Public blockchains’ iterative directions — from general-purpose to specific scenarios oriented. Which featured public blockchains will stand out in the next bull round?
From LD Capital Research
- As the market for new public blockchains heats up, the concept, featured public blockchains emerges. It may not be Ethereum Fork that defeats Ethereum, but more disruptive and useful public chains that can help Web3.0 move to maturity.
- The development of featured public blockchains is a necessary path for Web3.0 to shape the next-generation Internet. From the perspective of meeting the demand for scaling up Web3.0 applications, the continuous iteration of featured public blockchains is of great significance to the Web3.0 world that needs to make high-dimensional user experience improvements.
- The gradual completion of the Ethereum merger and layering process is not friendly to high-performance Ethereum Fork, while public blockchains with special technologies supported by alternative consensus mechanisms such as DAG, DiemBFT v4, and those with modular and innovative architectures may stand out in the next wave of public chains. Public chains will also be gradually differentiated to develop in the direction of wide area, private area and specific tracks (such as Appchain).
- Public blockchains with healthy ecological construction that can continue to attract native projects are able to travel through the bulls and bears markets; those under construction carry a large amount of unbursting vitality. The development of public chain is finding a balance between the complex scalability of modularity and the simplicity of experience presented to users.
- Public blockchain solutions that are oriented to vertical scenarios, have distinctive features, can meet specific needs and have lower migration costs may become the choice of the next wave of innovative power of crypto users, and these choices will most likely become the next generation of public chains that will cross the bull and bear after general-purpose public chains such as Ethereum, BSC, etc.
Not long ago, Aptos received a $150 million investment from FTX at a $2.75 billion valuation, for a total funding of $350 million. This is particularly impressive in a bear market, which of course has something to do with the fact that it was priced by capital through the construction of feasible solutions by acquiring user information in Meta (former Facebook) and the well-designed background of a large number of top scientists. Solana, a new public chain that came to prominence in the last bull market, currently has a bear market FDV of less than $20 billion, and Near FDV is only $4.1 billion.
The formation of a stable ecology of public blockchains that carries more application values is inseparable from time and user precipitation, a strong technical development team, and the support of a large community and technical community to jointly promote ecosystem projects development and implementation. Therefore, building a public chain is like building a railway, which requires huge investment in the early stage but brings sustainable income by collecting fees from users in the later stage, and the more prosperous the ecology is, the more powerful the innovation force is, and the marginal benefit of income will be more. This also explains the reason behind the high valuation of the infrastructure public chain as the core value carrier of Web3.0. Throughout the development process of the public chains, there are about three stages.
The first stage was from 2008–2013, when Satoshi Nakamoto published the Bitcoin white paper and Bitcoin became popular, and many “altcoins” emerged to improve Bitcoin, resulting in the first batch of public chains represented by BTC.
The second phase is 2014–2017, the addition of Turing completeness made Ethereum a turning point in the development of public chains. The concept of smart contract appeared in the blockchain for the first time, and made the public chain have the programmability to carry the operation of applications. At the same time, with the introduction of applications such as CryptoKitties, people began to truly experience the application of blockchain technology. Ethereum has also established its own ecological barriers in public chains with its first-mover advantage, and the public chains shown in this period include ETH, NEO, QTUM, EOS, etc.
The third phase is from 2018 to the present. Various consensus mechanisms and the iteration of verification and transaction layer technology have created a number of high-performance and low-cost public chains, including BSC, Solana, Avax, etc.
In the next stage of public chain development, there might be two trends especially we’ll see those after ETH2.0 merge and the following sharding. The first trend is that after the completion of the sharding, users who were forced to overflow to the EVM compatible L1 and the corresponding L2 due to high gas fees may return to Ethereum ecosystem thus the forks of Ethereum will face challenges; the second trend is that public chains with distinctive technology and innovative architecture will stand out, and the development of public chains will gradually diverge into the direction of serving wide/private domains and specific tracks (such as Appchain).
