What are the characteristics of the iteration direction of public chains? A review of the unique public chains that are expected to rise in the next bull market

Produced by: LD Capital Research

Author: Yilan

Abstract

1. As the new public chain market heats up, the concept of specialized public chains has emerged. What may defeat Ethereum is not a fork of Ethereum, but rather a user-friendly public chain that can help Web3.0 mature.

2. Developing specialized public chains is an essential path for Web3.0 to shape the next generation of the internet. From the perspective of meeting the demand for scaling Web3.0 applications, the continuous iteration of specialized public chains is of great significance for the Web3.0 world that requires high-dimensional user experience improvements.

3. The gradual completion of Ethereum's merger and sharding process is not friendly to high-performance Ethereum forks. Specialized technical public chains supported by alternative consensus mechanisms such as DAG and DiemBFT v4, as well as public chains with modular innovative architectures, may stand out in the next wave of public chains. Public chains will gradually differentiate into those aimed at broad, private, and specific track directions (such as application chains).

4. Public chains with healthy ecosystems that can continuously attract native projects can weather bull and bear markets. The public chains under construction carry a lot of untapped vitality, seeking a balance between the complex extensibility of modularization and the simplicity of user experience.

5. Public chain solutions that are oriented towards vertical scenarios, have distinctive features, can meet specific needs, and have lower migration costs may become the next wave of innovative forces for crypto users, and these choices are likely to become the next generation of public chains that can traverse bull and bear markets, following general-purpose public chains like Ethereum and BSC.

Introduction

Recently, Aptos secured a $150 million investment from FTX at a valuation of $2.75 billion, with a total funding of $350 million. This is particularly impressive in a bear market, which is certainly related to its viable solutions built through user information acquisition at Meta (formerly Facebook) and the backing of numerous top scientists. In contrast, Solana, which emerged in the last bull market, currently has a bear market FDV of less than $20 billion, while Near's FDV is only $4.1 billion.

The formation of a stable ecosystem that carries more application value for public chains relies on time and user accumulation, a strong technical development team, and a large community and technical support to promote application development and implementation. Therefore, building a public chain is akin to constructing a railway, requiring significant upfront investment, but generating sustainable income from user fees in the long run. The more prosperous the ecosystem, the stronger the innovative power, leading to greater marginal benefits from income, which explains the high valuations of infrastructure public chains as core value carriers of Web3.0.

Looking at the development process of public chains, it can be roughly divided into three stages.

The first stage is from 2008 to 2013. After Satoshi Nakamoto published the Bitcoin white paper, Bitcoin became popular, and many "altcoins" aimed at improving Bitcoin emerged, leading to the first batch of public chains represented by BTC.

The second stage is from 2014 to 2017. The introduction of Turing completeness made Ethereum a turning point in public chain development. The concept of smart contracts first appeared in blockchain, enabling public chains to have programmability for running applications. With the emergence of applications like CryptoKitties, people began to truly experience the application potential of blockchain technology. Ethereum also established its ecological barrier in public chains with its first-mover advantage, producing public chains like ETH, NEO, QTUM, EOS, etc.

The third stage is from 2018 to the present. Various consensus mechanisms and iterations of transaction verification layer technologies have led to a batch of high-performance, low-cost public chains, represented by BSC, Solana, Avax, etc.

In the next stage, the development of public chains may follow the process of ETH2.0 merger and sharding expansion, potentially resulting in two trends. The first trend is that after sharding is completed, users who previously overflowed to EVM-compatible L1 and corresponding L2 due to high gas fees may return, posing challenges for Ethereum forks. The second trend is that public chains with specialized technologies and innovative architectures will stand out, and the development of public chains will gradually differentiate into those serving broad/private and specific track directions (such as application chains).

Broad Classification of Public Chains and the Concept of Specialized Public Chains

Specialized public chains are a concept further derived from broad public chains, segmenting the characteristics of public chains in terms of technical features, product-market fit, and value narrative, to perceive the direction of public chain iteration. For example:

Public chains characterized by innovative architectures (such as modularization) and unique technologies include Aptos, Sui, IOTA2.0+Assembly, zk-snark lightweight public chain MINA, EMIT-Core, etc.;

Public chains characterized by serving segmented tracks include Flow, Metabit, ImmutableX, Metabit, and MINA, etc.;

Public chains characterized by value narratives include the ReFi green public chain Celo.

The market for public chains with pioneering technologies aimed at private domains and specific track fields remains a blue ocean.

Specialized Public Chains

This article mainly discusses five projects that align with the concept of specialized public chains in terms of innovative architecture (such as modularization) and core technologies.

