Analyzing the 2020-2022 Bull Market: Performance and Growth Logic of 21 Major Public Blockchains

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Introduction

The rise of Ethereum established smart contract platforms as a foundational pillar of the crypto ecosystem. While Ethereum remains the largest and most significant smart contract platform, its limitations in scalability and high transaction fees have made it unsuitable for many applications.

Newer public blockchains emerged to meet this demand, leveraging their performance and cost advantages. The 2021 bull market saw an explosion of applications and ecosystems on chains like BNB Chain, Polygon, Solana, Avalanche, Fantom, and Terra. As Vitalik Buterin noted, the future is likely multi-chain. The growth patterns observed during this bull market offer valuable insights into this evolving landscape.

Public Blockchain Performance: 2020-2022 Bull Market

Public blockchains are critical infrastructure within the crypto market. This analysis covers 21 major smart contract and cross-chain platforms, selected based on their market capitalization (top 100), established ecosystems, and significant market attention.

Constructing the Public Blockchain Index

To simplify tracking the overall performance of this sector, we created a weighted index (Chain_Index) based on the price movements of these 21 blockchains.

The index calculation is as follows:
Daily Index Price = ∑ (Daily Closing Price of Asset * Daily Weighting Coefficient of Asset)
Daily Weighting Coefficient = (Asset's 30-day Average Daily Trading Volume) / (∑ 30-day Average Daily Trading Volume of all Sample Assets)

The resulting index, plotted on a logarithmic scale, provides a clear view of the sector's overall trajectory.

Outperformance and Favorable Risk-Return Profile

During this bull run, the public blockchain index achieved a peak gain of 3,013%. Its lowest point was on March 16, 2020, following the "312" crash, and its peak was on May 11, 2021.

The index's maximum drawdown was 36.4%, occurring between February 18 and February 28, 2021. As of June 20, 2022, its maximum bear market decline was 72.5%.

Compared to Bitcoin's performance over the same period, the public blockchain sector demonstrated a superior risk-return profile. It also showed resilient defensive characteristics during the bear market, though prolonged downturn conditions could still lead to further depreciation.

Significant Dispersion in Maximum Gains

The performance of individual blockchains varied dramatically. Fantom (FTM) led with an astonishing gain of 144,198%, followed by Solana (SOL) at 50,152%.

We can categorize the performance into three tiers:

This dispersion highlights the importance of selective investment within the sector to avoid significant drawdowns.

Drawdown Analysis: BNB Emerged as the Most Resilient

The average drawdown across the 21 blockchains was 59.9%, lasting an average of 69 days. Most began their rallies between March and August 2020, peaking between September and December 2021, with an average rally duration of 467 days.

Notably, BNB's maximum drawdown was only 36.9%, and it recovered these losses within just 9 days, making it the most resilient asset in the sector during pullbacks.

The Evolving Landscape of Public Blockchains

Ethereum maintained its position as the undisputed leader, consistently holding over 50% market dominance. However, analyzing trends in Total Value Locked (TVL) and market capitalization reveals a shifting landscape.

Starting in February 2021, Ethereum's share of TVL began to decline sharply as BNB Chain surged. This was followed by Polygon, Solana, Tron, and Avalanche, which collectively began to challenge Ethereum's dominance. A similar trend was observed in market capitalization shares.

Note: TVL data for Internet Computer, IOTA, and Polkadot was not available on DeFiLlama during this analysis, which may slightly affect quantitative calculations but not the qualitative conclusions.

The Logic Behind the Public Blockchain Boom

1. DeFi Congestion on Ethereum

The DeFi Summer of 2020 created unprecedented demand for Ethereum block space, causing gas fees to skyrocket. The popularity of yield farming and memecoins fueled a frenzy of activity. Between June 2020 and February 2021, the total daily gas fees on Ethereum grew over 100 times, from $447,000 to $49.55 million, with DeFi transactions accounting for the largest and fastest-growing share.

2. BNB Chain: The First Mover

BNB Chain (then BSC), launched in September 2020, was the first to capitalize on Ethereum's congestion. Its EVM compatibility allowed it to easily onboard developers and users from Ethereum. Binance's $100 million seed fund to support DeFi projects on BSC further accelerated growth. By February 2021, BSC surpassed Ethereum in daily transactions, and the symbiotic relationship between its DeFi ecosystem and the rising price of BNB created a powerful feedback loop.

3. The Rise of Incentive Programs

Following BNB's success, other chains adopted aggressive incentive programs. Polygon launched a $140 million fund in April 2021, directly onboarding major Ethereum DeFi protocols like Aave and seeing its TVL soar 68x in two months. This set a new standard, with Fantom, Harmony, Avalanche ($180 million), Celo, and NEAR all launching similar programs later in the year. EVM compatibility became a key strategy for attracting Ethereum's developer community.

