Modular Blockchain: Reshaping the Future of the Encryption Ecosystem

The concept of modularity is reshaping the Blockchain field, covering not only a series of projects evolving based on Cosmos technology but also Ethereum Layer 2/Layer 3 solutions, Bitcoin Layer 2, and cross-chain technologies. Although these projects focus on different levels, they are gradually breaking the boundaries of traditional monolithic chains and driving the industry towards partial integration.

In this trend, the competitive landscape and focus are changing. The original competitive barriers will gradually be broken down and recombined and evolved during the integration process. Therefore, the uniqueness and irreproducibility of blockchain projects are becoming increasingly important, otherwise they may lose their foothold in the wave of modular blockchain.

Industry Landscape in the Coming Years

1. In the next 2-3 years, 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 this period of reshuffling, some foundational projects will emerge, forming the underlying infrastructure of the entire encryption field. This infrastructure will build deeper and deeper moats over time, unless disruptive technology emerges.

2. In 2-3 years, unless there are breakthrough technologies, the new narrative of modular blockchain will basically come to an end. Whether it's a modular blockchain or a high-performance blockchain, new entrants will find it difficult to gain market position.

3. In this case, even existing high-performance public blockchains need to find their indispensable position in this chaotic battle, otherwise they may lose their original competitive advantages. According to the evolutionary trend of modular blockchain, high-performance public blockchains are likely under significant pressure, and compared to security, the irreplacability of performance itself is relatively weak.

4. Ethereum will also face challenges, especially in the data availability layer and execution layer. However, this is also an inevitable result of the development of blockchain technology. No single blockchain can solve all problems, and compromises are necessary even for Bitcoin and Ethereum. It is unavoidable that some value will be dispersed.

   However, Ethereum has the most scarce resource in the encryption field ( security ), with its irreplaceable importance.

5. The possible evolution directions of the industry are: Ethereum and Bitcoin will provide the most fundamental settlement layer services for the entire encryption ecosystem. There may also be a few Layer 1 projects that have the opportunity to participate in some settlement layer services. The data availability layer will also experience full competition in its early stages, with participants including Ethereum and some projects focused on data availability. The execution layer is mainly concentrated in the Ethereum Layer 2 ecosystem, high-performance public chains, etc., and a large number of Bitcoin Layer 2 projects are currently under development.

6. With the arrival of modular blockchain, Ethereum and Bitcoin are gradually evolving into providers of underlying security services, while other data availability layers, execution layers, and settlement layer projects will offer different levels of services to meet various application needs.

The diversification of Blockchain is mainly reflected in the application layer, rather than the infrastructure layer. Although the infrastructure will also have a certain degree of decentralization, it will not present a flourishing situation, but rather partial decentralization.

After this round of modular blockchain cycle, the competition for blockchain infrastructure will gradually come to an end. In the next decade, the competition at the encryption application layer will become more intense, involving multiple fields such as gaming, social networking, decentralized finance, non-fungible tokens, artificial intelligence, and shared services. This marks the beginning of large-scale applications in the encryption field, which is expected to gradually be realized in 2-3 years.

From 2009 to 2026, this nearly two-decade period has essentially been the wild west of the encryption field. Although this period is filled with speculation, the underlying infrastructure is continuously improving, laying the foundation for the encryption field to eventually move towards large-scale applications.