• Aptos -- A high-performance public chain born with a golden key, using the Move language

Aptos is an L1 high-performance public chain project initiated by former team members of Meta's stablecoin project Diem (formerly Libra). The Aptos team believes that user experience needs significant improvement in security and scalability to reach mass adoption. Aptos has the most first-mover advantage among new public chains, with its public mainnet expected to launch in the third quarter of this year.

1.1 Introduction to Aptos Core Technology Features

Consensus Mechanism

Aptos uses the same optimized BFT (Byzantine Fault Tolerance) as Solana as its consensus mechanism, but unlike Solana, Aptos has added an innovative reputation system. This reputation system is particularly suitable for decentralized environments, allowing for the verification of on-chain data and the automatic change of leaders in the event of unresponsive validators without human intervention. Additionally, the block submission time has been significantly reduced, with an average completion time of less than 1 second. This asynchronous mechanism also enhances network security, capable of withstanding adverse network conditions, network partitions, or DoS attacks on validators, as it does not impose any synchronous assumptions on the network.

Memory Smart Contract Parallel Execution Engine

Aptos Labs has designed a new technical approach called Block-STM that supports flexible transaction programming in synchronous processes. STM stands for Software Transactional Memory. In experimental environments, this technology has shown to outperform sequential execution by 20 times under low competition loads and by 9 times under high competition loads when processing transactions for over 10,000 accounts on a 32-core system, with a theoretical expected TPS reaching over 160,000.

Data Source: Aptos Labs

Move Programming Language

The Aptos development team created the Move programming language to enhance blockchain security. Move is designed not only for writing smart contracts but also allows users to manage their accounts, change node settings, adjust commission sizes, and add new features.

In summary, Aptos's technological innovation optimizes transactions in parallel through consensus (AptosBFT), execution (Block-STM), and environment (Move) to improve speed and reduce costs.

1.2 Current Ecosystem of Aptos

The Aptos team has focused on ecosystem development in five sectors: stablecoins, DEX, wallets, lending markets, and oracles. Notable projects include the stablecoin project by Thata Labs, the first DEX Pontem Network, the crypto wallet Martian, the liquid staking protocol Zaptos, the domain service provider ANS, the crypto wallet Fewcha Wallet, the NFT project Aptos Toad Overload, the NFT marketplace Topaz, synthetic assets Clone, and the block explorer Aptosscan, among others, with a high degree of native project involvement. Additionally, many projects from Solana have also rushed to the Aptos ecosystem, creating a strong siphoning effect from Solana projects.

Data Source: @AptosInsights

• Sui -- A high-performance public chain that emerged simultaneously with Aptos, sharing key features

Sui is a high-performance L1 public chain launched by Mysten Labs (the team comes from Meta's stablecoin Diem and the Novi wallet project). Like Aptos, Sui aims to solve the blockchain trilemma, but its focus is on expanding composable and dynamic NFTs for a wide range of metaverse applications, including gaming, social, and commercial use. Sui has also achieved impressive funding results in the bear market (valued at $2 billion) and has released its tokenomics model ahead of Aptos.

2.1 Similarities and Differences in Core Technologies Between Sui and Aptos

In terms of programming language, Sui also uses Move as its native programming language. Although Sui's memory data and code model differ slightly from Aptos, Sui's Move language clearly indicates when memory data and code are owned/shared or mutable/immutable, a feature not present in Aptos.

Regarding consensus mechanisms, similar to Aptos, Sui's consensus protocol is also a derivative of HotStuff. Both Sui and Aptos minimize communication between validators required to process transactions to achieve lower latency. AptosBFT is partially asynchronous. Sui's consensus design separates the protocol's memory pool from the consensus layer, while most PoS L1 chains have a single consensus protocol.

In terms of SDK innovation, while Aptos also has an SDK for improving DX/UX, Sui's SDK has made interesting attempts to connect with other ecosystems and non-crypto use cases, such as opening game APIs, allowing game developers to seamlessly interact with Sui's ecosystem (users, other dApps, assets) and the Move language; enabling dApp developers to guide the community by facilitating the portability of digital assets from other ecosystems to Sui, and developing front-end tools aimed at "Handshake" as a channel for users to distribute, claim/redeem Sui digital assets (e.g., payments, merchant coupons).

2.2 Current Ecosystem of Sui

Currently, SUI has issued incentives for testnet registration and launched the Chrome extension self-hosted wallet "Sui Wallet." The progress of Sui's ecosystem seems relatively slow; besides the wallet, there are ongoing developments in browsers, games, and social metaverse projects. It is evident that Sui's ecosystem positioning leans more towards the expansion of a wide range of metaverse applications, including gaming, social, and commercial use.

• IOTA2.0+Assembly -- A high-performance public chain that meets modularization and employs DAG technology

IOTA, as the settlement layer for Assembly, was the first to adopt DAG technology, known as Tangle. Strictly speaking, Tangle is not blockchain technology, which is one of its unique pioneering features.

