- Over 10,000 cryptocurrencies exist in 2024, including Layer-1, Layer-2, stablecoins, and DeFi coins with varied uses and attributes.
- L2 blockchains improve L1 abilities by providing off-chain transaction scaling and quicker execution.
- Stablecoins offer price stability, while DeFi coins enable decentralized financial services and governance in Web3 ecosystems.
The cryptocurrencies segment has become defined in 2024 with over 10000 cryptocurrencies currently being circulated. This article, looks at the various categories, such as Layer-1, Layer-2, stable tokens, and DeFi tokens, with an emphasis on key features and uses in the blockchain industry.
Layer-1: Blockchains Powering Major Cryptocurrencies
A Layer-1 blockchain is the base layer of a blockchain. It is the main independent chain where transactions are carried out and verified. It also provides the necessary platform for decentralized apps and smart contracts.
The maintenance of a blockchain is the task of its network that checks transactions and creates new blocks. Every node of the blockchain has a technique to confirm the validity of a transaction to ensure it is secure, clear, and can’t be altered.
The most famous coins are Layer-1 cryptocurrency types. Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), and Solana (SOL) are some examples of this category.
Layer-2: Solution for Faster Crypto Transactions
Since Layer-2 network blockchains operate independently of Layer-1 blockchains for transaction execution, they are also considered off-chain scaling options. This implies that the Layer-2 network need not be a distinct blockchain; rather, it could be a centralized network where users decide to trust one another rather than depending on code to uphold trust, or it could just be a payment channel for sending money between two or more users via smart contacts.
Polygon (MATIC), Stacks (STX), Mantle (MNT), and Immutable (IMX) are examples of layer-2 cryptocurrency types with the highest market cap value.
Stablecoins: Solution to Crypto Changes
The volatility of the most known cryptocurrencies, such as Bitcoin (BTC), has caused cryptocurrency investments less appropriate for everyday transactions. Stablecoins seek to offer an alternative.
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Stablecoins keep a reserve of a fiat currency, like the US dollar, as collateral to guarantee the worth of the stablecoin. USDT, USDC, DAI, and FDUSD are the top 4 examples of stablecoins cryptocurrency types with the highest market value.
DeFi: Key Cryptocurrencies and Uses in 2024
Any digital asset utilized in DeFi apps, whether coins or tokens, is considered a DeFi cryptocurrency in the broadest sense. DeFi coins are regularly generated by DeFi dApp developers to supplement their blockchains with unique features such as incentive systems or voting rights.
DeFi coins are cryptocurrencies that serve a specific purpose inside their respective Web3 ecosystems. Hence, they are often a subset of a wider category known as utility tokens. DeFi tokens have applications in their crypto ecosystems that go beyond price speculation, although they may trade at a changing price on some cryptocurrency exchanges.
Avalanche (AVAX), Chainlink (LINK), Internet Computer (ICP), and Dai (DAI) are the top 4 examples of types of crypto ranked by market cap value.
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