Public blockchains serve as the foundational layer of value settlement in the Web3 ecosystem, enabling users to regain control over their data while ensuring security and transparency. Their ability to capture economic value has made them a compelling investment frontier. This article explores the core principles, technological evolution, competitive landscape, and investment strategies shaping the public blockchain space—offering a comprehensive guide for builders, investors, and Web3 enthusiasts.
Why Study Public Blockchains?
Web2’s Missing Value Settlement Layer
Web2, or the mobile internet era, operates on a layered architecture: hardware, connectivity, networking, transport, and application layers. Users interact primarily with the application layer—platforms like Facebook, WeChat, or Amazon.
However, these platforms act as centralized intermediaries that:
- Monopolize user-generated value, especially behavioral data
- Control financial interactions, such as payments via centralized servers
- Lack global consistency, leading to data silos and ownership issues
Two critical problems arise:
- Double-spending: Digital assets can be duplicated across isolated systems (e.g., fraudulent transactions).
- Data sovereignty loss: Users generate value but have no ownership or portability of their data.
This structural flaw stems from the absence of a universal value settlement layer—a missing piece that Web3 aims to restore.
👉 Discover how Web3 is redefining digital ownership and value transfer.
Web3: Reintroducing the Value Settlement Layer
Web3 introduces a new layer between transport and application layers: the blockchain-based value settlement layer. This innovation solves double-spending and data control issues by enabling:
- Global, tamper-proof ledger maintained through decentralized consensus
- User-controlled data ownership via cryptographic keys and open protocols
This framework is known as the "fat protocol" theory, contrasting with Web2’s "thin protocols" (like HTTP), which provide rules but no economic capture.
The Fat Protocol Model
- Structural completeness: Includes a built-in settlement mechanism.
- Economic sustainability: Generates revenue through transaction fees paid in native tokens.
- Value accrual: Fees incentivize validators (miners/stakers), securing the network.
Key Components:
- Shared data layer: Decentralized storage ensures transparency and interoperability.
- Native token consumption: Users pay gas fees in the chain’s native currency (e.g., ETH on Ethereum).
- Token incentives: Validators are rewarded, aligning long-term interests.
🔍 Native Token vs. Application Token
- Native token: Issued by the blockchain (e.g., $ETH). Used for security and gas.
- Application token: Created by dApps (e.g., $UNI). Drives utility and governance within ecosystems.
Core Principles of Blockchain Technology
At its heart, blockchain enables trustless coordination in distributed networks where participants don’t trust each other. It achieves this through redundancy and cryptographic verification—but at the cost of performance.
Trust Through Redundancy: A Real-World Analogy
Imagine counting $100 million in cash:
- Single person: Slow, error-prone, and vulnerable to fraud.
- Trusted team: Faster, but still risks collusion or failure.
- Untrusted group (blockchain): One person counts; others verify independently. Only after consensus is reached does the result stand.
This process ensures:
- Decentralization: No single point of control
- Immutability: Data cannot be altered without detection
- Fault tolerance: Nodes can fail without collapsing the system
Yet it comes with trade-offs:
- High redundancy → lower throughput
- Consensus overhead → slower finality
For example:
- Bitcoin: ~7 TPS
- Ethereum (pre-upgrades): ~15 TPS
These limitations sparked the quest for scalability—the central theme in blockchain evolution.
The Scalability Narrative: From Blockchain 1.0 to 3.0
The so-called blockchain trilemma—balancing decentralization, security, and scalability—defines the industry’s trajectory.
| Dimension | Description |
|---|---|
| Decentralization | Thousands of independent nodes maintain the network |
| Security | Resistant to attacks (e.g., 51% attacks) |
| Scalability | High throughput (TPS), low latency |
Most blockchains optimize for two at the expense of one.
Evolutionary Stages
🟢 Blockchain 1.0: Bitcoin – Max Security & Decentralization
- Focus: Peer-to-peer electronic cash
- Trade-off: Sacrificed scalability entirely
- Legacy: Proven resilience over 15+ years
🔵 Blockchain 2.0: Ethereum – Introducing Programmability
- Introduced smart contracts and EVM (Ethereum Virtual Machine)
- Enabled dApps: DeFi, NFTs, DAOs
- Limitation: Still constrained by low TPS and high gas fees
🔴 Blockchain 3.0: High-Performance Chains – Prioritizing Speed
Newer chains like Solana, Avalanche, and BNB prioritize scalability by:
- Reducing redundancy
- Using advanced consensus mechanisms
- Optimizing network architecture
But often at the cost of decentralization or reliability.
Ethereum’s Scaling Journey: From Monolith to Modular Future
Despite competition, Ethereum dominates with over 58% of total value locked (TVL) across all public chains. Its roadmap focuses on scaling without sacrificing security or decentralization.
Original Plan: POS + Sharding
Ethereum’s initial upgrade path included:
- Merge to Proof-of-Stake (PoS) – completed in 2022
- Sharding: Splitting the chain into 64 parallel "shard chains" for data availability
While sharding remains part of the vision, its role has evolved.
The Rise of Rollups: A Strategic Pivot
Due to delays and ecosystem demands, Ethereum shifted toward a rollup-centric roadmap, championed by Vitalik Buterin.
What Are Rollups?
Rollups execute transactions off-chain (Layer 2) and post compressed data back to Ethereum (Layer 1), benefiting from its security while improving speed and reducing costs.
