That is the second year of a PhD - the first year you're distracted by your literature survey of the area you're interested in. The second year is where you're trying to dig out a little niche that you can work in and expand the knowledge of what's there. The third year is where you're supposed to be writing up, but in reality you're probably still working on building up enough new knowledge in the area to actually write up.

It's not uncommon to feel the way you are during the second and third years - my advice is to recognise how you're feeling and then work out how to push forward (which is what you've already started to do).

My advice for how you can compete with large research projects full of postdocs is, don't try to. You're not in competition with them, you are doing your own research. It might be in a tiny niche area, but it's your area and it's new knowledge.

For what it’s worth, my second year of PhD was relatively miserable compared to my first and third.

ignore the prestige games, knuckle down and do the best work you can do- it’s more impressive if you succeed at a lower rank institution anyways, imo. And if you want that signalling power you can always plan to go for a postdoc.

Wishing you the best of luck, it can be a lonely path.

Just a comment someone once made to me - the PhD is a medieval institution <https://en.wikipedia.org/wiki/Doctor_of_Philosophy#History>. It's a lot like medieval medicine - it might do you good, but you're also lucky if it doesn't kill you.