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Jill Gunter is no stranger to crypto — she’s seen the market through its ups and downs, conducting research on blockchain protocols, working at multiple crypto startups and co-founding her own, and investing as a crypto VC at Slow Ventures. Gunter first started following the crypto space in 2011, when she was working in the traditional finance world as a derivatives trader at Goldman Sachs and when Bitcoin was the only major layer-one blockchain.

Since then, Gunter told TC’s Chain Reaction podcast, she’s been able to witness three distinct phases of development within the industry that have led it to this moment of heated competition between multiple established blockchains, and even more new protocols entering the fray.

The first phase is what Gunter called the era of altcoins. Protocols like Litecoin, Dogecoin and ZCash were born in this era, when developers sought to tweak the Bitcoin protocol in specific ways, such as changing the block size to change the throughput of the system, she explained.

“What you came out with was a lot of blockchains and a lot of tokens that had a lot of the same properties as Bitcoin, but changed the feature set,” Gunter said.

The next phase of the development of new blockchains came with the creation of Ethereum in 2015, according to Gunter. Ethereum brought a “sea change” in terms of what one could do with a blockchain by introducing the concept of programmability.

The modern era of layer-one blockchains, she continued, can be understood as a period of developers trying to tweak the feature sets of programmable blockchains to address some of the issues with Ethereum that exist today. Developers are trying to lower fees, boost usability, and add privacy features to applications on the blockchain that the layer-one Ethereum chain itself doesn’t have.

Ethereum’s high transation costs and low throughput have continued to plague the network with issues, frustrating users. Yuga Labs’ recent metaverse land sale grabbed headlines last week when people trying to buy NFTs were faced with exorbitant gas fees and failed transactions because of the popularity of the drop.

While alternative blockchains such as Solana and Avalanche offer lower costs and can process transactions much faster than Ethereum, Gunter said these other chains have not been “fully put to the test that Ethereum has been” because they haven’t had to process as many users at once.

What’s more, these newer chains have all “centralized something in some way,” Gunter continued.

“For the most part, these things have on their roadmap ways of continuing to decentralize over time, but again, we have yet to see those put to the test. We also have yet to see in what ways decentralization really matters to users in terms of the architecture of these things,” Gunter said.

These different blockchains are increasingly having to compete to attract developers to their ecosystems. As co-founder of privacy-focused layer-one blockchain Espresso Systems, Gunter knows firsthand how challenging it can be to get engineers to invest time in developing projects on a specific chain when there’s so much competition.

“Personally, I don’t think it’s good enough anymore to just wave around a white paper that says, oh, we’re actually going to be more scalable and more decentralized than anything else, Gunter said. “I think that you need to have truly differentiated features from what already exists. And I think that neither is good enough without the other — I think you do need to make a case for why your system is going to be the most popular and the most sound going forward over time.”

Admittedly, she added, all the layer-one projects out there are “making the right noises,” but have yet to be put to the test by users. Especially if crypto continues to experience a market downturn, the winners and losers in the fight between layer-one blockchains may be separated faster than the industry had expected.

You can listen to the entire interview with Gunter on our podcast, Chain Reaction. Subscribe to Chain Reaction on Apple, Spotify or your alternative podcast platform of choice to keep up with us every week.