Two main types:
| Type | Mechanism | Security Model | EVM Compatibility |
|---|---|---|---|
| Optimistic Rollup | Assumes validity; uses fraud proofs | Challenged within 7-day window | ✅ Full support |
| ZK-Rollup | Uses zero-knowledge proofs | Immediate validity proof | ⚠️ Improving (ZK-EVM) |
👉 Explore how ZK-Rollups are revolutionizing blockchain efficiency.
Key Projects
- Optimism, Arbitrum: Leading OP-Rollups with billions in TVL
- zkSync, StarkNet, Scroll: Pioneering ZK-EVM development
Ethereum now envisions a future where:
- Layer 1 ensures data availability
- Rollups ensure transaction validity
- Users move seamlessly across multiple L2s via bridges
This modular approach multiplies scalability potential when combined with future sharding.
The Competitive Landscape: One Superpower, Many Challengers
The public blockchain market follows a “one superpower, many strong players” structure.
Ethereum: Still Dominant
- TVL: ~$39B (~58% share)
- Strong developer activity and institutional backing
- Upcoming upgrades (e.g., EIP-4844) will reduce rollup costs by ~90%
Even with rising competition, Ethereum’s ecosystem depth makes it resilient.
Alternative Public Chain Strategies
Other chains compete using three primary models:
1. High Performance + EVM Compatibility
Target developers familiar with Ethereum tools.
Examples:
- BNB Chain (BSC): Centralized PoSA consensus; strong exchange backing
- Cronos: EVM-compatible; leverages Crypto.com’s user base
- Fantom: Fast finality; early DeFi growth fueled by celebrity endorsements
Pros: Easy migration for Ethereum dApps
Cons: Vulnerable once Ethereum scales
2. Extreme Performance + Capital-Fueled Ecosystems
Build from scratch with novel architectures.
Example:
Solana: Claims up to 65,000 TPS via Proof-of-History (PoH) and Turbine networking
- Low fees (~$0.001 per tx)
- Capital-intensive; suffered outages due to centralization risks
Emerging challengers:
Aptos & Sui: Built on Meta’s former Libra team’s Move language
- Claim 100K+ TPS with better safety than Solana
- Backed by a16z, FTX Ventures
- High expectations—but unproven at scale
3. Layer0 Infrastructure + Interoperability
Provide foundational frameworks for other chains.
Key players:
- Cosmos: SDK allows rapid chain creation; IBC enables cross-chain communication
- Polkadot: Shared security model via parachains
- Avalanche: Subnets allow custom blockchains under one network
These platforms aim to become the “cloud providers” of Web3—offering infrastructure rather than competing directly.
Investment Considerations in Public Blockchains
When evaluating public chains, focus on factors that drive long-term adoption:
Key Success Factors (KSFs)
Developer Activity & Ecosystem Maturity
- More active developers → more innovation → stronger network effects
- Example: Ethereum hosts >4,000 dApps; Solana grew rapidly via hackathons
Institutional Backing
- Support from top VCs (a16z, Multicoin) signals confidence and funding access
Market Positioning & Adoption Strategy
- Can the chain attract flagship projects?
- Does it solve real user pain points?
Technical Viability
- Performance matters—but only if usable in practice
- Most chains never hit claimed TPS limits; real-world UX is what counts
✅ Bottom Line: Scalability alone isn’t enough. Sustainable growth requires a vibrant ecosystem.
Frequently Asked Questions (FAQ)
Q: Why is Ethereum still dominant despite high fees?
A: Because of its unmatched security, developer community, and institutional trust. Most major DeFi and NFT projects launch first on Ethereum.
Q: Are new high-performance chains like Aptos and Sui worth watching?
A: Yes—they represent next-gen architecture with strong funding. However, they must prove resilience and attract real usage before challenging Ethereum.
Q: What’s the difference between a sidechain and a Layer2?
A: Sidechains have independent security models (e.g., Polygon PoS), while Layer2s rely on Ethereum for finality (e.g., Arbitrum). L2s are generally more secure.
Q: Will rollups replace standalone blockchains?
A: Not entirely—but they will dominate for applications needing Ethereum-level security with lower costs. Standalone chains may thrive in niche verticals (e.g., gaming).
Q: How do I choose which chain to build or invest in?
A: Match the chain’s strengths to your use case:
- High-value assets → Ethereum
- Frequent microtransactions → Solana or L2s
- Custom requirements → Avalanche subnets or Cosmos SDK chains
Q: Is cross-chain the future?
A: Interoperability is essential—but current bridges are risky. Trusted solutions (like IBC or shared security) will gain traction over time.
Final Thoughts: The Road Ahead
The public blockchain landscape will remain "one superpower, many challengers" for years to come. Ethereum’s ongoing upgrades ensure it won’t be displaced soon. Meanwhile:
- Rollups will become the default scaling solution
- New chains must offer unique value beyond speed
- Developer mindshare will decide winners
As modular architectures mature, we may see a world where:
- Ethereum secures data
- Rollups process transactions
- Specialized chains handle specific use cases
👉 Stay ahead of the curve—learn how modular blockchains are reshaping Web3.
Whether you're building, investing, or simply observing, understanding public blockchains is key to navigating the future of decentralized systems. The foundation is being laid—now is the time to engage.