General Classification of Public Blockchain and Featured Public Blockchain
Featured public blockchain is a concept stripped out from the generalized public blockchain, and the characteristics of the public chain are subdivided at the level of technical features, Product-Market Fit, and value narrative to get a sense of the direction of public chain iteration. For example,
the representative public chains featuring innovative architecture (e.g. modularity) and unique technology include Aptos, Sui, IOTA2.0+Assembly, zk-snark lightweight public chain MINA, EMIT-Core, etc.;
Those featuring service segmentation include Flow, Metabit, ImmutableX, Metabit, MINA, etc.;
Celo, ReFi green public chain features value narrative.
The public chain market with pioneering technologies for private domains and specific tracks is still a blue ocean.
Featured Public Blockchain
The report focuses on five projects that fit the concept of a featured public chain in terms of innovative architecture (e.g. modularity) as well as core technology differentiations.
- Aptos — initiated by top-level team, a high-performance public chain using Move language
Aptos is an L1 high-performance public blockchain project launched by former team members of the Meta stablecoin project Diem (formerly Libra). The Aptos team believes that the user experience needs to be significantly improved in terms of security and scalability to reach the masses (Mass Adoption). Aptos has the most first-mover advantage among new public chains, and the public mainnet that may be released in the third quarter of this year.
1.1 Features of Aptos’s Core Technologies
Aptos uses the same optimized BFT (Asynchronous Byzantine Fault Tolerant) as Solana as its consensus mechanism, but unlike Solana, Aptos adds an innovative reputation system, which is particularly suitable for decentralized environments, enable it to check the data on chain as well as automatically changes automatically changes the leader without manual intervention when it encounters a non-responsive status from the validator. In addition, block submission time is significantly shortened, with the average submission completion time less than 1 second. This asynchronous mechanism also enhances the network security function to resist harsh network conditions, network partitions, or DoS attacks on the validators, as it does not impose any synchronization assumptions on the network.
Memory Smart Contract Parallel Execution Engine
Aptos Labs has designed a new technical approach, Block-STM, that supports flexible transaction programming in the synchronization process. STM stands for Software Transactional Memory, which in an experimental setting with 32 cores simultaneously processing 10,000+ account transactions can outperform sequential execution by 20 times under low race load, and by 9 times under high race load with the expectation theory of TPS reaching 160,000+.
Programming Language — Move
The Aptos development team created the Move programming language to improve the security of the blockchain. Move is not only designed for writing smart contracts, but users can also use Move to manage their accounts, change node settings, resize commissions and add new features.
In a nutshell, Aptos’s system (its technological innovation) currently optimizes transactions through consensus (AptosBFT), execution (Block-STM) and environment (Move) in parallel to increase speed and reduce costs.
1.2 Aptos’s Current Ecology
Aptos team has been working on the ecological construction of five sectors including stablecoin, DEX, wallet, lending market and oracle machine. Notable ones are Thata Labs’ stablecoin project, the first Dex Pontem Network, crypto wallet Martian, liquidity staking protocol Zaptos, domain name service provider ANS, crypto wallet Fewcha Wallet, NFT project Aptos Toad Overload, NFT marketplace Topaz, synthetic asset Clone, block browser Aptosscan, etc. The ecological projects are high in originality. In addition, many Solana projects have also pre-empted the Aptos ecology, and Aptos has a strong syphonic effect on projects on Solana.
- Sui — A high-performance public chain that emerged at the same time as Aptos and shares main features
Sui is a high-performance L1 public chain launched by Mysten Labs (the team comes from Meta stablecoin Diem and the Novi wallet project.) Like Aptos, Sui attempts to solve the blockchain trilemma, but it centers on scaling composable and dynamic NFTs for a wide range of metaverse applications including gaming, social, and commerce. Sui has also achieved notable funding in a bear market ($2 billion valuation) and released its token economics model ahead of Aptos.
2.1 Similarities and Differences in Core Technologies Between Sui and Aptos
In terms of language environment, Sui also uses Move as its native programming language. Although Sui’s memory data and code model is slightly different from Aptos, Sui’s Move clearly indicates when memory data and code are owned/shared or mutable/immutable, whereas Aptos does not have such feature.