4. Solana’s Ecosystem-First Strategy

Solana's remarkable growth was driven by an "ecosystem-first, technology-second" approach. By opting for a more centralized but high-throughput architecture, it delivered a working product quickly. Its team and investors heavily incentivized ecosystem growth through liquidity mining, developer grants, hackathons, and funding. This focus paid off, as Solana saw one of the highest growth rates in developer count in 2021.

5. NFT Mania Fuels Demand

In the second quarter of 2021, NFTs became the next major driver of on-chain demand. While Ethereum remained the dominant hub for NFT activity, other chains grew rapidly. Solana's NFT ecosystem, for example, saw transaction volumes rise even during market dips in May 2021, eventually establishing itself as the second-largest NFT platform.

6. Summary of Growth Drivers

The public blockchain boom was ultimately driven by:

The Case of Cosmos and Polkadot

In contrast, ecosystems like Cosmos and Polkadot, which focused on complex, long-term technical architecture that was not natively EVM-compatible, benefited less from the immediate bull market frenzy. This slower pace of ecosystem development is reflected in their more modest price performances during this period.

Established Moats: Post-Bull Market Analysis

Ethereum's Fortress

Ethereum possesses the strongest moat. Its key advantages include:

BNB Chain's Centralized Power

BNB Chain experienced meteoric growth, with TVL jumping from $15 billion to over $35 billion in ten days during Q2 2021. However, its highly centralized nature was exposed by a series of major hacks and exploits (including on Venus and PancakeBunny) following the May 2021 crash. These incidents eroded user confidence. Its strength lies in its integration with the vast Binance ecosystem, but its weakness is its dependence on the Ethereum developer community for innovation.

Solana's Speed and Stumbles

Solana developed a vibrant ecosystem of nearly 2,700 projects across DeFi, NFTs, and gaming. It built a strong, independent NFT infrastructure, exemplified by the Magic Eden marketplace, which commands over 97% of Solana NFT volume. However, its network has been plagued by repeated outages and downtime, raising serious questions about its decentralization and long-term reliability despite its high throughput. Its low fee revenue model also presents sustainability challenges.

Frequently Asked Questions

What was the best-performing blockchain in the 2021 bull market?
Fantom (FTM) was the top performer by maximum gain, achieving an increase of over 144,000%. Solana (SOL) and Polygon (MATIC) also saw extraordinary gains of over 50,000% and 35,000%, respectively.

Why did some blockchains like Cosmos and Polkadot underperform?
These platforms focused on building complex, long-term technical infrastructure that was not natively compatible with Ethereum's Virtual Machine (EVM). This resulted in a slower pace of ecosystem development compared to chains that prioritized EVM compatibility and rapid deployment of incentive programs, causing them to miss the peak of the bull market demand.

What is the main takeaway from the public blockchain rally?
The rally was primarily demand-driven. Blockchains that could effectively address Ethereum's scalability issues and provide financial incentives for developers and users experienced the fastest growth. Success was less about pure technological superiority and more about execution, timing, and ecosystem support.

How does EVM compatibility help a blockchain?
EVM (Ethereum Virtual Machine) compatibility allows developers to easily port their applications from Ethereum to a new chain with minimal code changes. This provides a massive shortcut for bootstrapping a new ecosystem by leveraging Ethereum's vast existing pool of developers, tools, and code.

Is Ethereum's dominance guaranteed in the future?
While Ethereum remains the leader, its dominance is being challenged. The future is likely to be multi-chain, with different blockchains catering to specific use cases. Ethereum's key challenge is scaling effectively via Layer 2 solutions to retain its developer and user base.

What are the biggest risks for new public blockchains?
Key risks include excessive centralization, which compromises security and decentralization; network instability and downtime, as seen with Solana; and unsustainable economic models that rely on high inflation from incentive programs without generating sufficient fee revenue.

Conclusion

Public blockchain tokens demonstrated both explosive growth and resilient risk profiles during the last cycle, cementing their role as a crucial component of a crypto portfolio. The bull market revealed that while Ethereum has a formidable head start, the competitive landscape is far from settled. Blockchains that rapidly deployed capital, embraced EVM compatibility, and onboarded killer apps were able to capture significant market share.

The previous cycle was defined by a supply gap—Ethereum's scaling limitations meeting insatiable demand for DeFi and NFTs. The next cycle may be different, favoring blockchains that can attract and retain the high-quality applications that have proven their value across multiple market conditions. The ultimate winners will be those that balance scalability, security, and a sustainable economic model.