The blockchain world is evolving fast and so must Layer 1 networks. According to Sonic Labs CEO Mitchell Demeter, simply offering high speed and low fees is no longer enough for Layer 1 (L1) blockchains to stay competitive. In a recent interview, Demeter outlined why the industry needs to shift from a race on clock speed to a deeper focus on user retention, developer incentives, and sustainable growth.
The Changing Landscape of Layer 1 Blockchains
Historically, many Layer 1 blockchains emerged by emphasizing speed and low transaction costs. These factors helped them stand out against heavyweights like Ethereum or Bitcoin, especially during crypto’s early boom years around 2020–2021. But as the ecosystem matured, several Layer 1 chains began offering similar if not identical performance metrics. As a result, “fast and cheap” is no longer an automatic differentiator.
Moreover, the foundational challenges for Layer 1 blockchains remain: the so-called “blockchain trilemma,” the tension between decentralization, security, and scalability. By improving throughput and speed, many blockchains end up sacrificing some degree of decentralization or security, which can compromise long-term trust.
What Sonic Labs’ CEO Says: The New Metrics for Success
Demeter argues that as L1 blockchains become more commoditized, the next battleground isn’t speed — it’s stickiness. The metrics that matter now are:
- Can user retention, can a blockchain keep users coming back through value beyond cheap gas fees?
- Developer adoption and engagement are developers building apps, smart contracts, and protocols that attract and retain users?
- Long-term value capture: Can the ecosystem generate sustainable value through governance, tokenomics, real-world utility, not just speculative hype?
For Sonic Labs, this means building infrastructure and incentives for developers, not just focusing on raw throughput. Their goal: make the network a platform people want to build on, stick around on, and use.
Why Speed Alone Is Not Enough
To understand why speed isn’t the only factor, it helps to revisit what defines a Layer 1 blockchain: the base protocol that processes and finalizes transactions directly on-chain.
Traditional Layer 1s like Bitcoin manage only around 7 transactions per second (TPS), leading to scalability limitations. Ethereum, even after moving to Proof-of-Stake, handles a modest throughput compared to centralized systems such as payment networks.
To improve scalability and speed, many networks adopted architectural changes, including sharding or DAG-based designs, to process more transactions in parallel. But boosting throughput often comes at the expense of decentralization or security. That trade-off forces developers to reconsider whether speed is worth the sacrifice.
Thus, even for technically superior blockchains, the key to long-term success lies beyond raw performance metrics.
What Blockchain Projects Should Do Next
Based on the insights from Sonic Labs and industry trends, here are strategic priorities for Layer 1 blockchains aiming for sustainable growth:
- Prioritize developer incentives and ecosystem growth: Foster a thriving ecosystem of decentralized applications (dApps), tools, and smart contracts to attract developers who build long-term.
- Focus on user-centric value and retention: Offer real-world utilities, user-friendly features, and community governance, not just low gas fees.
- Balance scalability with decentralization and security: Avoid sacrificing network integrity for the sake of throughput; instead, explore thoughtful protocol upgrades, sharding, or hybrid consensus mechanisms.
- Sustainable tokenomics and value capture: Design token and reward models that encourage long-term participation from users, stakers, and builders, not just short-term speculators.
Conclusion
In 2025, the competitive edge for Layer 1 blockchains no longer lies in who can process the most transactions per second. As pointed out by Sonic Labs CEO Mitchell Demeter, speed and low cost have become table stakes. The real differentiators are sustainable utility, developer-centric ecosystems, and long-term value capture.
FAQs
Q: What exactly is a “Layer 1” blockchain?
A: A Layer 1 blockchain refers to the base protocol (the main blockchain) that processes and finalizes transactions directly on-chain, without relying on any other chain or secondary network. Examples include networks like Bitcoin, Ethereum, and newer Layer 1s.
Q: Why can’t most Layer 1 blockchains scale easily?
A: Because they must balance three core properties: decentralization, security, and scalability. Improving scalability often means making trade-offs in security or decentralization, which can compromise the network’s integrity. This trade-off is commonly called the “blockchain trilemma.”
Q: Don’t high speed and low fees make a blockchain inherently better?
A: While speed and low fees were once major differentiators, they are no longer sufficient on their own. As many blockchains now offer similar performance, the new priorities are developer adoption, ecosystem growth, and sustainable long-term value, factors that ultimately define whether a blockchain thrives or fades.
Q: What should blockchain projects focus on to stay competitive today?
A: They should invest in building strong developer ecosystems, designing sustainable token-economics, prioritizing decentralization and security, and delivering real-world utility that retains users — rather than just optimizing for speed.
Q: Does focus on utility and ecosystem mean speed is irrelevant?
A: Not at all. Speed still matters, but it’s now part of a broader equation. A balanced blockchain combines reasonable speed with security, decentralization, and a thriving ecosystem. That holistic approach determines long-term success.