Sui’s consensus mechanism is similar to Aptos’s, and its consensus protocol is also a derivative of HotStuff. The consensus mechanisms of both Sui and Aptos minimize the communication required between validators to process transactions to achieve lower latency. AptosBFT is partially asynchronous. Sui’s consensus implementation is designed to separate the protocol’s memory pool from the consensus layer, whereas most PoS L1s have a single consensus protocol.
In terms of SDK innovation, while Aptos also has an SDK for improving DX/UX, Sui’s SDK makes interesting attempts to connect to other ecosystems and non-crypto use cases, such as opening a game API where game developers will be able to seamlessly interact with Sui’s ecosystem (users, other dApps, assets) and the Move language; allowing dApp developers to lead the community by facilitating the portability of digital assets from other ecosystems to Sui and develop a front-end tool for “Handshake”as a channel for users to distribute and collect/redeem Sui digital assets (e.g. payments, merchant coupons) to crypto and non-crypto users.
2.2 Sui’s Current Ecology
At present, SUI has issued incentivized testnet registration, and released the Chrome extension self-hosted wallet “Sui Wallet”. The ecological progress of Sui seems to be slow, in addition to the wallet, there are browsers, games and social metaverse projects currently under construction. It can be seen that Sui’s ecological positioning is also more inclined to the expansion of a wide range of metaverse applications including games, social networking, and commerce.
- IOTA2.0+Assembly — a high-performance public chain with modularity + DAG
IOTA, as the settlement layer of Assembly, pioneered the DAG technology called Tangle, which is not a blockchain technology strictly speaking, but a unique and alternative pioneering approach.
Assembly with IOTA 2.0 provides high-concurrency TPS, scalable deployment of contract chains, shared security and other help for the web3.0 world that needs massive user experience improvement. Developers are also able to customize incentives and fees of each chain.
3.1 Features of Assembly’s Core Technology
In terms of composability, Assembly can be regarded as Layer 1.5, which is a smart contract architecture layer, and the individual smart contract chains built on Assembly are the real Layer 2.
Based on the DAG structure of IOTA2.0’s L1 high-concurrency TPS, the combination of IOTA2.0+Assembly splits other public chains’ L1+L2 model into 2.5 layers, which is much more modular and can be combined with various possibilities, such as coupling and arrangement with different data availability layers/execution layers/settlement layers, due to a separate Assembly smart contract architecture layer.
In terms of the cost, the technical characteristics of Assembly determine that the network cost of building applications or interaction based on Assembly will be the lowest in the entire public chain market, and the cost will remain at a stable level.
For security, Assembly uses a form similar to ETH 2.0 Fraud Proof Rollup, where each validator stakes assets as security assurances, and any third party can provide evidence of fraud by monitoring the chain’s activity when the validator updates the wrong chain status, and then get rewarded. This ensures that the state of the chain is protected from malicious transitions as long as there is one honest validator in the validator committee.
3.2 The Ecological Construction of IOTA2.0 and Assembly
Currently there are 213 projects under development on IOTA 2.0, which can then be seamlessly migrated once the Assembly Mainnet goes live. Some projects carry the concept of Industry 4.0 and create synergies with the off-chain. The popular projects among all include IOTAlias, IOTA charging stations, etc.
IOTA 2.0+Assembly is one of the few public chains with distinctive features in the market with unique Tangle mode based on DAG consensus architecture and modular structure composition, but its ecology is being built at a relatively slow pace.
- Mina — A Lightweight Public Blockchain Featured Zk-snark Technology
The core concept of Mina is a “lightweight blockchain”, where the size of all transaction-occupied blocks processed in the entire Mina network is limited to 22 KB, and the latest block will contain the latest state of the entire blockchain, allowing users to fully verify the current state of the blockchain in milliseconds with just one zk-SNARK proof.
