Seven Essential Elements for Public Chain Ecosystem to Attract Investment, None Can Be Missed

Author: Master of Five Fireballs, Plain Language Blockchain

Do you remember when you first entered the crypto industry, the term "public chain" seemed very grand?

Because when people mention public chains, they often first think of "general-purpose smart contract" types like ETH, or platform-type public chains, rather than "one coin, one public chain" types like BTC and LTC. In our minds, we define them as "Coin."

At that time, every new platform-type public chain attracted a lot of attention, from the earliest NEO to later EOS, and then Solana, each one captured the spotlight and soared in value, after all, "the world has suffered from ETH for too long" (it was just too slow back then…).

Now, public chains have entered a phase of explosion or even saturation, with older one-coin public chains like LTC and Monero long forgotten. The new one-coin public chains basically refer to types like Cosmos Appchain. There are casually dozens of platform-type public chains, and if counted seriously, it could easily reach three digits.

Is it now so easy to build a public chain? Yes and no.

It's true because launching a public chain is indeed much faster now. Gavin Wood once launched a chain using Substrate in just 15 minutes, and with Avax, a subnet can be created in 42 seconds using command line… With the support of various chain-launching tools, the difficulty of creating a public chain has decreased significantly compared to before.

But is building a public chain just about getting it to run?

Of course not. There are still a lot of things waiting for you afterward; getting a public chain running is just the beginning.

01 Let's talk about the hard stuff

1) Wallets

Everything is difficult at the beginning. To have a public chain that others will use, the first step is to have a wallet.

Currently, public chains show a complete polarization in wallets. For EVM-compatible chains like various OP series L2, Fantom, and Polygon, you can simply add a network to MetaMask. However, for non-EVM-compatible chains, it’s not that simple; you need to have your own "wallet ecosystem" or a "leading wallet," and the experience must also be good.

In this regard, Solana and Cosmos are undoubtedly the best two, with Phantom and Keplr providing excellent user experiences.

As for negative examples, there are plenty. The earliest NEO, the later EOS, and now Polkadot and ICP either have wallets that are extremely difficult to use, have various user-unfriendly settings, or still lack a standard or a leading wallet… In short, the wallet experience can directly affect the prosperity of a public chain's ecosystem.

2) RPC Nodes

In the early days, Bitcoin and ETH users had to set up a full node when using wallets.

Now that blockchain has gradually become popular, very few people do this anymore. Therefore, the operation requests made in wallets are directly forwarded to RPC nodes (RPC refers to services related to interacting with EVM-compatible public chains), and this area is relatively centralized.

The vast majority of public chains use RPC nodes provided by two service providers, Infra or Alchemy. So once there is an issue with the servers of these two providers, the public chain itself often suffers significant impacts. Currently, there are decentralized options like Pocket Network, but unfortunately, it is still in a very early stage, somewhat reminiscent of the early Dex era of EtherDelta!

RPC nodes are a type of infrastructure that people usually don't perceive, but when issues arise, they can be fatal. Poor performance can directly affect user experience, and the most well-known case might be the Harmony chain, as its RPC nodes are often criticized by users on Discord and Twitter…

3) Block Explorers

I believe every DeFi user has used Etherscan at some point.

Compared to the behind-the-scenes feel of RPC, block explorers are directly aimed at DApps and users, and their user experience significantly impacts the overall experience of the chain.

After all, the essence of blockchain is to emphasize trustlessness, transparency, and verifiability, and these characteristics must be presented through block explorers.

So when a new public chain is launched, I often look at two points during testing and experience: one is the wallet, but often on EVM-compatible chains, it doesn't reveal much because they all use MetaMask. Therefore, what better reflects a chain's technical capabilities is how well the block explorer is designed, which is the second point I pay attention to.

4) Computing Power Equipment (Optional)

This is basically something that the new generation of public chains doesn't need anymore, but a few years ago, various POW chains were quite popular, and computing power equipment was selling like hotcakes.

