Why Do We Need Purpose-Built Blockchains? (X Space Recap)

Key Takeaways

• Purpose-Built Blockchain is currently a hot topic of discussion. It's a relatively new concept, and Story Network and Abstract, which are receiving the most attention in the market today, fall into this category.
  

• Jason from Story and Luca from Abstract noted that unlike general-purpose blockchains that focused solely on infrastructure performance, purpose-built blockchains prioritize solving user problems.
  

• They cited Story Network and Abstract Chain as prime examples. Story Network aims to build a blockchain specialized for the IP market, while Abstract focuses on building a blockchain optimized for "fun consumer applications."
  

• Purpose-built blockchains take a distinctly different approach from existing blockchains. While existing blockchains focus on scalability, performance, and liquidity to provide better convenience to current users, purpose-built blockchains seek new use cases and markets and optimize blockchain solutions for those specific markets.
  

• The reason to pay attention to Story Network and Abstract is that they have introduced a new blockchain framework called purpose-built blockchain and are pioneers in this field. Therefore, it's important to closely monitor their future developments.

1. Background - Anatomy of Purpose-Built Blockchain

Last Thursday (November 14th 1PM PST), Jason Zhao, co-founder of Story Network, and Luca Netz, CEO of Abstract Chain, participated in an X Space to discuss purpose-built blockchains. Having previously written an article about purpose-built blockchains, I moderated the discussion. Here's a summary of the space.

1.1 What is a Purpose-Built Blockchain?

1.1.1 Jason's Definition

The space began with Jason from Story outlining the concept of purpose-built blockchains. His definition interestingly prioritizes solving user problems over technology. This reflects the industry's recognition that mere technical improvements like increased transaction speed aren't enough to attract real users. Purpose-built blockchains redefine the entire tech stack for specific application layers, focusing on implementing composable asset classes on-chain, unlike application-specific chains. In contrast to general-purpose blockchains like Ethereum and Solana, they aim to provide optimized performance and user experience through technical designs tailored to specific industry requirements.

Jason emphasized that Story Network is a fitting example of a purpose-built blockchain as it 1) targets the intellectual property market and 2) designs blockchain infrastructure specifically for this market. He also highlighted other examples like Injective Network (identity as a blockchain built for finance) and HyperLiquid (focused on token trading with the goal of becoming an on-chain Binance).

1.1.2 Luca's Definition

Luca added that since building general-purpose blockchains like Solana is extremely challenging, focusing on a single category where one excels is more efficient. In this context, Story selected IP as its category, while Abstract chose entertainment. Particularly, Abstract aims to build a blockchain for applications that users can enjoy easily without understanding blockchain technology or complex tech stacks.

1.2 Why Purpose-Built Blockchains Will Become the New Meta

Why are Jason and Luca focusing on building purpose-built blockchains? Their focus stems from their vision for the future blockchain ecosystem, envisioning a future where various blockchains with specialized purposes coexist and evolve rather than one general-purpose blockchain dominating the market.

According to Jason, this direction is "natural." Just as the internet was created through various microservices working together, the blockchain world can create excellent products through infrastructures with various purposes working in tandem. Of course, this cooperation happens on the backend, invisible to users.

In a way, this trend is evident not just in the internet but throughout human history. As mentioned in my article, we must remember that we've always progressed through specialization. In this context, purpose-built blockchains represent a highly future-oriented approach in the blockchain industry.

1.3 Purpose-Built Blockchains Are Actually Easier and More Intuitive

What about potential obstacles in building purpose-built blockchains? Luca pointed out that building purpose-built blockchains has lower barriers. Looking at history, while many blockchains pursued becoming general-purpose chains, only Ethereum and Solana successfully established themselves in the market. In contrast, purpose-built blockchains define users and markets first, making it easier to find PMF and focus resources.

Jason presented a similar perspective. Purpose-built blockchains clearly define builders' purposes and help blockchain foundations or labs specify their target audience. He emphasized the importance of purpose over generality, stating that "something for everyone is essentially something for no one."

This shows a paradigm shift in blockchain development. Unlike the traditional approach of "if you build a good blockchain, users will come," purpose-built blockchains follow the philosophy that "you must define users first and build a blockchain that meets their needs for users to come."

1.4 Are Purpose-Built Blockchains Sustainable?

Having witnessed the rise and fall of many blockchains, I was concerned about sustainability, a common issue for non-general-purpose chains. Looking at past appchain failures, sustainability was their biggest problem. The need for continuous token minting to cover high infrastructure costs relative to the small market size led to token value dilution, creating an unsustainable cycle. I questioned whether purpose-built blockchains could avoid these structural issues.

However, Luca and Jason had different views. They explained that purpose-built blockchains target markets and use cases of considerable scale, unlike appchains. Particularly, Luca mentioned the potential of the IP market that Story targets, arguing that if they adequately meet this market's needs, they could be even more sustainable than general-purpose blockchains. The key factor is not the blockchain's approach but the target market's size. Their interesting argument was that sustainability isn't a concern since they design blockchains for already large-scale cases and sectors.

2. Takeaway - Purpose-Built Blockchain is a Movement

While moderating this space, I gained many insights. First, I realized that the blockchain technology stack cannot escape the major trend of 'specialization.' This is because purpose-built blockchains completely overturn the existing proposition that "blockchain's problem is scalability." Perhaps the blockchain industry has been so fixated on speed and scalability that it overlooked the true success factors for products.

What truly matters is 'defining the market' and 'defining the customer.' From this perspective, the numerous blockchains that have focused solely on scalability seem illogical, while protocols like Story and Abstract, which first define market and users before building infrastructure, appear more logical.

While providing better convenience to existing blockchain users is important, that alone cannot grow the industry's overall pie. To get more people to use blockchain, we need ways to utilize blockchain utility in new cases, not just previously validated ones. In this aspect, I believe the direction that purpose-built blockchains pursue is the right path for the blockchain industry's development.

Of course, purpose-built blockchains face challenges in pioneering markets that existing blockchains haven't addressed, but as Jason and Luca mentioned, this could actually be an opportunity. This is because they can focus on areas where they have expertise and build products focused on specific sectors or cases rather than the entire market. Story and Abstract will become the pioneers of this new category called purpose-built blockchains. As their success will lead more builders to purpose-built blockchains, their future movements are highly anticipated.

3. Resource

Related Articles, News, Tweets etc. :

• Is the Era of Purpose-Built Blockchains Coming? by Steve Kim

• X Space on Purpose Built Blockchain