Galaxy: Is the Universal L1 dead? You're wrong.

Source: Galaxy; Compiled by: Jinse Finance

In the past few weeks, news about new “enterprise-grade” blockchains built for specific application scenarios has been rampant. DTCC is tokenizing securities hosted on DTC on Canton. Stripe launched a testnet for its payment-focused blockchain, Tempo. Robinhood is building its own L2 layer for storing real-world assets.

For crypto natives, these developments may trigger a familiar anxiety: the cypherpunk values ​​underpinning cryptocurrencies are being diluted. The general-purpose, permissionless blockchains that have fueled the adoption of cryptocurrencies will be bypassed by regulated existing institutions with distribution channels and balance sheets.

If tokenization, real-world assets, and stablecoins are increasingly deployed on private or semi-permissioned tracks, what role will decentralized protocols play? This is a very valid question. The answer is: very much so.

Our view:

To borrow Mark Twain’s words, the talk of the death of general-purpose L1 is greatly exaggerated.

These networks are fulfilling their original design purpose. They remain the only environment for the large-scale emergence of new financial technologies. This role will become even more crucial as technology accelerates, regulations become more stringent, and the cost of experimentation decreases. Yes, the competitive landscape is becoming increasingly crowded. However, competition from specialized or permissioned blockchains does not negate the role of open networks. Rather, it highlights the different problems they address (and, please don't misunderstand, this doesn't mean we need to roll out more general-purpose L1 blockchains). The core error lies in assuming that blockchains are fungible infrastructure. This is not the case. Enterprise-grade blockchains excel at tokenizing existing assets within known legal and financial frameworks. This is both an advantage and a limitation. In contrast, general-purpose L1 blockchains are venues for creating new assets, markets, and coordination mechanisms. Bitcoin didn't originate from a UN task force, nor did decentralized finance (DeFi) and stablecoins. These systems require an environment where anyone can deploy code, issue assets, and iterate without permission. This capability is not an ancillary feature of decentralized blockchains, but rather a primary driver of their long-term value. Almost all crypto-native technologies that later attracted institutional attention (blockchain, stablecoins, etc.) were born in permissionless environments. In this sense, permissionless blockchains often "cannibalize" themselves. Once the model is validated and market demand is clear, their most successful innovations are eventually adopted, copied, or internalized by centralized institutions. But this is not a failure of public blockchains; it precisely demonstrates their role as discovery engines for the broader financial system. This dynamic is particularly important in an AI-driven economy. As AI reduces the start-up costs of products, services, and even entire businesses, the demand for programmable, neutral financial infrastructure will grow. Permissionless Level 1 payment systems provide global settlement, composability, and instant distribution capabilities for economic experiments that cannot obtain prior approval from any regulatory or existing institution. They are optimized for exploratory innovation. Most experiments fail, but a few successful ones can reshape the market landscape. It's also a mistake to assume that regulatory clarity necessarily favors centralized or permissioned blockchains. If the Clarity Act recently passed by the US House of Representatives foreshadows the ultimate direction of market structures, then decentralization may increasingly serve a protective function rather than a burden. More decentralized networks allow developers and applications greater freedom to innovate within a clearer legal framework. In other words, as regulation matures, decentralization may shift from being seen as a risk to being seen as an advantage. Finally, market sentiment for L1 tokens is inextricably linked to their price. When L1 tokens underperform, claims of their insignificance abound. This cycle is not new; it's a recurring feature of cryptocurrency boom-bust cycles. In fact, blockchains like Ethereum and Solana are closely tied to innovation cycles, not quarterly product releases. Their value should be measured in decades. Bitcoin is the best example.