Among the new generation of public chains that still insist on POW, the ones I know are Nervos and Kadena; even ETH has transitioned to POS. This shows the trend of the times.

Of course, you can still see some old-school supporters of POW on Twitter or various Chinese media, tirelessly explaining the advantages of POW over POS in terms of decentralization and technology. In my view, what they say is likely true, but it doesn't matter.

Just like when the MP3 player emerged, you could argue from various angles that CD quality beats MP3, but ultimately, the MP3 market completely replaced CDs in just a few years, and later, MP3 was replaced by cloud music on 4G smartphones. The market has never been determined solely by technology; being able to see the trend helps avoid many pitfalls.

I still hold the same view: in the long run, we should have only one POW chain, and that is BTC.

02 Now let's talk about the soft stuff

1) Token Standards

You might first think of DeFi suites, DEXs, lending, stablecoins, and so on.

These are certainly important, but they still come in second place.

The first place should be the Token standard; this is the most important!

If a public chain doesn't issue tokens, or if the ecological projects on it don't issue tokens, what is there to play with? You might as well play with a consortium chain.

The reason ETH is powerful is largely due to the numerous ERC standards, with the two most well-known being ERC20 and ERC721, which directly sparked two major waves: the 2017 ICO and the 2021 NFT boom.

Therefore, when a new public chain goes live, having a relatively unified Token standard is essential for a thriving ecosystem.

A negative example in this regard is undoubtedly ICP, which has been live for over a year without an official Token standard, resulting in the entire ecosystem being in a "no usable Token" state. Perhaps the initial idea was to leave the standard to developers and users to freely create a standard in the "community," but later found this approach unworkable. Finally, in August of this year, a "quasi-official" homogeneous Token standard called ICPC-1 was established.

2) The Five Essentials of DeFi - DEX, Lending, Stablecoins, Oracles, Bridges

Originally, there were three essentials, but now oracles and bridges have become standard, so let's make it five.

DEX

The most important one; almost all new public chains, even if they have nothing else, must have a Swap. Of course, it’s usually either a fork of Uni or Sushi. This serves as the trading platform for the public chain and is naturally a top priority.

Lending

This is akin to commercial banks, ranking second in importance, but it can't match DEX. First, the value capture is not as good as DEX, so the income can't compare. Second, a new chain often has low lending demand. For example, Cosmos has been thriving with Osmosis, yet lending has hardly attracted attention, whether it's the established Kava or the new Umee, both are being ignored.

Stablecoins

Ideally, there should be a native stablecoin, but usually, you need to grow strong enough to attract the attention of Tether or Circle to bring USDT or USDC into the ecosystem. Until then, you can only "borrow" some from ETH through bridges. UST was an exception at first, but unfortunately, it later collapsed…

Oracles

In the early days, many public chains wanted to develop their own solutions, but now most have given up the struggle. Why not use the ready-made Chainlink?

Bridges

These are crucial for the import and export of various stablecoins and mainstream assets, and they are a major target for hackers, yet they are indispensable. The Cosmos ecosystem has an advantage in this area because it doesn't need bridges within its ecosystem; IBC allows direct transfers, and bridges are only needed when dealing with ETH or other chains.

3) NFTs and Domains

Last year, this trend was hardly visible, but this year it has almost become a standard feature for all public chains.

Now, every chain basically has its own NFTs similar to Punks or Apes, although the prices can't compare to the real Punks and Apes. The only noteworthy aspect might be the Solana NFT ecosystem, which has high-priced NFTs like Degod and is working hard to catch up with the Opensea NFT market.

Beyond NFTs, this year, domains have also slowly become a standard infrastructure feature, led by ENS.

Now we have .eth, .sol, .bit, .bnb, .etc, .icp, .dot, .evmos… I believe that in the near future, every public chain will have its own corresponding domain suffix to facilitate user management and address usage.