Web3, the decentralized internet that operates through blockchain technology, is experiencing a problem: fragmentation. As the popularity of Web3 has grown, multiple blockchain networks have emerged, all vying for users and offering alternatives to the existing platforms. The result has been a fragmented landscape that risks slowing down the adoption of Web3 technologies and tarnishing its reputation.
Bitcoin, the world’s first digital currency, emerged as a native digital asset, and for years, it was the dominant player in the space. But then Ethereum emerged, offering a decentralized application platform that allowed users to create new digital assets and financial applications using smart contracts. Both Bitcoin and Ethereum flourished, with communities forming around each platform and valuable products and applications being developed utilizing them.
However, this success led to the proliferation of alternative blockchain networks that offer different advantages and shortcomings. While the bitcoin competitors have generally been derivatives of bitcoin, the decentralised applications platforms have seen a number of alternative layer one networks, such as Binance Smart Chain, Cardano, Polkadot, and Solana, all claiming to be superior to Ethereum.
This fragmentation risks harming the industry’s growth and innovation by diverting resources from focusing on layers and abstractions that can be created on top of an existing base network instead of creating alternatives. Interoperability between networks becomes limited, and the transfer of assets between different platforms becomes cumbersome, with a high risk of exploitation. It leaves many onlookers to conclude that Web3 has become too fragmented to double down on one platform and wait until the landscape consolidates before committing to a particular technology.
The pragmatic solution would be for teams to focus on creating layers and abstractions on top of existing base networks instead of creating alternatives. This approach would enable Web3 to evolve far faster than it currently is, and users would have a consistent base platform across the board. The primary focus of the layers that exist on top would be to add ever-increasing capabilities and value for its users, thus servicing the end-user far better.
A possible solution to the fragmentation problem could be greater consolidation of platforms and protocols over time, with Ethereum serving as the primary settlement layer for Web3, and Bitcoin retaining its position as digital gold. This would allow other networks to remain in existence as layer two networks that inherit the security guarantees of Ethereum. This approach would be beneficial for Web3 users, and the industry as a whole, ensuring that the primary focus of the layers that exist on top is to add ever-increasing capabilities and value for its users.
It is essential to commit to building on top of existing platforms to reach the full potential of Web3. Rather than continually optimizing something that has yet to reach its full potential, we need to concentrate our efforts on developing platforms that can offer significant value and capabilities to the end-user. History has shown that the best technology does not always win, and it is crucial to ensure that fragmentation does not become the end of the road for technical innovation.