networks has been quite impressive. The pace of work on GitHub has also been generally satisfactory for these alternates.

    If held for the long term, all three alts would add enormous value to investors’ portfolios. However, based on the current state of the metrics, Cosmos appears to be a better pick in the short term.

    Is there room for more gratitude?

    Aside from a couple of immediate resistance levels around $30 and $31, Cosmos did not appear to have any other roadblocks in its way. Volumes for this alt have been increasing, and it was trading well above its moving averages. If buying pressure continues to build, traders can expect this alt to break through its May highs within the next few trading sessions. If this is not done, the alt will revert to around $27.

    In fact, in a recent video, popular analyst Michael van de Poppe stated the same thing, saying,

    “If I had to choose a coin to follow Solana and it had to be a layer-one solution, it would be Tezos, Polkadot, or Cosmos, and given the structure, it looks amazing.”

    Tezos and Polkadot, which were trading at $6.22 and $32.7 at press time, did not appear to be far from their May highs of $49.7 and $8.4, respectively.

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