This article is deprecated and no longer accurate. Visit https://versatus.io/blog for Versatus updates and news.
The race for mass adoption in the Layer 1 blockchain space is far from over. In fact, we would argue it is really just getting started, and it’s time to challenge the notion that the market is already saturated. By examining Ethereum’s limitations, the scarcity of Web3 developers, and the importance of ongoing innovation, it becomes clear that there is still plenty of room to build a successful base layer. A successful base layer is one that can attract the masses of developers to build projects, some of which will attract the masses of users. With projects like Versatus on the horizon, a new era of competition and innovation is set to unfold.
Ethereum’s Scaling Limitations:
While Ethereum’s rollups have garnered attention as a scaling solution, their capabilities are constrained by Ethereum. Currently, all rollups combined can produce only 600 transactions per second (TPS), while that will eventually increase, it’s unlikely to increase by much. Our friends at Monad have been hammering this point home on Twitter:
And Keone, the co-founder of Monad has highlighted this point with deeper detail and research in a few threads, first on Arbitrum:
And later on Optimism:
Moreover, rollups sacrifice decentralization for throughput, fragment user bases, and introduce censorship concerns due centralization and the reliance (frequently) on a single sequencer. These limitations highlight the need for continued innovation in the Layer 1 space.
The Web3 Developer Challenge:
The developer community in Web3, the heart and soul of any base layer or Layer 2, is tiny when compared to the more mature and wide reaching Web2 community. There are fewer than 30,000 developers in the Web3 ecosystem (according to Electric Capital) with less than 10,000 working full-time.
There are a number of reasons for this, all which are solvable, and few which are actively being worked on by other teams. Part of the problem is the scalability. A lack of a scalable base layer restricts the kind of projects that are even feasible in Web3. We already discussed scalability, and this is a problem actively being worked on by many teams in the space, but beyond this, there are many other problems preventing developer adoption. Let’s start with the most obvious ones.
Most platforms in Web3 require developers to learn a new language. EVM requires devs to learn Solidity, while Solana and many others have adopted Rust or some Rust-like language as their smart contract language. While Rust has a robust community, they are for the most part systems engineers, not consumer application developers.
We at Versatus love Rust, and the Rust community, and in fact, the Versatus protocol is built in virtually pure Rust, however, Rust is not the easiest language to learn. It has a very steep learning curve. For the typical consumer application developer interested in Web3 Solidity may seem like the obvious choice. The prospect of learning Solidity doesn’t seem like too big of a deal for experienced hackers. Becoming an expert at understanding the vulnerabilities of it, and how to defend against exploits, and consequently the ability to build safe programs in Solidity is another story. In the Rust habitat, just simply learning Rust itself is difficult, learning it in a way that you feel confident building programs that will handle users funds is a different level of responsibility, one that many devs clearly have opted out of.
This has widespread implications. From tight labor markets, driving the cost of smart contract development up, to high audit costs. Often the need for multiple code audits to garner confidence from the would be user base are required, doubling or tripling the cost.
To take it yet a step further, once you learn the language, and feel confident enough to build secure smart contracts, the business model is not the most attractive. Your users will have to pay fees, often very high fees (on Ethereum) to even get a taste of your project. In Web2 most, if not all successful products have at least some form of a Freemium model that allows users to test the product for free before committing the payment. While Account Abstraction may solve this last problem eventually, it’s going to require the rebuilding and redeployment of many projects just to make them compatible with Account Abstraction wallets, and therefore offer some sort of free or freemium access to the product.
The result has been an exorbitant Developer Acquisition Cost, arguably the most important KPI for a Layer 1 or Layer 2 Blockchain. And as a consequence, a very small community with very few use cases. Developers require significant capital just to bring a prototype to testnet. Before even discovering if there would be a usable product, let alone product market fit, founders of web3 projects need to receive grants, raise capital, and spend hundreds of thousands, sometimes millions of dollars.
Base layers, in particular, are well suited to overcome these hurdles with new approaches and innovation within the ecosystem, such as Versatus’s unikernel containerized general compute platform.
By offering a variety of languages devs can build in, security built into the programs by design, the ability to deploy scalable micro-services that can easily interact with each other to build a scalable decentralized app, on a fast, decentralized, censorship resistant network, using dev tools and a DevOps framework they are already familiar with, developers will be able to go from “0 to Hello, World!” in Web3 in under 15 minutes on Versatus.
This flexibility means shorter roadmaps, lower costs, fewer bugs, better designs, easier maintenance, and greater optionality in terms of what can be built in Web3. Combined with fresh, new ideas about how to find and reach developers, Versatus is uniquely positioned to find the first 1 million Web3 developers, and as a result, many mass adoption use cases.
Other solutions to solve this problem are emerging, albeit with their own challenges.
Dymension.xyz uses Rollapps to provide each dApp their own execution environment, in which more customization is possible. However currently there is significant work required to achieve such flexibility. Celestia with their modular, scalable Data Availability and Consensus layer has a similar approach, allowing developers to customize their execution environment with a variety of Virtual Machines and runtimes (such as EVM, WASM, MoveVM). These options may provide greater customization, but often with additional expertise needed to actually achieve such. Over time, it is likely these configuration options become more “drag and drop” and enhance the developer experience as well. Other platforms have opted for single languages, but more common languages, such as Agoric, with Javascript Smart Contracts, and NEAR, adopting something similar with their “BlockchainOS” model.
All of these are steps in the right direction, steps that would not be taken if builders had the same mentality that ETH maxis and many VCs in the space have adopted.
Why Ongoing Innovation Matters:
A stagnant mindset in the blockchain space risks missing out on the next groundbreaking projects, like Ethereum, Cosmos, Solana, or Polkadot. The history of technology and the Internet demonstrates the importance of continuous innovation, from the evolution of HTTP to the rise of diverse social media platforms. Furthermore, embracing innovation is crucial for staying ahead of potential risks, such as quantum computing, and reducing tradeoffs between security and speed.
Imagine if Google and Microsoft gave up on their respective cloud platforms because “AWS already won”, or Zuckerberg gave up on Facebook because MySpace took off. What if John D. Rockeffeller was happy to have a monopoly on kerosene and never hired chemists to find uses for the petroleum waste? What if AI innovation stops today, now that ChatGPT is the dominant platform for AI driven conversational information?
Should we just be satisfied with < 1,000 TPS, little to no developer flexibility, and the main use case for blockchain being speculation? At Versatus we believe nothing less than the future of finance and information depends on the continued innovation and discovery of scalable base layer blockchains. By providing such a platform paired with a developer experience that allows for the building of a truly decentralized internet, it is undoubtedly possible to capture entirely new developer communities and as a consequence, billions of users to follow.
About Versatus Labs, Inc.
Versatus Labs is the development company building Versatus, an innovative blockchain protocol. Versatus is a fast, scalable Layer 1 built on top of a novel consensus mechanism called Proof of Claim. Versatus aims to make the developer experience frictionless by bringing ‘Build, Ship, Run’ DevOps to Web3 with its isolated, composable smart contracts containers, complete with a unikernel VM enabling developers to build in the language of their choice.
