Variant co-founder: The next decade of smart contract blockchain

Author: Jesse Walden, co-founder of Variant Fund; Translator: 0xjs@黄金财经

The first decade of smart contract blockchain was born out of Bitcoin's original cypherpunk values: censorship resistance, open source, permissionless, and a new hope for building a democratic/fair Internet on a shared world computer.
Today, these ideological values ​​are facing market pressure, because the mainstream market values ​​different things: performance, cost, profitability, compliance.

Powerful technology is rarely used as intended by its creators or early adopters. Look at Bitcoin ("peer-to-peer electronic cash system") versus Bitcoin ETF or USDC.

As the original value of smart contract blockchain merges with mainstream market values, the next decade may develop in different directions.

Many of the growing use cases for smart contract platforms (fiat stablecoins/RWAs, open finance, many DePIN networks) are neither decentralized, permissionless, nor censorship-resistant, but simply leverage the decentralization of the underlying blockchain to achieve openness, interoperability, and settlement. Applications are also increasingly abstracting L1 cryptocurrencies, which have historically been viewed as censorship-resistant “internet money,” leading many to rethink the value proposition of the largest market cap tokens, including the underlying assets of the next generation of public chains.

For early adopters, this may be hard to accept. This is not what many in the industry were expecting. Does this mean it’s over?

I don’t think so. But it may just be the end of a prologue.

To meet the market’s demand for their value, cryptocurrencies are being commercialized. Commercialization, especially of open/permissionless software, is the form factor that brings good ideas to the largest audience, and thus has the greatest impact on the world.

Commercialization often comes with compromises. The opportunity lies in shaping the nature of those compromises, and thus the outcomes of commercial impact. To do that, you have to abandon ideological dogma, adapt to the game on the field, compete, and try to steer things in the direction you want them to go.

For example, compromising on decentralization for the sake of scale (whether through Rollups or integrated architectures) may better serve the use case of getting wallets into people’s hands. If that works, the next opportunity is to improve decentralization — and then, teach more people to learn new things that lean into the original ideology.

For me, this is a personal thing. I care a lot about the original ideology; it’s that pull that brought me here. That being said, I care even more about impact. I learned this lesson in a different creative scene. I went to college in Montreal, which had an incredibly rich cultural scene at the time (Arcade Fire, Tiga, A-Trak, Chromeo, Grimes, Vice, American Apparel, etc.). What emerged from this local scene quickly went global, spreading through the internet and merging with other hipster scenes, especially music blogs from 2004-2012 (Hype Machine, anyone?).

Soon, the scene merged with the mainstream. This merging was done primarily through stereotypical artists and brands taking the essence of the sound and culture, stripping out the nuances, and packaging it for retail in a popular but bland way. Meanwhile, the handful of artists and creatives who pioneered this original scene persisted, becoming fixtures in pop culture. To do so, they often had to make just enough compromise between the original movement and what was perceptible to the general public. This combination of determination and pragmatism is admirable because it has the greatest impact, and thus the greatest degree of pushing the culture forward.

So if you feel like the values ​​that got you into crypto are being diluted by the mainstream — I hear that, but try to look at it differently — because the commercialization of crypto could mean that the real opportunity in terms of impact is just beginning. I’m going to try to write more concrete examples of what that opportunity might look like. I sketched this out in yesterday’s “Only Crypto”/”Better With Crypto” post, but there’s more to say.