The First Frontier for Chain Abstraction: The Crypto Economy

Cryptocurrency is social technology encoded within financial technology.

Much has been written about this to highlight the possibility of a decentralized, permissionless, intermediary-less Web. 

And yet, getting there hasn't been easy. 

As soon as one of Web3's problems is solved, others appear—user onboarding, regulatory frameworks, scalability, you name it. The latest (and we suspect, the last before we see parabolic growth for dApps) of these make-or-break issues is user and liquidity fragmentation across hundreds of blockchains. To which, as you know, we've proposed chain abstraction as a definitive solution.

This article will explore the intersection of two concepts: 

1. The systemic importance of crypto finances, which against all odds has carried Web3’s vision to becoming too-big-to-be-ignored; and
2. How chain abstraction can turn the financial aspect of crypto into the first building block towards mass dApp adoption.

The Trojan horse

We won't dwell too much on this point as entire books could be (and have been) written about it. Simply put, the crypto ecosystem is a tale of how a revolution worth trillions of dollars can surface with the proper incentives and technologies in place. 

Succinctly, this has gone as follows:

1. Bitcoin is invented, facilitating secure, decentralized, permissionless transfers of value.
2. This concept on its own becomes valuable, accruing financial worth for the network and its collective owners.
3. As this technology’s potential gets recognized and more people learn about it, its value grows.
4. The above sparks a virtuous cycle of financial growth and adoption, leading to the formation of financial markets based on this value.
5. Eventually, further innovations upon the original concept appear. Some of these inventions are even based on values and goals beyond value transmission (e.g. Ethereum, Filecoin, Chainlink, etc.).
6. Of the above, some fail, some succeed, and the most valuable ones create value cycles and ecosystems of their own. This drives further notoriety, resulting in a cross-ecosystem spillover of users and interest.

In other words, the financial/speculative component of blockchains has been the main vehicle driving the sustainability and promotion of decentralized, permissionless, intermediary-less technology.

Speculation is the Trojan horse for a decentralized Web.

But what does this have to do with chain abstraction?

Goes without saying that, if decentralization is the goal, having multiple blockchains, rather than relying on a single one, fits it perfectly. 

Chain abstraction then makes this reality possible by allowing Web3 to further decentralize and scale without the UX challenges that come with incompatible chains.

Since that point is hopefully obvious by now, the question that remains is: can a financial trojan horse spearhead the transition into the Abstraction Era?

Well, we believe it to be so.

Abstracted finance—the first echelon of the Abstraction Era

A few points are undeniably true of the current crypto ecosystem:

• Our most successful products (NFTs, DeFi, prediction markets, memecoins, trading) are all financially-oriented.
• A considerable fraction of the crypto ecosystem’s activity occurs in centralized platforms (like CEXs) due to their superior user experience and ease of use.
• Bridges support a great and ever-growing share of Web3’s transactions and value.
• Users are increasingly siloed, with all incentives aligned toward locking them in specific chains.
• In an ecosystem with thousands of assets across hundreds of chains, basic functionalities like sending, buying, selling, and swapping tokens (in other words, trading) continue to be essential to every product, for a variety of reasons. 

Although all points above paint a clear picture of the Web3 ecosystem, the last one is particularly important: Due to Web3’s nature, any decentralized product needs to rely on one or more trading features, even if just to interact with users’ existing tokens.

This makes some degree of chain abstraction non-negotiable for every product, as an ongoingly-fragmenting ecosystem will only grow more complex. This can be applied via:

• The ability to access dApps on any chain without bridging.
• The ability to pay for gas with any token, on any chain.
• If the user needs to send assets across chains, them being able to do so without incurring additional manual processes.
• The ability to have a single balance across all chains, rather than a fragmented balance sheet.

In fewer words:

Doubling down on successes

All the above leaves us with a clear strategic roadmap. Chain abstraction is happening, and while at making it a reality, Web3 needs to double down on the source of its strengths and growth potential. 

On-chain finance is a consistent proving ground, has clear product-market fit, and is the most substantial adoption driver. It also has a centralized alternative to be vampire-attacked by decentralized options: CEXs.

As such, chain-abstracted financial infrastructure is the first frontier, leading us to deliver immediate value to the ecosystem's most active participants.

Furthermore, this can also further empower decentralized financial products: Chain abstraction primitives can supercharge all of DeFi, from DEXs to stablecoin minting, lending protocols, derivatives, and even emerging use cases like RWAs. This doesn’t just mean iterating on existing success: it’s about accelerating the industry by removing its artificial barriers.

In the end, chain abstraction is the great equalizer, allowing Web3 to compete with Web 2.0.

Wait and see

If you’ve made it this far, you’re probably wondering what to do with this information now. Or, most likely, what WE are doing with it.

Sadly, we won’t tell you now.  But SOON™ you’ll find out.

Hell, soon™er than you think.

About Particle Network

Particle Network powers chain abstraction, addressing Web3's fragmentation of users and liquidity. This is enabled by Particle's Universal Accounts, which give users a unified account and balance across all chains.

Website | Docs | Discord | Twitter