Dear friends and audience, thank you very much for coming to the Wanxiang Blockchain Global Summit. Today, the topic I want to share is "The Explosion of Application Protocols in the New Stage of Blockchain". A few days ago, a big migration of the Ethereum consensus protocol was not only of great significance to Ethereum, but also a very important historical moment for global blockchain technology and blockchain applications. The infrastructure construction phase is coming to an end, and the application explosion is coming.
Before talking about the explosion of blockchain application protocols, let's review how the Internet protocol stack is built. In the decades from the 1970s to the 1990s, Internet protocols were messy and blooming.
The most important agreements at the time were:
The famous DEC company at that time launched the DECNET Internet protocol model.
IBM's own SNA internet protocol model.
The OSI internet protocol model launched by European official institutions.
In the United States, the TCP/IP Internet protocol model initiated by the private bottom-up
In these decades of protocol wars, the TCP/IP model has emerged as the ultimate winner. I think that the TCP/IP model can defeat those Internet protocol models that are respected by officials, big companies, scholars and experts, mainly for the following five reasons:
First, the TCP/IP model is guided by requirements. The code precedes the standard, that is, the code that can be run is used first, and the standard is gradually obtained after the test of the market. And OSI, an Internet protocol model organized by European officials, it is precisely from the framework to the standard, and finally to the code. Obviously, the demand-oriented TCP/IP model is more competitive.
Second, the TCP/IP model was initiated from the bottom up by communities and self-organization. Although it eventually had an official body, for the first 20 years, until the mid-1980s, it was a community-based approach with developers who shared the same values to push the TCP/IP model.
Third, the TCP/IP model adopts the agile development model to iterate rapidly, and constantly iterate the TCP/IP model according to market demands and technical possibilities. The OSI model is a waterfall development, that is, after the entire model is designed, it is given to users and users at one time, which is obviously not a typical practice of the Internet.
Fourth, the TCP/IP model is a developer-friendly, user-friendly model. Customers first, customers first.
Fifth, the TCP/IP model is a completely open source and open model. Of course, several other Internet models are also open source, but they are not permissionless. They are proprietary models and require authorization to use them. The TCP/IP model does not require authorization, anyone can use it, and anyone can contribute to this model.
By summarizing the successful experience of the TCP/IP model of the Internet protocol stack, we can find that, in fact, the blockchain protocol also follows these characteristics and is developed in a similar way. At this point, the Internet protocol stack and the blockchain protocol stack are taking the same path.
We generally divide TCP/IP into 5 layers: the physical layer is its first layer, that is, the bottom layer, including cables, optical fibers, etc. The second layer is the link layer, such as IP. The third layer is the network layer, the fourth layer is the switching transport layer, and the fifth layer is the application layer of the Internet.
Borrowing the 5 layers of the TCP/IP internet protocol stack, we can design a protocol stack for the blockchain value network.
The bottom layer is the base layer of the value network protocol stack, which we call L0, which mainly includes decentralized bandwidth, decentralized storage and decentralized computing. Bandwidth, storage, and computing are a very important foundation for the future value network. In the roadmap announced by the Ethereum Foundation to the community, the performance of Ethereum will reach 10 million TPS per second in the next 10 years. The premise of reaching 10 million TPS per second is that the bandwidth must increase by 100 times.
The second layer - L1, we call it the settlement layer. Since it is a value network, there must be a valuable protocol layer related to clearing and settlement.
The third layer is L2, which I call the transaction layer. This layer is mainly to realize the smooth and efficient exchange and transaction of some value tokens such as NFT and Token.
The fourth layer I call it the data layer, this layer of protocols is mainly used to generate data assets and digital assets. Data assets and digital assets are two types of things. Data assets here specifically refer to the identities of each of our users, individuals or institutions bound on the Internet and on the blockchain, and the identity data generated according to the behavior of these identities, we call it data assets. Digital assets are new asset categories created by users as creators on the Internet and on the blockchain, including some digital artworks marked by NFT.
The fifth layer is the top layer, which I call the application layer. All the business scenarios we are familiar with, experienced and used will eventually be refactored at L4, the application layer. Any business is worth doing all over again on the value network, and that's the structure of the blockchain protocol stack we assume right now.
In this structure, I personally feel that Ethereum plays a central role. Ethereum had an important upgrade on September 15th, from PoW consensus algorithm to PoS consensus algorithm. This is not only an important historical moment for Ethereum, but also an important historical moment for the global blockchain industry. Ethereum founder Vitalik Buterin once announced the future development roadmap of Ethereum, which consists of 5 stages. I think the three stages of the merger on September 15, the sharding after merging, and the Verkle tree after sharding are the three most important stages in this upgrade process. The fourth and fifth stages are just iterations of the previous optimizations and parts.
After these three stages are completed, as a network for clearing and settlement of the underlying value of the blockchain, Ethereum will have very high performance and very flexible scalability, and at the same time, it will have the ethereum that has been proved in practice in the past 7 years. Robustness and security of the Square network. A robust and secure network with higher TPS and more flexible scalability provides a very good technical foundation for the explosion of applications, which will surely usher in the explosion of applications.
