A History of Web3’s Paradigm Shifts
The history of Web3 is marked by a series of paradigm shifts, from the initial development of general-purpose blockchains like Ethereum to the rise of performance-optimized solutions and, more recently, the emergence of purpose-built blockchains tailored for specific use cases. This essay explores these transitions, highlighting how Web3 is moving from broad, foundational platforms to more focused, specialized infrastructures designed to meet unique needs and challenges.
How To Domesticate Chaos: The Singular-Particular Motion
Most of the internet today is domesticated chaos. Take Netflix, for example: The company’s backend architecture handles millions of requests daily. With a click of a button, any user around the globe can access high-quality video streaming at marginal latency. That’s possible because Netflix’s architecture consists of hundreds of microservices, each dedicated to handling one particular task, potentially using diverging programming languages and databases. Today, most applications rely on a myriad of orchestrated microservices, usually running on cloud infrastructure. The complexity of microservices, thus, lies in their complex interplay and orchestration rather than their individual handler logic.
Not even two decades ago, this architecture was entirely unthinkable. For long, single monolithic servers ruled the internet, with only one machine fulfilling the whole scope of requests, regardless of their specificity. And even though service-oriented architecture slowly made it to the developer mainstream, there was no hint of the cloud-based orchestras individually running millions of processes that would soon dominate the industry. The general-purpose servers were usually deployed as hardware by individual companies, and the only way of scaling was—at some point—to deploy additional servers behind a load balancer. The complexity of central servers, thus, lies in the application’s code itself, not so much on the infrastructure side—one big chunk of code to rule them all.
The shift from general-purpose servers to highly differentiated microservices is an ideal example of what we call a paradigm shift. Thomas Kuhn, the renowned philosopher of sciences, analyzed this phenomenon in his seminal work “The Structure of Scientific Revolutions.” He introduced the concept of a paradigm, referring to the set of practices, norms, and theoretical frameworks that define a scientific discipline at any given time. According to Kuhn, scientific progress does not happen in a linear way but rather through a series of revolutions or shifting paradigms. These shifts occur when the prevailing paradigm encounters anomalies it cannot explain, leading to a crisis and eventually the adoption of a new paradigm that better accounts for these anomalies. In technology, we see these same processes.
For monolithic servers, the crisis that triggered the paradigm shift to microservice architecture came in the form of scaling demand: single servers could not uphold performance as requests increased to the millions, and rich media formats conquered the internet. The load was balanced and isolated by splitting up the business logic across various machines, with each process doing its own task. The complexity of the application itself—the code deployed on the machine—decreased as there were now smaller programs. In contrast, the complexity on the infrastructure side increased: the network of services soon demanded innovations like messaging protocols (e.g., MQTT), event-driven architecture, pipelines, queues, etc. Complexity was never lost but shifted to other layers of the technology as coherent singularity turned into fragmented plurality.
Web3’s Major Paradigm Shifts
The paradigm shift from something singular with inherent complexity to something fragmented with external complexity can be found almost everywhere; we could coin it a meta-paradigm of sorts. It can be found in the change from the singular, procedural program monsters of FORTRAN or COBOL to the object-oriented paradigm as exemplified by Java’s modules; we see it in sociology, either by Luhmann’s system theory that describes modern societies as a complex system of growing fragmentation, or the cultural fragmentation that postmodernists like Jean-François Lyotard or Michel Foucault proclaim; and we can find it in biology, with the ever-growing complexity of cellular structures.
The paradigm shift from something singular with inherent complexity to something fragmented with external complexity can be found almost everywhere; we could coin it a meta-paradigm of sorts.
Unsurprisingly, the development of Web3 yields almost the same results. However, since Web3 is such a young discipline, these paradigm shifts are still unfolding, which makes them harder to grasp. Still, we can roughly sketch out three different paradigms that have dominated the industry at one point or another: the foundational paradigm of general-purpose blockchains, the rise and inflation of the performance-oriented paradigm, and finally, a change unraveling in this very moment, the dawn of purpose-built blockchains. Each of these different paradigms is constituted through the scope of the problem addressed, the underlying assumptions, and the self-understanding of the projects.
1) Foundational Monoliths—The General-Purpose Paradigm
When Ethereum extended Bitcoin’s revolutionary idea of sovereign money to form a Turing-complete blockchain in 2015, it posed the first general-purpose blockchain, with various other actors building similar infrastructure in the years to come. These projects tackled a fundamental problem: How can decentralization be achieved? What game theoretical elements will lead to a secure solution prone to malicious actors? In essence, these foundational projects had to prove that decentralization is even possible in the first place and that they can be somewhat sustainable in the long run. Scalability, at this early point, was an afterthought.
