The Blockspace Singularity

For years, crypto skeptics and believers alike have decried the lack of mainstream use cases for blockchain technology. Thousands of decentralized applications have been deployed, but mainstream use cases are scarce. That may be about to change.


A singularity, a point of infinitely dense matter, is theorized to have caused the Big Bang when one such point exploded, distributing matter throughout the universe. I think we’re at an analogous moment in the history of crypto.


Over the last year, developers have delivered fast, cheap blockspace to builders.


The “majors” have made huge strides, with Ethereum (ETH) deploying its Dencun upgrade in March, reducing transaction costs for users of layer-2 blockchains to less than $0.01. Solana (SOL) has (largely) fixed the downtime issues that plagued it until last year, leading to a massive surge in economic value on the protocol.


New entrants have also been coming thick and fast. New layer-1 blockchains such as Sui, Sei, Aptos (APT) and others have launched in the past 18 months, promising unprecedented levels of throughput. This process is nowhere near complete, with yet another cohort of new and heralded blockchains expected to come to market with novel design elements throughout 2024 and beyond:



The Experimentation Stage Begins


Chris Dixon, in his new bookRead Write Own,” predicts that “a key moment will be when the infrastructure becomes so good that application developers no longer need to think about infrastructure.”


Since crypto began, application developers have only had to think about infrastructure. Even if you had a novel idea for a crypto use case, infrastructure limitations likely kept you from executing it.


Now that multiple blockchains with diverse designs can operate reliably at scale and low cost, developers can focus on what they can do, rather than what they can’t.


The figure below serves to illustrate just how much tech there is to be experimented with:


Recently, we’ve seen novel ideas for decentralized social media and social finance; DePIN networks that utilize high throughput blockchain solutions to enable real-world utilities; and AI-adjacent tools such as decentralized compute networks and AI agent platforms.


Over time, novel applications will only get more popular and more performant as they work out what infrastructure best suits their needs. Perhaps this process will end with scaled applications running on modular solutions settling back to Ethereum, or maybe the monolithic vision will win, and Solana, Monad, Aptos or Sui will become the preferred blockchain of the masses. In the end, the market will decide what solutions work best once they can be tested at scale.


The Value of Being Early

The last concentrated wave of application innovation was DeFi summer of 2020. Many of the top decentralized finance applications launched, kickstarting a flywheel of user adoption and speculation that grew the total size of the DeFi market exponentially.


Being early proved a lasting advantage. DeFi platforms such as Aave, Maker, and Uniswap launched in this period. Despite their open-source code that makes them inherently copyable, all still trade at multibillion-dollar valuations and remain cornerstones of the DeFi ecosystem.


The same will likely be the case for this next application revolution. Even if the newest class of ideas can be copied, once their network effects take off they will be hard to disrupt. For this reason, as we approach a possible “big bang” moment of novel use cases, investors need to be particularly adept at identifying early winners.


This process of investors seeking to identify early winners is well underway. Just last week, decentralized social media platform Farcaster raised a whopping $150M from early stage investors. Such a round is typically reserved for smart contract platforms and is evidence that the broader market is waking up to the fact there is an unprecedented opportunity at the application layer today. 


How We Could Be Wrong

If the application “big bang” fails to materialize, it will likely be because:


  1. The current blockchain infrastructure still isn’t good enough: There may be unforeseen technical challenges that emerge at the scale of 10+ million users. Developers have been forced to guess what stresses their protocols might face, and it’s conceivable the solutions we have today will require further improvements.
  2. Not enough teams are working on creating novel app ideas: VCs have created strong incentives for Web3 builders to try their hand at solving for fast, cheap blockspace. New blockchain solutions routinely raise 8 to 9-digit rounds and trade at the highest public market valuations. This may continue until it is clear the market for new blockchains has become oversaturated.
  3. Regulatory pressure continues to restrict the industry’s growth: In recent months, the SEC has sued leading applications like Uniswap and MetaMask, a continuation of a broad crackdown on the industry. The US regulatory regime remains a black cloud stifling development. 


While some of these concerns are well founded, we think the blockspace singularity is here. With new blockchain solutions at their disposal, today’s class of builders and entrepreneurs can focus exclusively on creating novel applications that will onboard billions globally to crypto.