Unlike other Layer 1 blockchains that grow with each block added, Mina is able to maintain a fixed size by using a series of self-referential cryptographic proofs. It is helpful to think of Mina’s recursive cryptography process as taking a picture of the blockchain. Whenever a new block is added, another picture of the new block is taken with the existing blockchain, limiting the size of the blockchain to a single picture while preserving all the information.
Mina’s adoption of zk-SNARKs makes it a compelling featured public blockchain solution with unique advantages over traditional blockchains. The wave of zero-knowledge has also ushered in a new trend, favoring the Snark algorithms of modular combinations, and new replacement of the crypto module may bring interesting results.
4.1 Features of Mina’s Core Technology
Solving the State Bloat Problem
While Ethereum plans to address the problem of state size in a later set of upgrades called “The Purge,” Mina has been focused on the ever-growing data and the growth of transactions, accounts, tokens, contracts and other information since its inception.
Zero-knowledge proofs support privacy by not revealing any unnecessary information. The zk-proof of the Mina blockchain only proves that the state is valid and does not show the interaction account. Even if Mina’s consensus nodes only keep a history of the last 290 blocks.
Running a non-consensus node requires very little disk space and computing power. While other blockchains suffer from state bloat and may require powerful industrial-grade hardware to run full nodes, Mina’s non-consensus nodes will run on a smartphone or browser. Each user can run their own node, resulting in a significant improvement in decentralization. The ideal of a blockchain that goes beyond self-regulation is self-verification, and Mina is the only blockchain that can achieve it.
4.2 Mina’s Current Situation and the Prospect of Future Ecological Layout
Mina Protocol is currently used as a payment chain, and it completed the first anniversary of its mainnet launch on March 23, 2022. Smart contracts called zkApps are on the product roadmap for Q2 2022. Raised $92 million this March from large crypto investors such as Three Arrows Capital and FTX Ventures to execute on its vision of building a private and secure layer for web3. The Mina ecosystem has raised a cumulative $140 million.
At present, Mina can complete KYC operations of certain applications without revealing user identity information with the help of Pickles inductive proof system, and prove that a user’s credit score reaches or exceeds a certain threshold to realize application scenarios such as deposit-free leasing and mortgage-free loans without revealing the user’s credit score. As the ecology has not yet been launched, zkAPPs leaves enough room for imagination for Mina’s future ecological layout.
MINA utilizes the potential of the zero-knowledge proof space without affecting decentralization and has become a featured public chain that combines the hottest zk technology of the moment with L1.
- EMIT-Core — A Cross-chain Public Blockchain With Modular High Performance
The core logic of EMIT-Core, a sub-project of EMIT project, is to minimize the coupling between accounts through Block-Lattice’s ledger fabric and Random-Check consensus algorithm during the operation of the blockchain system, so as to improve responsiveness and throughput of the whole blockchain system. It is very advantageous in terms of elastic expansion of physical bottlenecks such as computation, storage, and bandwidth. Since the system itself does not run complex computations, transaction costs are very low or even zero, and it makes it very easy to develop high-performance complex decentralized applications (open to extend EMIT-Core functions).
5.1 Features of EMIT-Core’s Key Technology
Unlike Near’s grouped sharding, the Block-Lattice ledger is considered the least granular sharding approach, where each account is a shard. To achieve high throughput and low latency, the ledger decouples transactions into two parts, originating and receiving, which are created by different accounts. Since the creation of blocks from different accounts does not affect each other, this model allows for huge elasticity of storage and throughput after the introduction of the settlement state of the blocks. This approach also generalizes the cross-chain behavior. Different from Nano’s account model, EMIT-Core uses the Random-Check algorithm to confirm blocks and supports a diverse set of assets.
A New Decentralized Application Scheme
EMIT-Core believes that a decentralized application consists of a set of P2P network nodes that as a whole can agree on input and output sequences without bothering about each other’s internal state, and in extreme cases, the application can have only output sequences. This more flexible definition allows the logic applied on EMIT-Core to be very complex. With EMIT-Core’s high throughput and low latency system architecture benefits, decentralized applications can approach the experience of centralized applications.
