Understanding the Parallel L1 Monad Ecosystem and Potential Analysis

Monad Ecosystem

Since the Monad blockchain has not yet launched on the mainnet, its ecosystem is still under development. As of February 2024, over 80 independent protocols and dApps have committed to building on this platform. With the launch date of the mainnet approaching, this number is expected to approach 150 or 200.

One of the earliest and significant participants to integrate with Monad is LayerZero, an industry-leading protocol designed for cross-platform messaging and cross-chain interoperability across various chains and system types. The integration with LayerZero will allow Monad to seamlessly connect with 50 to 60 (and growing) of the most well-known blockchains in the field. Additionally, this integration will enable the sending of data to Monad via LayerZero endpoints, which will be used for purposes related to governance voting, loan contract calls, arbitrary data exchanges, and more. This integration also allows the exchange of ERC-20 and native Gas tokens as wrapped assets on Monad, with more utilities connected to LayerZero set to release in the coming months.

The Monad-LayerZero collaboration marks a significant milestone for both projects, helping to alleviate the challenges of cross-chain interoperability that exist in today’s blockchain landscape.

Significantly, Monad also recently announced a partnership with Pyth Network. This will enable Pyth to use Monad’s highly scalable low gas design to provide more reliable pricing data. Note that more frequent price feedback updates mean more accurate data, which in turn means more efficient DeFi operations.

Some other protocols building on the network include:

1. Orderly Network: A cross-chain liquidity layer and DEX frontend deployment platform.
2. Pike Finance: A cross-chain lending platform and decentralized money market.
3. Switchboard Oracles: A decentralized Oracle network, allowing verifiable randomness, functionalities, and price feedback.

Furthermore, Monad has recently welcomed several other projects to its ecosystem, including Notifi Network (a notification and customer engagement infrastructure layer), Swaap Finance (an unmanaged, interoperable market-making infrastructure), Catalyst (an interoperability protocol for cross-chain AMMs), Wombat Exchange (a multi-chain, cross-chain single-sided DEX), TimeSwap Labs (an oracle-free lending protocol for creating ERC-20 currency markets), and Aori (a high-performance order book protocol).

Additionally, projects like Dyson Finance (a DEX allowing retail investors to seamlessly provide liquidity), Ambient Finance (a DEX for diversified stable liquidity), AIT Protocol (an AI data platform using a train-to-earn model), ACryptoS (a DEX, yield liquidity staking platform, and decentralized money market), and Monadians (an NFT collection focused on Monad), are also among the recent collaborations with Monad.

Moreover, Monad recently announced it will integrate with the Wormhole cross-chain interoperability and bridging protocol, enabling robust connections with multiple blockchains like Solana. The collaboration with Wormhole allows Monad to unlock cross-chain interoperability with multiple blockchains connected to the Wormhole ecosystem.

Roadmap and future plans

1. February 2022: Monad was established in New York City.
2. February 2023: Monad received $19 million in funding from several leading cryptocurrency venture capital firms.
3. September 2023: Monad released documentation that first detailed the architecture of the Monad blockchain.
4. Second half of 2024: Launch of the Monad testnet.
5. End of 2024 or early 2025: Launch of the Monad mainnet.

While the Monad protocol has not yet launched on the mainnet, it is difficult to determine its exact future roadmap. Nevertheless, it is likely that the platform will launch its mainnet by the end of 2024, which means its direction will become clearer by then.

Comparative Analysis

Monad is a Layer 1 smart contract platform designed for extreme scalability. In fact, many speculate that it will be the most scalable platform to be released in the next 18 to 24 months, with technology that could rival industry giants like Solana.

Despite this, as a widely covered network like Solana demonstrates high total value locked (TVL) and a large user base, it contrasts with a new platform like Monad, which has yet to launch on the mainnet. Undoubtedly, once Monad launches, it will rapidly expand its user base, but there is still a long way to go in terms of real-world adoption.

A distinctive feature of Monad, unlike many other fast chains, is that it combines parallel execution (similar to Aptos, Sui, Solana, etc.) with EVM compatibility. Chains like Aptos, Sui, and Solana showcase parallel execution but are not compatible with Ethereum, meaning that the challenge of porting their iterations on these networks remains ongoing for developers.

Solana

According to many blockchain experts, Solana might be the most scalable blockchain currently in existence. However, Monad ultimately hopes to match and even surpass Solana in terms of network scalability and transaction throughput.

Many consider Solana to be a clear industry leader in terms of speed and scalability, and it is also one of the most widely used platforms in the blockchain sector. However, many believe that, compared to other platforms like Monad, its design is considerably centralized.

