A common response I always receive for my application layer writings is that I’m being pessimistic. I’ve been writing about this topic for 7 years now (different anons) and it’s the same every time. I’m just trying to observe the space and making pragmatic recommendations based on the state of the application layer. So, let me explain.

8 years ago, before Ethereum launched, BitShares had:

• DEX

• User issued assets (basically ERC-20s)

• Stablecoins (even algorithmic, see BitUSD)

• Memecoins (see Brownie Points)

• NFTs

• ICOs

• DAOs

• Proof-of-stake, free transactions, fast confirmations

Years before that, there was plenty of talk about all of this; and the Ethereum Whitepaper listed all of these usecases and more. Indeed, there were app-specific chains for things like domain names (e.g. Namecoin).

Around 2018-20, there was a wave of application layer innovation on Ethereum which recreated all of the above in a much more refined, usable, and composable form. I’ll also note that this period was the depths of the previous bear market, so the current stagnation can definitely not be blamed on “bear market blues”.

Between the early app-specific chains in 2013 and the coming-of-age in 2019, we saw BitShares forked into Steem, which was my first writing venue in crypto. But personal history aside, we saw the ICO mania in 2017-18 where the kitchen sink and more was thrown at “…. but blockchain”. Needless to say, 99.99% of those never made sense and despite hundreds of billions of dollars thrown at them, almost none of it amounted to anything.

Today, if we look at the precious few protocols in crypto that have strong product-market fit - store-of-value, stablecoins, core DeFi, NFTs, ENS, gambling/speculation - all of this was imagined a decade ago.

Some things became more popular than expected - like collectible NFTs; while others much less than expected - like payments. There are some things that are yet to be tried in a refined manner - like onchain games. But overall, the theme of the application layer was set a decade ago.

All of this is to say, as an observer writing about this topic since Steem in 2016, what other conclusion can I come to? Other than, application layer innovation has stagnated, and by examining from first principles why the successful ideas have attained product-market fit we can attempt to gain an understanding and pragmatically optimise for the best outcomes.

Now, some of you may dismiss all of the above as “just a boomer who is out of touch”. To be very clear, I welcome and champion application layer innovation - which is why I’ve been talking about this topic. But at the same time, we must be realistic and pragmatic, and examine the evidence for what people have actually been using. Blind entitlement and hopium will never work - we must build applications that have a chance at finding a userbase.

As I have clearly mentioned, there is definitely application layer innovation to come - particularly with usecases that necessitate hundreds/thousands of chains running parallely (I’ll remind you that we have had abundant single-chain scalability for years now, first in L1s, now in L2s, that are barely utilized), something that’ll finally be possible with validity proofs and aggregating them. This should, in theory, enable hybrid applications. There’s also a lot of room for growth with already existing applications and concepts.

At the same time, it’s also important to acknowledge that 99.99% crypto projects have failed - there’s no need to continue throwing billions of dollars at them instead of focusing on the actually successful usecases. Let’s take stablecoins, for example, which is clearly the dominant usecase alongside store-of-value. If we neglect stablecoins, it may eventually be seceded by things like CBDCs; all the while the 99.99% of failed crypto continues to go nowhere. It’s a lose-lose situation.

So, this is what leads me to my recommendation: drop all the fat, focus on consolidating the success stories by expanding usage through better UX, security and usability, continue funding new applications that actually make sense.

I’ll end by saying - I’m just an observer, and if something unprecedented happens, I’ll surely update with a new blog post. However, after a decade, very little has changed, and I’ll continue to value available evidence over blind hopium. If someone presents any evidence for a massive new wave of applications, from an application-centric, not infrastructure-centric perspective, I’d be delighted.

I’d also ask you to see alternative views on the application layer that is backed by reason, like Vitalik’s.

A common response I always receive for my application layer writings is that I’m being pessimistic. I’ve been writing about this topic for 7 years now (different anons) and it’s the same every time. I’m just trying to observe the space and making pragmatic recommendations based on the state of the application layer. So, let me explain.

8 years ago, before Ethereum launched, BitShares had:

• DEX

• User issued assets (basically ERC-20s)

• Stablecoins (even algorithmic, see BitUSD)

• Memecoins (see Brownie Points)

• NFTs

• ICOs

• DAOs

• Proof-of-stake, free transactions, fast confirmations

Years before that, there was plenty of talk about all of this; and the Ethereum Whitepaper listed all of these usecases and more. Indeed, there were app-specific chains for things like domain names (e.g. Namecoin).

Around 2018-20, there was a wave of application layer innovation on Ethereum which recreated all of the above in a much more refined, usable, and composable form. I’ll also note that this period was the depths of the previous bear market, so the current stagnation can definitely not be blamed on “bear market blues”.

Between the early app-specific chains in 2013 and the coming-of-age in 2019, we saw BitShares forked into Steem, which was my first writing venue in crypto. But personal history aside, we saw the ICO mania in 2017-18 where the kitchen sink and more was thrown at “…. but blockchain”. Needless to say, 99.99% of those never made sense and despite hundreds of billions of dollars thrown at them, almost none of it amounted to anything.

Today, if we look at the precious few protocols in crypto that have strong product-market fit - store-of-value, stablecoins, core DeFi, NFTs, ENS, gambling/speculation - all of this was imagined a decade ago.

Some things became more popular than expected - like collectible NFTs; while others much less than expected - like payments. There are some things that are yet to be tried in a refined manner - like onchain games. But overall, the theme of the application layer was set a decade ago.

All of this is to say, as an observer writing about this topic since Steem in 2016, what other conclusion can I come to? Other than, application layer innovation has stagnated, and by examining from first principles why the successful ideas have attained product-market fit we can attempt to gain an understanding and pragmatically optimise for the best outcomes.

Now, some of you may dismiss all of the above as “just a boomer who is out of touch”. To be very clear, I welcome and champion application layer innovation - which is why I’ve been talking about this topic. But at the same time, we must be realistic and pragmatic, and examine the evidence for what people have actually been using. Blind entitlement and hopium will never work - we must build applications that have a chance at finding a userbase.

As I have clearly mentioned, there is definitely application layer innovation to come - particularly with usecases that necessitate hundreds/thousands of chains running parallely (I’ll remind you that we have had abundant single-chain scalability for years now, first in L1s, now in L2s, that are barely utilized), something that’ll finally be possible with validity proofs and aggregating them. This should, in theory, enable hybrid applications. There’s also a lot of room for growth with already existing applications and concepts.

At the same time, it’s also important to acknowledge that 99.99% crypto projects have failed - there’s no need to continue throwing billions of dollars at them instead of focusing on the actually successful usecases. Let’s take stablecoins, for example, which is clearly the dominant usecase alongside store-of-value. If we neglect stablecoins, it may eventually be seceded by things like CBDCs; all the while the 99.99% of failed crypto continues to go nowhere. It’s a lose-lose situation.

So, this is what leads me to my recommendation: drop all the fat, focus on consolidating the success stories by expanding usage through better UX, security and usability, continue funding new applications that actually make sense.

I’ll end by saying - I’m just an observer, and if something unprecedented happens, I’ll surely update with a new blog post. However, after a decade, very little has changed, and I’ll continue to value available evidence over blind hopium. If someone presents any evidence for a massive new wave of applications, from an application-centric, not infrastructure-centric perspective, I’d be delighted.

I’d also ask you to see alternative views on the application layer that is backed by reason, like Vitalik’s.