Author: @binafisch; Translator: Peggy, BlockBeats Editor's Note: Cryptocurrencies are going mainstream, but in a way that may be completely different from what you imagine. It won't appear in the form of Bitcoin, Ethereum, or Solana, nor will it be dominated by NFT art or meme coins. Instead, it will quietly integrate into the underlying layers of digital finance and the internet, becoming a secure communication layer between applications, much like the shift from HTTP to HTTPS. Today, stablecoin trading volumes are approaching those of Visa and PayPal, Web3 is "invisibly" entering daily life, and the future Layer 1 will no longer be a "world computer," but a "world database," providing a trusted shared data source for millions of applications. This article will take you deep into understanding the logic behind this shift: Why is interoperability key? Why will business models be restructured by the convergence of AI and blockchain? And why the future of frictionless finance isn't a single giant chain, but a universal foundational layer. The following is the original text: Cryptocurrencies are going mainstream, just in a way that might not be what you expect. It won't be like Bitcoin, Ethereum, or Solana, nor will it be dominated by NFT art or meme coins, and it's even less likely to be an EVM (Ethereum Virtual Machine) or SVM (Solana Virtual Machine). Blockchain will quietly integrate into the network, becoming a secure communication layer between applications, much like the shift from HTTP to HTTPS. The impact will be profound, but the experience for users and developers will remain largely unchanged. This shift is already underway. Stablecoins, essentially fiat currency balances on the blockchain, currently handle approximately $9 trillion in adjusted transaction volume annually, comparable to Visa and PayPal. Stablecoins are not fundamentally different from PayPal USD; the difference lies in the more secure and interoperable transmission layer that blockchain provides. After more than a decade, ETH is still not widely used as currency and is easily replaced by stablecoins. ETH's value comes from the demand for Ethereum block space and the cash flow generated by staking incentives. On Hyperliquid, the most traded assets are synthetic representations of traditional stocks and indices, not native crypto tokens. The main reason existing financial networks integrate blockchain as a secure communication layer is interoperability. Today, a PayPal user cannot easily pay a LINE Pay user. If PayPal and LINE Pay operated as chains like Base and Arbitrum, market makers such as Across, Relay, Eco, or deBridge could facilitate these transfers instantly. PayPal users wouldn't need LINE accounts, and LINE users wouldn't need PayPal accounts. Blockchain allows for such interoperability and permissionless integration between applications. The recent buzz surrounding Monad as the next major EVM ecosystem reveals that the crypto space is still clinging to outdated thinking. Monad boasts a well-designed consensus system and strong performance, but these features are no longer unique. Fast finality is now just a basic requirement. The idea of developers migrating massively and locking into a new, single ecosystem is not supported by the experience of the past decade. EVM applications migrate very easily between chains, and the wider internet will not be re-architected within a single virtual machine. The Future Role of Decentralized Layer 1: A World Database, Not a World Computer Or, in cryptographic terms: the foundational layer of Layer 2 chains. Modern digital applications are inherently modular. There are millions of web and mobile applications globally, each using its own development framework, programming language, and server architecture, and maintaining an ordered list of transactions that defines its state. In cryptographic terms, each application is already an app-chain. The problem is that these app chains lack a secure, shared, and trusted source. Querying the application state requires trusting a potentially faulty or compromised centralized server. Ethereum initially attempted to solve this problem with a world computer model: in which each application is a smart contract within a single virtual machine, validators re-execute each transaction, calculate the overall global state, and run a consensus protocol to reach agreement. Ethereum updates its state approximately every 15 minutes before a transaction is considered confirmed. This approach has two main problems: it lacks scalability and cannot provide sufficient customization for real-world applications. The key understanding is that applications should not run in a single global virtual machine, but should continue to run independently, using their own servers and architecture, while publishing their ordered transactions to a decentralized Layer 1 database. Layer 2 clients can read this ordered log and independently compute the application's state. This new model is both scalable and flexible, capable of supporting large platforms such as PayPal, Zelle, Alipay, Robinhood, Fidelity, or Coinbase with only modest adjustments to their infrastructure. These applications do not need to rewrite to an EVM or SVM; they simply publish transactions to a shared, secure database. If privacy is important, they can publish encrypted transactions and distribute decryption keys to specific clients. Underlying Principles: How the World Database Scalable Scalable a world database is much easier than scaling a world computer. The world computer requires validators to download, verify, and execute every transaction generated by every application globally. This is computationally and bandwidth-intensive, with the bottleneck being that each validator must fully execute the global state transition function. In a world database, validators only need to ensure data availability, block order consistency, and that the order is irreversible once finality is achieved. They do not need to execute any application logic; they only need to store and propagate data in a way that ensures honest nodes can reconstruct the complete dataset. Therefore, validators do not even need to receive a complete copy of every transaction block. Erasure coding makes this possible. For example, suppose a 1MB block is divided into 10 parts using erasure coding and distributed to 10 validators. Each validator receives approximately one-tenth of the data, but any 7 validators can combine them to reconstruct the entire block. This means that as the number of applications increases, the number of validators can also increase, while the data load per validator remains constant. Ten applications generate 1MB blocks, with 100 validators, each processing only about 10KB of data; with 100 applications and 1000 validators, each validator still processes the same amount of data. Validators still need to run the consensus protocol, but only need to agree on the block hash order, which is much easier than reaching consensus on the results of global execution. As a result, the capacity of the world database can scale with the number of validators and applications without overloading any validator with global execution. Inter-chain interoperability of a shared world database. This architecture introduces a new problem: interoperability between Layer 2 chains. Applications within the same virtual machine can communicate synchronously, while applications running on different L2 chains cannot. For example, with ERC20, if I have USDC on Ethereum and you have JPYC, I can use Uniswap to exchange USDC for JPYC in a single transaction and send it to you because the USDC, JPYC, and Uniswap contracts are coordinated within the same virtual machine. If PayPal, LINE, and Uniswap each operate as independent Layer 2 chains, we need a secure cross-chain communication method. To pay a LINE user from a PayPal account, Uniswap (on its independent chain) needs to verify the PayPal transaction, execute multiple exchanges, initiate the LINE transaction, verify completion, and send a final confirmation back to PayPal. This is Layer 2 cross-chain messaging. To complete this process securely in real time, two elements are required: The target chain must have the latest hash of the source chain's ordered transactions, typically a Merkle root or similar fingerprint published on a Layer 1 database. The target chain must be able to verify message correctness without re-executing the entire source chain program. This can be achieved through succinct proofs or Trusted Execution Environments (TEEs). Real-time cross-chain transactions require a Layer 1 layer with fast finality, combined with real-time proof generation or TEE authentication. Towards Unified Liquidity and Frictionless Finance This brings us back to a grander vision. Today, digital finance is fragmented by closed systems, forcing users and liquidity to concentrate on a few dominant platforms. This concentration limits innovation and hinders new financial applications from competing in a level playing field. We envision a world where all digital asset applications are connected through a shared base layer, enabling liquidity to flow freely between chains, payments to be made seamlessly, and applications to interact securely in real time. The Layer 2 paradigm makes it possible for any application to become a Web3 chain, while a high-speed Layer 1, acting solely as a world database, enables these chains to communicate in real time and interoperate naturally, much like smart contracts within a single chain. This is how frictionless finance was born—not through a single, massive blockchain attempting to encompass everything, but through a universal foundational layer that enables secure, real-time cross-chain communication.
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