Read the Original Article on Linkedin:
This small post gauges the probable future of L1 blockchains landscape --- a likely scenario of consolidation from usability, L1 design/architecture vs throughput and economics perspective. (more likely solar systems vs small city states)
Current limitation:
- Poor user experience (switching between diff domains w/ various wallets & networks)
- Fragmented liquidity from too many diff L1s that does not quite facilitate efficient global price unification (via arbitraging) and provide sufficient depth of liquidity
Essentially the same asset (i.e. ETH) living on diff domains (L1s, L2s, bridge etc.) are different wrapped versions of ETH, hence they all have different tickers with presumably different liquidity pools (spreading too thin)…
L1s from economic, design and throughput:
- Economic conditions (a likely recession)
- Essentially blockchain is a business of block space. Given deteriorating macro environment, we might see quite a drop in demand for block space in general
- In addition, block space comes w/ different qualities and costs based on design, security and network ops hence inherently affects short term and long term demand. Lots of L1s are very similar architecture wise that has limited throughput. Unless its a superior design (such as DAG model that enables parallel processing and verification, different flavor or sharding), and already have substantial adoption, its very unlikely that a large number of L1s will survive. Below is a quick description on diff designs:
- L1’s architecture has implication on transaction ingestion, which broadly could be categories as a bracelet (traditional blockchain) vs a web (DAG). Implication of the bracelet set up is a huge bottleneck in throughput and high cost due to arbitrary sequential ordering of all transactions while consuming global computation power as a major of the validating nodes need to do the work and come to consensus.
- In comparison a DAG model allows parallel processing with no dependency that uses much smaller set of nodes to agree on transaction validity. Aka, this is partial ordering instead of a sequential ordering. (Please see pic below for illustration)