Modularization Trends and Future Development Prospects in the Blockchain Industry

The modular trend of blockchain technology is continuously deepening, which not only includes projects derived from Cosmos technology but also encompasses Ethereum L2/L3, Bitcoin L2, and cross-chain technologies among others. Although these projects focus on different areas, they are all gradually breaking the boundaries of traditional monolithic chains, promoting the industry towards integration.

In this context, the competitive landscape is changing. The original technological barriers are being gradually broken down and are recombining and evolving during the integration process. This means that the uniqueness and irreplaceability of Blockchain projects are becoming increasingly critical. Projects that cannot demonstrate their own value may gradually lose their market position in the wave of modularization.

In the next 2-3 years, the modular Blockchain sector will enter a phase of intense competition. The data availability layer, execution layer, and even the settlement layer will undergo a major reshuffle. This process will filter out a batch of foundational projects, which will become the underlying infrastructure of the entire crypto ecosystem. Over time, these infrastructures will form increasingly deep technological barriers, unless disruptive innovations emerge.

After this stage, the entry window for new high-performance Blockchain projects may basically close. Unless breakthrough technologies emerge, new entrants in the single Blockchain or high-performance Blockchain sectors will find it difficult to gain market share. Even existing high-performance public Chains need to find their indispensable positioning in this competitive landscape, or they may lose their original competitive advantages.

As the leader in the industry, Ethereum will also face challenges, particularly in terms of data availability layers and execution layers. However, this situation is an inevitable result of the development of blockchain technology, and no single blockchain can solve all problems. Even Bitcoin and Ethereum need to seek balance in various aspects, and the dispersion of some value is unavoidable.

However, Ethereum possesses the most scarce resource in the crypto space - security, which gives it a unique irreplaceability.

The potential future development trend is that Ethereum and Bitcoin will provide the most basic settlement layer services for the entire crypto ecosystem. There may also be a few L1 public chains that will have some opportunities for settlement layers. In the data availability layer, there will be full competition in the early stages, with participants possibly including projects like Ethereum, EigenDA, Celestia, Near, Avail, etc. The execution layer is mainly focused on competition between Ethereum L2s (such as Optimism, Arbitrum, Starknet, zkSync, Blast, etc.) and high-performance public chains (such as Solana, Avalanche, Aptos, Sui, etc.), while a large number of Bitcoin L2 projects are also in preparation.

With the development of modular Blockchain, Ethereum and Bitcoin are gradually evolving into providers of underlying security services. Other data availability layers, execution layers, and settlement layer projects will provide different levels of services to meet various application needs.

The diversification of blockchain technology is mainly reflected at the application layer, rather than at the infrastructure level. Although the infrastructure will have a certain degree of decentralization, it will not present a flourishing situation, but rather a partially decentralized state.

After the future modularization cycle, the competition in blockchain infrastructure will gradually stabilize. In the next decade, the competition in the crypto application layer will become even more intense. This includes various fields such as gaming, social, DeFi, NFT, AI, and shared services. This marks the beginning of the crypto sector's move towards large-scale applications, and it is expected that in 2-3 years, crypto technology will gradually achieve widespread adoption.

From 2009 to 2026, this period of more than a decade can be regarded as the wild west of the cryptocurrency space. Although this stage was filled with speculative activities, it was also a process of continuous improvement of the underlying infrastructure, laying the foundation for the widespread application of cryptocurrency technology.