In addition to the five-stage upgrade of the Ethereum mainnet, there are other new technologies and protocols such as sharding, layering, sidechains, subchains, etc. Further develop the security, robustness, higher TPS, and more flexible scalability of Ethereum, so that the entire blockchain technology system is expected to reach hundreds of thousands of TPS within three years, and is expected to reach millions within five years. It is expected to achieve the tens of millions of TPS planned by the Ethereum Foundation within 10 years.
If these 3-year, 5-year and 10-year plans can be realized as scheduled, then the value settlement achievement of the blockchain protocol stack is none other than Ethereum. At the same time, the infrastructure construction of Ethereum should be completed within three to five years. The next step is to build a lot of applications on the basis of very good infrastructure, so it will usher in the explosion of blockchain applications. stage.
We can also compare the historical period of the explosion of Internet applications and the explosion of blockchain applications. First, let's review how the explosion of Internet applications happened.
Everyone agreed that the explosion of Internet applications started in 2010, but in the early 1890s, the TCP/IP Internet model was officially established. In 2000, the basic models of Internet commerce had actually appeared, but they had not yet been able to achieve large-scale operations, and in particular, they had not yet found ways and means of monetization.
With the emergence of mobile Internet and smart phones in 2010, especially the revolution of APP, the Internet presentation method, we think that the explosion of Internet applications has begun. Before APP, we used computers and browsers to log in to the web to have a relationship with the Internet. Such a complex and multi-link process made most people unable to communicate with the Internet. However, using an APP on a mobile phone can be used to surf the Internet with one click, which enables Internet businesses to gain customers on the order of 100 million to one billion. On the basis of one billion customers, through algorithmic recommendation and customer portraits, companies can have high conversions. rate to obtain commercial value.
The application explosion of blockchain refers to the process of Internet application development. I think the application explosion should begin in 2025. This judgment is first based on 2025, when the blockchain system may reach one million TPS per second. At the same time, the technology of all aspects of Web3 may be basically ready. In addition, new forms of business organization began to be perfected and began to function well. At that time, the blockchain began to enter its application explosion period, which I predict is 2025.
The application protocol of the blockchain, first of all, it must be on the blockchain and run based on the blockchain. Second, it must use smart contracts to ensure the effective operation of the entire business activity. Third, all blockchain applications must adopt a decentralized governance mechanism. Fourth, NFT is not just a proof of equity for digital products. NFT will become the ability proof, behavior proof, workload proof, contribution proof, and activity proof for each blockchain application participant. Based on these proofs, blockchain applications will use Token as an incentive tool to establish a very effective Token-based incentive mechanism, so that all participants and related parties can get what they want and get sufficient and effective incentives.
In addition, the application protocol of the blockchain must be open source and open and collaborative. Open collaboration means that all blockchain application protocols can allow participants to come and go as they want without the permission of anyone. This is the characteristics of the blockchain application protocol that I have summarized myself. I believe this feature can also be used to analyze Web3, and it can also be used to analyze DAO (distributed self-organization). DAO will become a very important form of business organization in the era of blockchain application explosion in the future.
Looking at DAO from the perspective of the commercial organization of blockchain applications, I think it has four characteristics.
First, the DAO is a trustless network. To be trust-free, it must be based on blockchain, smart contracts and digital wallets.
Second, DAO is a transparent network, and the whole process is on the blockchain. Therefore, the operation data of DAO is completely open and transparent to the whole network. From the perspective of information disclosure, DAO has an order of magnitude improvement over traditional business in terms of transparency, timeliness, authenticity and comprehensiveness of information disclosure.
Third, DAO is a right-of-use network, in which there is no founder, which means DAO has no owner. DAOs have initiators, and the initiators may have a certain influence on the network and the appeal of the community, but they do not own the network.
Fourth, DAO is a permissionless network. It is up to individuals to join or withdraw from DAO. No application is required. No one or institution can decide who can join DAO and who cannot.
Fifth, there are two value markers in the DAO business model, which I think are both indispensable and equally important. One is NFT. As I mentioned earlier, NFT is actually a proof tool. NFT is used to record your behavior, contribution, ability, and property rights. After this information is recorded, DAO can issue Token based on a set of models to provide economic incentives for these behaviors, so Token is an economic model and an incentive model. At the same time, because of the share and standardization of Token, it is also the value exchange of all DAOs, so the business model of the entire DAO should be said to be "Play NFT to Earn Token", which is the business model of DAO in my personal opinion.
Finally, let me summarize, whether it is the Internet protocol stack or the blockchain protocol stack, the more the underlying protocol is, the more globally unified it is. The more unified the underlying protocols are, the more diverse the application layer protocols are. For example, there are hundreds of application layer protocols in the Internet. I believe that there will be hundreds of blockchain protocols at the application layer in the future. The explosion of application protocols is actually the explosion of applications and the explosion of blockchain business, so I am very much looking forward to the arrival of the blockchain in 2025.
My sharing is here, thank you all.