Unlocking the Power of Purpose-Built Chains
VeradiVerdict - Issue #326
I’m excited about the explosion of purpose-built chains that are designed around a specific company or brand solving a specific problem. For example, Blackbird, a restaurant loyalty program app/chain recently announced that they are building an L3 powered by Conduit, using the Arbitrum DA and settling on Base. Soneium, a rollup on Optimism made by Sony Block Solutions Lab is another example. Worldcoin, a rollup using Alchemy’s RaaS, verifies identities. There are over 50 Arbitrum Orbits chains and over 29 OP stack chains in its Superchain. There are dozens of others that use their own tooling or other interoperability solutions.
Many projects have turned to building their own chains because of:
How straightforward it is to build chains (with RaaS and straightforward frameworks)
Additional revenue, primarily from node auctions and sequencer revenue
Having full ownership of a chain purpose-built for their use case
These trends have created its own set of problems: further fragmented liquidity, poor user experience, and limited revenue streams. Stakeholders all want pieces of the pie; rollup operators, infrastructure providers, liquidity providers, market makers, and apps. The environment for operators is oppressive and broken. Pantera has invested in two companies trying to solve different parts of this problem: Radius and Altius.
MEV and Radius:
The primary revenue source, user transaction fees, has proven unsustainable due to competition for rollups to drive fees down, and unpredictable fluctuations in Ethereum’s data storage costs (blobs).
Radius unlocks a new revenue stream for operators. The Lighthouse Network by Radius helps searchers find profitable MEV opportunities in rollups and submit bundles, competing for execution. Instead of charging rollups for the opportunity, they charge a portion of the searcher’s bid instead.
This lets rollups capture MEV revenue while preventing risks like censorship and transaction reordering. Read more about their technical implementation here.
Execution and Altius:
Everyone wants parallelized execution but no one wants to give up their sequencer and rewrite consensus. Altius solves two challenges in the blockchain ecosystem: performance bottlenecks and interoperability gaps. The vast number of infrastructure diversity between chains means cross-chain interactions are extremely complicated. This fragmentation limits composability, where transactions across chains need to execute automatically. Current solutions, such as bridges or shared sequencers, provide only partial improvements, failing to work effectively across diverse VM environments.
Optimizing Execution by splitting it into 4 steps
Altius introduces a VM-agnostic Parallelism framework, splitting its execution layer into four parts: storage, interpreter, resolver, and coordinator. The parallel scalable storage divides state into shards across commodity hardware nodes, allowing simultaneous read/write operations. The resolver digs into transaction bytecode, converting it to a static single assignment format to spot dependencies, then re-runs only conflicting instructions, ultimately cutting delays. This shared execution layer allows L1 and L2s to tap into high-speed processing without building their own systems.
Chain Reaction
Purpose-built chains are accelerating, with Radius and Altius leading the charge by providing composability and execution improvements to the next generation of chains.
Some people believe that too many L2s fragment the broad ecosystem. Radius creates economic incentives, like making cross L1/L2 arbitrage possible, which let L2s and L1s work together as one ecosystem—boosting synergy instead of breaking things apart. Radius is already partnering with 5 rollups, including Swell.
Others believe building dApps (rather than rollups) creates flexibility to re-launch on the upcoming, most performant L1 chains. Altius lets chains future-proof the bottleneck of execution by providing an upgradeable modular execution tech stack.
In order to build the next hundred chains and onboard the next billion users, it has to be easier for anyone to build and operate a chain, with no performance tradeoffs for users. Radius and Altius are building towards this vision.
Read more about Radius and how rollups can work with them here.
Read more about Altius and how blockchains can integrate with them here.
- Paul Veradittakit
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LETS MEET UP
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London, March 17
Amsterdam, March 18
Geneva, Switzerland, March 19
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New York City, March 28
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ABOUT ME
Hi, I’m Paul Veradittakit, a Managing Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. I’ve been in the industry since 2014, and the firm invests in equity, early stage token projects, and liquid cryptocurrencies on exchanges. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.
If you have an projects that need funding, feel free to DM me on twitter.
Great post! The rollup-based appchains are the way to go!
What do you think about based rollups and based appchains? Are they coming?