When we analyze the discourse, marketing, and sentiment around these projects at the time of their initial development, we see a lot of focus on minimizing attack vectors, game theory, validator logic, establishing secure standards, etc. The development went into one unified infrastructure layer that was supposed to hold the entire logic. The application layer, namely in the form of standardized smart contracts, remained at a rudimentary level. Look at the ERC-20 standard, for instance: Millions, even billions of dollars, are stored in simple mappings. While some of these rudimentary flaws led to crises like the DAO hack 2016, an increasing number of projects started buildig applications that reached a wider mainstream audience.
In November 2017, Vancouver-based startup Dapper Labs created the game CryptoKitties, which also introduced the ERC-721 standard, co-authored by Dapper Labs’ CTO Dete Shirley. CryptoKitties allowed users to collect, breed, and trade digital cats, each with unique characteristics; it became an overnight success, and soon, thousands of users joined the craze for the cute decentralized kittens from Canada. The rush of cat-crazy users caused a massive surge in transactions, accounting for nearly 30% of all Ethereum transactions at its peak. This resulted in much longer processing times and dramatically increased gas fees, making Ethereum de facto unusable for days.
The CryptoKitties incident mimicked a process that had happened to Web2 decades earlier when the rising number of clients suddenly brought centralized general-purpose infrastructure to a crisis. The way new Web3 projects responded to this challenge would shape the industry’s discourse for the years to come, and we can still feel the repercussions of CryptoKitties today.
2) Powerhouse Abundance—The Performance-Oriented Paradigm
After the wild years of Sybil attacks, fork wars, DAO hacks, and much more, there came a point at which these initial general-purpose blockchains had consolidated. Standards of secure and well-designed blockchain systems had evolved, best practices were established, and the feasibility of a decentralized supercomputer had been proven by the first generation of general-purpose blockchains. After CryptoKitties, scalability became the focus of the next wave of crypto builders, and it manifested mostly in what many saw as a given: the scalability trilemma.
The breadth of different solutions and sub-paradigms soon reached astounding levels as more and more projects took up their fight against the triangular constraint between decentralization, scalability, and security. Solutions came in the form of dedicated layer 1 blockchains that promised faster transactions or cheaper gas costs; others proposed the idea of improving the speed and cost of first-generation blockchains by offloading the majority of transactions to another layer—layer 2 solutions like rollups were born; and for some, scalability also meant tweaking the usability for developers and end users, thereby ensuring mainstream adoption in the long run. In any case, the age of faster, better, cheaper had begun.
While most of these projects brought innovative concepts to the table, they never truly challenged the idea of a general-purpose supercomputer. Sure, their solutions were faster, cheaper, and more usable than their first-generation counterparts, but they remained rooted in the monocentric understanding: one blockchain to rule them all. It should also be noted that these projects face not only forward-looking pressure in the form of ever-growing scale but also backward-driven pressure: Projects like Ethereum never stopped innovating, ultimately finding their own paths to solving the scalability trilemma, catching up with every week a new project is out, carrying the decisive advantage of having a battle-tested foundation of decade-long operation.
Another issue with the performance-oriented chains and L2 solutions is the growing inflation of this category. Especially the last few years have shown an explosion of these projects trying to tweak an increasingly narrowing problem set native to Web3, leading some to question if these projects genuinely exist for the technical tweaks they bring to the table or simply for the token their launch justifies. No matter how this plays out, there is no doubt of the abundance of performance-oriented projects herding around a relatively minor problem set highly tied to industry specifics. Some have argued that—to foster true innovation—Web3 should lose its obsession with general-purpose tweaking and discover new avenues. But how could these look like?
Interlude: Beyond Monocentricity
While the performance wars took up the majority of the industry’s discourse in the last years, there were developments in the background that paved a different way, one that gradually questioned the monocentric domination of the general-purpose paradigm and its performance-oriented offsprings towards an approach of diversification; an approach that inherits a lot of characteristics from Web2’s shift from central servers to distributed microservices. Two exemplary projects that unleashed further development in this direction are Cosmos and Avalanche, early experiments in thinking beyond the monocentric performance wars.