Random-Check means that the requestor that confirms the check randomly selects some nodes among the global nodes and obtains the account information on these nodes, and if these account states are consistent, then it is assumed that this state is the correct state of the current account. The security can be improved by increasing the number of checks or the number of nodes per check. This algorithm is the guarantee of high TPS of EMIT-Core.
From: 《EMIT White Paper》https://osf.io/bymuk/
5.2 The Ecological Construction of EMIT-Core
The vision of the EMIT project itself is “to integrate the assets of the crypto world and create an economically complete decentralized world”. In the EMIT project, bridges have been built among decentralized networks such as Ethereum, Binance Smart Chain, Tron and Super ZERO, and there is an sub-project, EMIT-Epoch, continuously absorbing and expanding the entire ecosystem. All of this is built on the EMIT-Core technology. So far, EMIT has its own cross-chain wallet and ecological applications such as Cross, Chaos, Altar, TeamMining, StarGrid, RelicsMarket, Accounts, Assets, Bangs, etc., and all of which are in the subproject EMIT-Epoch. The ecology in EMIT-Epoch will gradually increase over time, eventually forming an economically complete decentralized world.
Value Assumptions and Potential Risks
Even if Aptos gets a valuation of $2.75 billion in the bear market, optimists still believe that there will be several times or even dozens of times of growth space for Aptos in the next round of bull market, which also brings us more room for imagination. In addition to the horizontal comparison of valuation between Aptos and high-performance public chains such as Ethereum, Near, Solana and other leading public chains, how far is the to-take-stage infrastructure from the trillion-dollar valuation of Web2.0 Alphabet?
Of course, doubters also believe that the public chain track has been too congested and the high-performance narrative has not brought real change to the industry. Perhaps only the combination of a true killer application and an underlying layer that can carry that application can create the value and impact that Web 3.0 is expected to have.
Compared with the new public chains whose valuation is still high in the bear market, we probably should not ignore the featured public chains that are under construction and have relatively reasonable valuation, whether it is a public chain in development or a future one that does not exist yet. It may not be Ethereum Fork that defeats Ethereum, but more disruptive and useful public chains that can help Web3.0 move to maturity.
At present, we observe that the development of public chains tends to be modularized decoupling as well as specific needs targeted, and the market of general-purpose L1 such as Ethereum is gradually becoming a red ocean. However, even if the ETH2.0 merge and sharding is completed, it does not mean that ETH can fully carry the potential incremental users of Web3.0. For example, if an application has 10,000 users before the ETH2.0 performance enhancement, and later on the influx of 10 million users makes its requirement for public chain TPS increase by 1000 times, the simple expansion of 1000 times obviously cannot bear the demand for high performance of these incremental users. Even VCs are crowded into the infra space, there are still opportunities in the public chain track. The market needs modular and universal public chains to graft and overlay the best resources in Web3.0 to serve the wide range of users, and also needs professional public chains facing vertical-application-oriented scenarios to provide the most “suitable soil” for specific use cases in the subdivided track.
The development of featured public chains may give rise to some new applications and business models that we cannot imagine in the current state. As to what kind of new applications and new models will be unlocked, we can at least expect the next-generation Internet to bring us a several-time better experience than Web 2.0 with the support of blockchain technology that has various features.
Li Xi,《Web3时代的模块化公链探索之路-基于IOTA的Assembly》, LD Capital Research
Tony, Stewart, Mavis, Jason, Ryan, Luiz,《Solana生态报告》，头等舱
Kunal Goel,《Mina Protocol — Small but Mighty》, Messari
The information in this report comes from publicly disclosed references, and the opinions expressed herein are for research purposes only and do not represent any investment advice. The opinions and forecasts given in the report are only analyses and judgments as of the date of issuance and are not permanently valid. Furthermore, under no circumstances shall the institution or the author be liable to any person for any loss arising from the use of any content in this report.
Official website: ldcap.com