Blockchain Modularity: Reshaping the Encryption Ecosystem

Blockchain technology is entering a new era of modularization, which includes not only projects based on specific technological advancements but also encompasses Ethereum L2/L3, Bitcoin L2, and cross-chain solutions. These diverse projects, although focusing on different areas, collectively break the boundaries of traditional monolithic chains and promote the industry's convergence.

In this transformation, the competitive landscape is undergoing profound changes. The original technological barriers are gradually being broken down, and new advantages are being reorganized through integration. Therefore, the uniqueness of Blockchain projects is becoming increasingly important, otherwise they may lose their footing in the wave of modularization.

Reshaping of Industry Landscape

1. Modular Chaos Period

With the rise of modular Blockchain, the data availability layer, execution layer, and even the settlement layer will enter a period of intense competition. After about 2-3 years of reshuffling, some foundational projects will emerge, building the underlying infrastructure of the encryption field. These facilities will accumulate over time, forming a deep moat, unless disruptive technologies arise.

2. Opportunities for high-performance Blockchain new projects are decreasing.

In the next 2-3 years, unless there are significant technological breakthroughs, it will be difficult for new monolithic Blockchains to find a market position. Whether it is a traditional monolithic chain or a high-performance Blockchain, new entrants will face huge challenges.

3. Existing high-performance public blockchains are facing challenges.

In the new landscape, even existing high-performance public chains need to reposition their value, otherwise they may lose their original advantages. Compared to security, pure performance advantages may seem less unique.

4. Challenges and Opportunities of Ethereum

Ethereum will also face challenges, especially in the data availability layer and execution layer. However, this is an inevitable result of the development of Blockchain technology, and no single Blockchain can solve all problems. Nevertheless, Ethereum possesses the most scarce resource in the encryption field—security, which gives it an irreplaceable status.

5. Possible development directions for the industry

In the future, Ethereum and Bitcoin may provide the foundational settlement layer services for the entire encryption ecosystem, with a few L1s also having the opportunity to participate. The data availability layer will experience intense competition, with numerous participants. The execution layer is mainly concentrated in Ethereum L2 and some high-performance public chains, while emerging Bitcoin L2 projects are also on the rise.

6. The maturity and large-scale application of encryption

With the development of modular Blockchain, Ethereum and Bitcoin are gradually evolving into providers of underlying security services. Other projects offer diversified services at different levels to meet various application needs.

The diversification of Blockchain is mainly reflected at the application layer, rather than the infrastructure level. Although the infrastructure will maintain a certain degree of decentralization, it will not present a flourishing situation.

After this round of modularization, competition in the blockchain infrastructure will become more stable. In the next decade, competition at the encryption application layer will become more intense, covering multiple areas such as gaming, social, DeFi, NFT, AI, and shared services. This marks the beginning of the encryption field's move towards large-scale applications, expected to gradually materialize in 2-3 years.

From 2009 to 2026, these years can be seen as the wild era of the encryption field. Although it was filled with speculation, during this period, the underlying infrastructure continued to improve, laying the foundation for the widespread application of encryption.