Cosmos aims to create an “Internet of Blockchains,” where a central general-purpose blockchain is substituted with use-case optimized blockchains that seamlessly communicate with each other. This is achieved through its Inter-Blockchain Communication (IBC) protocol, which transfers data and value across independent blockchains. Using the Cosmos SDK—a modular framework for building custom blockchains—developers can create their own chains hooking into the IBC protocol. The notion of fragmenting the general-purpose dominance also underlies the project Avalanche, as it uses subnets—customizable, interoperable blockchains that can be tailored for specific applications or regulatory environments. They allow for a high degree of customization and scalability. In addition to these two developments, some projects experimented with decoupling the different layers—consensus, execution, and data availability—enabling infrastructure developers to combine the specific layers as they are ideal for their particular use cases.
3) Purpose-Built—A New Paradigm?
In combination, these early experiments from the likes of Cosmos and Avalanche set the ground for a new generation of blockchains that is now quickly gaining traction and could possibly be the next dominant paradigm in Web3: purpose-built blockchains. The term was popularized by Story cofounder Jason Zhao in his recent tweet, sparking vivid discussion around this new approach. Purpose-built blockchains present a fundamental shift from prior infrastructure, not only because they built their technology using a modular approach; their main difference from general purpose and performance-oriented blockchains is that they are not trying to provide a one-size-fits-all, but rather pose a decentralized platform that is centered around a typical use case. Their approach to building a solution does not start with a Web3-native problem—as is the case with performance-oriented blockchain—but rather with an issue that lies beyond the scope of the industry: a real-world use case that decentralized technology adapts to. The self-referentiality of current blockchain technology development is thus exchanged with an outward-looking function.
The clear focus on one use case allows purpose-built blockchains to inject problem-specific logic at the infrastructure layer, providing users of the blockchains performance benefits for the specific use case without needing to adhere to all possible use cases (as with general-purpose blockchains). Often, this targeted performance enhancement is achieved by enshrining pre-compiled smart contracts that carry the chain’s essential business logic. In combination, the modular layers are chosen with the particular use case in mind, allowing a fine-tuned approach with a clear goal. Finally, the design of a dedicated, purpose-built blockchain allows for the implementation of validator-specific logic to unleash advanced use cases.
Take Story, for example, a purpose-built blockchain focused on onramping intellectual property to the blockchain. Unlike financial assets, intellectual property forms complex networks of countless parent-child relationships and is thus notoriously hard to fit on existing general-purpose blockchains due to ballooning gas costs when traversing IP graphs. That’s why Story has enshrined a modular Proof-of-Creativity protocol natively into their layer 1, a set of smart contracts optimized to handle relational data structures like intellectual property quickly and cost-efficiently. Layer-wise, Story combines the Cosmos SDK and EVM, opting for a fast finality with the cometBFT consensus algorithm. The modular layer 1 approach allows for future extensibility like implementing a graph database or validator-specific logic (e.g., for blacklisting disputed IPs).
While focused on a clear use case, Story still provides a platform for various applications, from IP marketplaces over IPFi experiences to consumer hubs. On the other side of the spectrum, blurring the boundaries to app-specific chains is Hyperliquid. Hyperliquid is a decentralized exchange (DEX) that provides high-performance trading capabilities for digital assets. It aims to deliver a centralized exchange (CEX)-like experience on a decentralized platform, emphasizing speed, liquidity, and user experience while maintaining the core principles of decentralization, such as user custody and transparency. To achieve its mission, Hyperliquid has also decided to build a layer 1 blockchain that provides essential performance increases for its specific use case.
The difference between Story and Hyperliquid highlights one challenge that purpose-built blockchains must overcome: the tradeoff between use case advantages and operational overhead. Even though there are foundational technologies like the Cosmos SDK in place, building an own layer 1 blockchain from the ground up involves a tremendous amount of work. Additional effort needs to be accounted for to ensure sufficient decentralization, realize cross-chain communication, and boost the chain’s liquidity as well as ecosystem. Due to these constraints, purpose-built blockchains must choose their use case wide enough to justify this additional overhead, while being narrow enough to unleash sector-specific performance increases. Only time will tell if enough real-world problems fall into this category.
Coda
In conclusion, the evolution of Web3 can be described as a movement from general-purpose to specialized solutions. Much like the shift from monolithic servers to microservices in Web2, Web3 is witnessing its own metamorphosis from general-purpose blockchains towards purpose-built blockchains. Each of these phases reflects a deeper paradigm shift, where the focus has shifted from proving the viability of decentralization, to optimizing performance within a Web3 context, and now to tailoring blockchain technology for specific real-world use cases. This new direction emphasizes solving particular problems with customized infrastructure, breaking away from the “one blockchain to rule them all” mindset that has previously dominated the industry.