Solana utilizes a consensus mechanism called Tower BFT, a Proof of Stake (PoS) system that incorporates an enhanced version of Practical Byzantine Fault Tolerance (PBFT), along with a time-based mechanism called Proof of History (PoH), which reduces messaging overhead and latency.

The platform also employs Sealevel, a parallel execution framework designed to modify smart contracts continuously within a system to ensure their operation at ultra-high speeds.

Solana can confirm blocks within 0.4 seconds and scale up to 65,000 transactions per second (TPS), with transaction costs typically being just fractions of a cent. Furthermore, Solana is about to introduce Firedancer, a specialized validator setup infrastructure, which some believe will enable the network to handle up to one million TPS transactions. However, this remains to be seen.

One of Solana’s biggest weaknesses is the lack of Ethereum Virtual Machine (EVM) compatibility and the inability for developers to use Solidity to create Ethereum smart contracts. While development in Solidity on Solana is not possible, it can support Ethereum dApps through the Wormhole bridge. Nevertheless, the fact remains that Monad has a clear advantage in this respect, as it possesses a complete EVM framework.

Near

NEAR is often considered one of the highest throughput blockchains in the industry, boasting a finality time of just 1 second and transaction costs lower than most of its competitors. The NEAR Protocol is a Proof of Stake (PoS) blockchain, conceptually a community-operated cloud computing platform. NEAR utilizes sharding and other technological innovations to significantly enhance the network’s transaction throughput. Once its proprietary Nightshade sharding infrastructure is fully developed, NEAR claims it will be able to process at least 100,000 transactions per second.

As a major competitor to platforms like Hedera Hashgraph, Monad, Avalanche, and Solana, NEAR defines its platform as ultra-fast, energy-efficient, secure, and highly adaptable, aimed at enterprise applications, DeFi, and a range of other utilities. To facilitate this, NEAR has helped to develop Aurora, its EVM-compatible development framework, and the Octopus Network for interoperability; as well as the Rainbow Bridge, a means to transfer assets between Ethereum, Aurora, and NEAR. Although it has integrated Aurora, NEAR itself is not Ethereum compatible.

Similar to how MacOS, Windows, and Linux make computing user-friendly, NEAR recently launched its Blockchain Operating System (BOS) as a framework that allows developers to build and deploy decentralized frontend applications on any blockchain network.

Despite these innovations, Monad adopts a pipelined approach in an EVM-compatible environment, which NEAR does not. This technology alone might enable Monad to eventually surpass other platforms like NEAR in terms of decentralization, network throughput, and scalability.

Other highly scalable networks include Avalanche, BNB Smart Chain, Fantom, Injective Protocol, and emerging networks like Sei Network and Shardeum, which are Ethereum-compatible and focus on scalability. While these chains are considerably scalable, they do not necessarily match the efficiency of decentralization and EVM compatibility presented by Monad.

Other blockchains claiming high scalability include Ripple, Stellar, Algorand, Kadena, Aptos, Sui, MultiversX, and Cardano. Additionally, some speculate that once Ethereum fully implements its sharding capabilities, it could eventually handle over 100,000 TPS. However, this has yet to be proven, and the network’s massive scale may make this challenging to achieve.

Many experts also believe that Ethereum’s infrastructure is somewhat outdated and difficult to modify, meaning it may not keep up with the scalability of newer chains. Again, only time will tell if the Ethereum network can overcome these challenges in the long term.

Analyze the future potential of Monads

Although still very new, Monad represents a blockchain with significant long-term potential. It combines decentralization, extreme scalability, and compatibility with Ethereum, making it a disruptor in the blockchain space. Specifically, its parallel execution and superscalar pipeline framework, along with other cutting-edge innovations, technically position Monad advantageously.

Monad’s capability to handle 10,000 transactions per second (TPS) from the outset sets a strong benchmark compared to many existing chains. Given that 10,000 TPS is just the starting point, Monad theoretically could scale to several hundred thousand TPS in the coming years.

Despite this, Monad faces a daunting challenge in adoption, striving to capture a significant market share among well-established competitors in its first one or two years of development.

Conversely, the platform has already established solid foundational partnerships with powerful partners like LayerZero, Pyth Network, and Wormhole, indicating that its ecosystem of over 80 projects will significantly grow over time, with an expected 150 projects to be built on the platform by the time the mainnet launches.

However, the launch of many large Layer 2 platforms in the first half of 2024 (in addition to many existing Layer 2 solutions) may mean that many Layer 1 platforms will struggle to gain adoption.

Regardless, it is clear that Monad has the potential to be a game-changing blockchain, used to create decentralized, high-performance trading platforms, transaction systems, and various utilities.

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