Assembly, in conjunction with IOTA 2.0, provides high concurrent TPS for the Web3.0 world that requires significant user experience improvements, offering scalable contract chains where developers can flexibly customize incentives and fees for each chain, sharing security and other assistance.

3.1 Introduction to Assembly Core Technology Features

In terms of composability, Assembly can be seen as a 1.5 layer, which is a smart contract architecture layer. The various smart contract chains built on Assembly are the true Layer 2.

Based on the high concurrent TPS DAG structure of IOTA 2.0, the combination of IOTA2.0+Assembly breaks down other public chain L1+L2 models into 2.5 layers, modularizing many aspects, and because there is a separate Assembly smart contract architecture layer, it can combine various possibilities, such as coupling and arranging with different data availability layers/execution layers/settlement layers.

In terms of cost, the technical characteristics of Assembly ensure that the network fees for applications built on or interacting with Assembly will be the lowest in the entire public chain market, and the fees will remain at a stable level.

In terms of security, Assembly uses a form similar to ETH2.0's fraud-proof Rollup, where each validator stakes assets as security guarantees. Any third party can provide fraud evidence when a validator updates an incorrect chain state by monitoring chain activity and receive rewards. This ensures that as long as there is one honest validator in the validator committee, the chain's state can be protected from malicious changes.

3.2 Ecosystem Development of IOTA2.0 and Assembly

Currently, there are 213 projects under development on IOTA 2.0, which can seamlessly migrate to the Assembly mainnet once it goes live. Some projects are based on the Industry 4.0 concept, creating synergies with off-chain activities. Popular projects include IOTAlias, IOTA charging station, etc.

Data Source: ecosystem.iota.org/explore/projects

IOTA2.0+Assembly's unique Tangle model based on DAG consensus architecture and modular structure is one of the few distinctive public chains in the market, but its ecosystem development speed is relatively slow.

• Mina -- A lightweight public chain employing zk-snark technology

Mina's core concept is "a succinct blockchain," with all transactions processed across the Mina network limited to a block size of 22 KB. The latest block contains the most recent state of the entire blockchain, allowing users to fully verify the current blockchain state in milliseconds with just one zk-SNARK proof.

Data Source: minaprotocol.com

Unlike other Layer 1 blockchains that grow with each added block, Mina maintains a fixed size by using a series of self-referential cryptographic proofs. It is helpful to think of Mina's recursive cryptographic process as taking a snapshot of the blockchain. Each time a new block is added, a new snapshot of the existing blockchain is taken, limiting the blockchain size to that of a single snapshot while retaining all information.

Mina's use of zk-SNARKs makes it a striking specialized public chain solution, offering unique advantages compared to traditional blockchains. The wave of zero-knowledge proofs is also ushering in new development trends, leaning towards modular combinations of Snark algorithms, which may yield interesting results with new cryptographic modules.

4.1 Introduction to Mina Core Technology Features

Solving the State Bloat Problem

Ethereum plans to address the state size issue in a later upgrade called "The Purge," while Mina has focused on the continuously growing data and transactions, accounts, tokens, contracts, and other information since its inception.

Supporting Privacy

Zero-knowledge proofs support privacy by not disclosing any unnecessary information. Mina's zk-proof only proves the validity of the state without revealing interacting accounts. Even Mina's consensus nodes only retain the history of the last 290 blocks.

Decentralization Improvements

Running a non-consensus node requires minimal 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 can run on smartphones or browsers. Each user can run their own node, significantly improving decentralization. The ideal of self-regulating blockchains is self-verification, and Mina is the only blockchain capable of achieving this.

4.2 Current Status and Future Ecosystem Layout of Mina

Mina Protocol is currently used as a payment chain and completed its mainnet launch one year ago on March 23, 2022. Smart contracts known as zkApps are on the product roadmap for the second quarter of 2022. In March of this year, it raised $92 million from major crypto investors like Three Arrows Capital and FTX Ventures to execute its vision of building a private and secure layer for Web3. The Mina ecosystem has raised a total of $140 million.

Mina currently utilizes the Pickles recursive proof system to perform certain KYC operations without disclosing user identity information and to prove that a user's credit score meets or exceeds a specific threshold without revealing the user's credit score, enabling applications like no-deposit rentals and no-collateral loans. As the ecosystem has yet to gain momentum, zkApps leave ample room for imagination in Mina's future ecosystem layout.

Mina leverages the potential of zero-knowledge proof space while maintaining decentralization, becoming a specialized public chain that combines the hottest zk technology with L1.

