Modular Blockchain Evolution and Its Impact on the Crypto Industry

According to PANews, the evolution of modular blockchain technology is breaking down the barriers of isolated single chains and leading to partial integration. This change is causing a shift in the competitive landscape, with the uniqueness of blockchain projects becoming increasingly important to maintain their position in the market. Over the next 2-3 years, a period of intense competition is expected in the data availability (DA) layer, execution layer, and settlement layer of modular blockchains. After this period, some foundational projects will emerge, forming the underlying infrastructure for the entire crypto industry. These infrastructures will develop deeper moats over time, unless disrupted by groundbreaking technologies. In 2-3 years, the window for new high-performance blockchain projects will likely close, unless there are breakthrough technologies. Both single-chain and high-performance blockchain newcomers will struggle to gain a foothold in the market. Existing high-performance public chains will need to find indispensable positions in the competitive landscape to avoid losing their protective moats. As modular blockchains evolve, high-performance public chains will face significant pressure, as their performance is less irreplaceable compared to security. Ethereum will also be impacted, particularly in the DA and execution layers. However, no single blockchain can solve all problems, including Bitcoin and Ethereum, which have a balanced approach. Some value being taken away is inevitable. Ethereum possesses the most scarce resource in the crypto industry (security), making it indispensable. A possible evolution scenario is that Ethereum and Bitcoin will provide the most basic settlement layer services for the entire crypto industry. A few L1 projects may also have some settlement layer opportunities. The DA layer will experience intense competition, including Ethereum, EigenDA, Celestial, Near, Avail, and others. The execution layer will mainly occur in Ethereum L2, high-performance public chains like Solana, Avalanche, Aptos, Sui, and a large number of new Bitcoin L2 projects. With the arrival of modular blockchains, Ethereum and Bitcoin are gradually evolving into providers of underlying security services, along with other DA layer, execution layer, and settlement layer projects offering different levels of services to meet various application needs. The flourishing of blockchain applications will mainly occur at the application layer, rather than in infrastructure. After this cycle of modularization, the competition for blockchain infrastructure will come to an end. In the next decade, competition in the crypto application layer will intensify, including games, social media, DeFi, NFTs, AI, shared services, and more. This will mark the beginning of large-scale adoption of the crypto industry, which is expected to occur 2-3 years from now. From 2009-2026, the crypto industry has experienced a wild era filled with speculation. During this time, the underlying infrastructure has gradually improved, leading the crypto industry towards large-scale adoption.