Crypto is going mainstream—just not in the way you might think

It won’t look like Bitcoin, Ethereum, or Solana. It won’t be dominated by NFT art or memecoins. It likely won’t be the Ethereum Virtual Machine (EVM) or the Solana Virtual Machine (SVM). Blockchains will quietly integrate into the web as a secure communication layer between applications, similar to the shift from HTTP to HTTPS. The impact will be significant, but the experience for users and developers will feel almost unchanged. This transition is already underway.

Stablecoins, which are simply fiat balances represented on blockchains, already process roughly $9T of adjusted annual volume. This rivals Visa and PayPal. Stablecoins are not fundamentally different from PayPal dollars. The difference is that blockchains give them a safer and more interoperable transport layer. After more than a decade, ETH is still not meaningfully used as money and is easily replaced by stablecoins. ETH derives value from cashflows that come from demand for Ethereum blockspace and staking incentives. On Hyperliquid, the highest volume assets are synthetic representations of traditional equities and indices rather than crypto-native tokens.

The primary reason for the existing financial web to integrate blockchains as a secure communication layer is interoperability. A PayPal user cannot easily pay a LINE Pay user today. If PayPal and LINE Pay operated as chains in the same sense that Base and Arbitrum do, then market makers such as Across, Relay, Eco, or deBridge could facilitate these transfers instantly. The PayPal user would not need a LINE account and the LINE user would not need a PayPal account. Blockchains allow this kind of interoperability and permissionless integration between applications.

The recent excitement around Monad as the next major EVM ecosystem shows how many people in crypto remain attached to an outdated mental model. Monad has a well-designed consensus system and strong performance, but these properties are not unique anymore. Fast finality is now table stakes. The idea that developers will move en masse and become locked into a new monolithic ecosystem is not supported by the last decade of experience. It is easy to move EVM applications from one chain to another, and the broader internet is not going to rearchitect itself inside a single virtual machine.

The future role of the decentralized Layer 1: world database, not world computer

Or in crypto terms: a base layer for Layer 2 chains.

Modern digital applications are fundamentally modular. There are many millions of web and mobile applications. Each application uses its own development framework, programming language, and server architecture. Each one maintains a database that defines its state as an ordered list of transactions.

In crypto terms, every application is already an app-chain. The problem is that these app-chains do not have a secure, shared source of truth. Querying the state of an application requires trusting centralized servers that can fail or be compromised. Ethereum originally attempted to solve this through the world computer model. In this model, every application is a smart contract inside a single virtual machine. Validators re-execute every transaction, compute the entire global state, and run a consensus protocol to agree on it. Ethereum updates this state roughly every fifteen minutes, at which point a transaction is considered confirmed.

This approach has two major problems. It does not scale, and it does not allow enough customization for real applications. The key realization was that applications should not run inside a single global VM. Instead, they should continue to operate independently, using their own servers and architectures, while posting their ordered transactions to a decentralized Layer 1 database. A Layer 2 client can read this ordered log and independently compute the application state.

This new model is both scalable and flexible. It can support large platforms such as PayPal, Zelle, Alipay, Robinhood, Fidelity, or Coinbase with only moderate changes to their infrastructure. These applications do not need to be rewritten into the EVM or SVM. They only need to publish their transactions to a shared, secure database. If privacy matters, they can post encrypted transactions and distribute decryption keys to specific clients.

Under the hood: how a world database scales

Scaling a world database is far easier than scaling a world computer. A world computer requires validators to download, verify, and execute every transaction produced by every application in the world. This is computationally expensive and bandwidth intensive. The bottleneck is the need for every validator to fully execute the global state transition function.

In a world database, validators only need to ensure that data is available, that blocks are ordered consistently, and that the ordering cannot be reverted once finalized. They do not need to execute any application logic. They only need to store and propagate data in a way that guarantees that honest nodes can reconstruct the full dataset. Therefore, it is not even necessary for each validator to receive a full copy of each data block of transactions.

Erasure coding makes this possible. For example, suppose a 1 megabyte block is split across ten validators using an erasure code. Each validator receives roughly one tenth of the data, but any seven validators can combine their pieces to reconstruct the entire block. This means that as the number of applications increases, the number of validators can also increase, and the per-validator data load remains constant. With ten applications producing one megabyte blocks and one hundred validators, each validator only handles roughly ten kilobytes per block. With one hundred applications and one thousand validators, each validator still processes about the same amount of data.

The validators still run a consensus protocol, but only need to agree on the ordering of block hashes. This is far easier than running consensus on global execution results. The result is a system where the capacity of the world database scales with the number of validators and the number of applications, and where no validator is overloaded by global execution.

Interoperating chains sharing a world database

This architecture creates a new problem, which is interoperability between Layer 2 chains. Applications in the same VM can communicate synchronously. Applications running on separate L2s cannot. Consider the ERC20 example. If I have USDC on Ethereum and you have JPYC, I can use Uniswap to swap USDC for JPYC and send it to you in a single transaction. The USDC, JPYC, and Uniswap contracts coordinate inside one VM.

If PayPal, LINE, and Uniswap each operate as separate Layer 2 chains, we need a method for secure cross-chain communication. To pay a LINE user from a PayPal account, Uniswap (on its own chain) would need to verify the PayPal transaction, execute several trades, initiate a LINE transaction, verify its completion, and send a final confirmation back to PayPal. This is Layer 2 cross-chain messaging.

To do this securely in real time, two elements are required. First, the destination chain needs an up-to-date hash of the source chain’s ordered transactions. This is usually a Merkle root or similar fingerprint published on the Layer 1 database. Second, the destination chain needs a way to verify message correctness without re-executing the entire source chain program. This can be accomplished with succinct proofs or through Trusted Execution Environments.

Real-time cross-chain transactions require a Layer 1 that provides fast finality combined with real-time proof generation or TEE attestations.

Towards unified liquidity, frictionless finance

This brings us back to the broader vision. Today, digital finance is fragmented across closed systems, forcing users and liquidity to cluster around a few dominant platforms. This concentration limits innovation and prevents new financial applications from competing on equal footing. We imagine a world in which all digital asset applications connect through a shared base layer, allowing liquidity to flow freely across chains, payments to become seamless, and applications to interact safely in real time.

The Layer 2 paradigm made it possible for any application to become a Web3 chain. A fast Layer 1, serving solely as a world database, makes it possible for these chains to communicate in real time and interoperate as naturally as smart contracts within a single chain. This is how frictionless finance emerges: not from one monolithic blockchain attempting to do everything, but from a universal base layer that enables secure, real-time communication across all chains.

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