• EMIT-Core -- A modular high-performance cross-chain public chain

EMIT-Core, as a sub-project of the EMIT project, aims to minimize the coupling between accounts during the operation of the blockchain system through the Block-Lattice ledger structure and Random-Check consensus algorithm, thereby improving the overall response speed and throughput of the blockchain system. It has significant advantages in the elastic scaling of physical bottlenecks such as computation, storage, and bandwidth. Since the system itself does not perform complex calculations, transaction fees are very low, even zero. This also makes it very simple to develop high-performance, complex decentralized applications (openly extending EMIT-Core's functions).

5.1 Introduction to EMIT-Core Core Technology Features

Block-Lattice Fragmented Ledger

Unlike Near's grouped sharding, the Block-Lattice ledger is considered the finest granularity sharding method, where each account is a shard. To achieve high throughput and low latency, the ledger decouples transactions into two parts: initiation and reception, created by different accounts. Since the creation of blocks from different accounts does not affect each other, this model can achieve significant storage and throughput elasticity after introducing block settlement states. This approach also generalizes cross-chain behavior. Unlike Nano's account model, EMIT-Core uses the Random-Check algorithm to confirm blocks and supports diverse assets.

New Decentralized Application Scheme

EMIT-Core believes that decentralized applications consist of a group of P2P network nodes, which can reach consensus on input and output sequences as a whole without needing to care about each other's internal states. In extreme cases, applications can consist solely of output sequences. This more flexible definition allows for very complex logic in applications on EMIT-Core. The high throughput and low latency system architecture of EMIT-Core brings the experience of decentralized applications closer to that of centralized applications.

Random-Check Algorithm

Random-Check refers to the requirement for confirmation checks where the requester randomly selects some nodes from the global nodes and retrieves account information from these nodes. If the states of these accounts are consistent, then this state can be considered the correct state of the current account. Security can be enhanced by increasing the number of checks or the number of nodes checked each time. This algorithm guarantees the high TPS of EMIT-Core.

Data Source: "EMIT White Paper" https://osf.io/bymuk/

5.2 Ecosystem Development of EMIT-Core

The vision of the EMIT project itself is "to integrate assets from the crypto world and create a complete decentralized economy." Within the EMIT project, bridges have been built connecting decentralized networks like Ethereum, Binance Smart Chain, Tron, and Super ZERO, and a sub-project called EMIT-Epoch is continuously absorbing and expanding the entire ecosystem. All of these are built on the foundation of EMIT-Core technology. So far, EMIT has its own cross-chain wallet and various ecosystem applications such as Cross, Chaos, Altar, TeamMining, StarGrid, RelicsMarket, Accounts, Assets, Bangs, etc. These ecosystems are all part of the EMIT-Epoch sub-project, and the ecosystem within EMIT-Epoch gradually increases over time, ultimately forming a complete decentralized economy.

Value Imagination and Potential Risks

Even though Aptos has achieved a valuation of $2.75 billion in a bear market, optimists still believe that Aptos has several times or even dozens of times the growth potential in the next bull market, which gives us greater room for imagination. Besides horizontally comparing Aptos with leading public chains like Ethereum, Near, and Solana, how far is the breakthrough infrastructure from the trillion-dollar valuation of Web2.0's Alphabet?

Of course, skeptics argue that the public chain track is already too crowded and that the narrative of high performance has yet to bring real change to the industry. Perhaps only the combination of truly killer applications and the underlying infrastructure that can support these applications will create the expected value impact of Web3.0.

Conclusion

Compared to the new public chains that still have high valuations in a bear market, we should not overlook the specialized public chains that are under construction and have relatively reasonable valuations. Whether they are in development or yet to exist in the future, what may defeat Ethereum is not a fork of Ethereum, but rather a user-friendly public chain that can help Web3.0 mature.

Currently, we observe that the development of public chains tends towards a state of modular loose coupling and parallelism aimed at vertical application fields. The general-purpose L1 market, such as Ethereum, is gradually becoming a red ocean, and even if the ETH2.0 merger and sharding expansion are completed, it does not mean that ETH can fully accommodate the potential incremental users of Web3.0. For example, if an application has 10,000 users before scaling and later attracts 10 million users, increasing its TPS requirement by 1,000 times, simply scaling by 1,000 times clearly cannot meet the high-performance demands of these incremental users. Even in a crowded space, the public chain track still presents opportunities. The market needs modular general-purpose public chains to integrate and overlay the best resources in the Web3.0 world to serve broad users, while also facing specialized public chains for vertical application scenarios to provide the most suitable soil for specific use cases in segmented tracks.

The development of specialized public chains may give rise to new applications and business models that we cannot currently imagine. As for what new applications and models will be unlocked, we can at least look forward to the next generation of the internet delivering experiences several times better than Web2.0, supported by uniquely characterized blockchain technologies.