Galaxy: Is the Universal L1 dead? You're wrong.

Source: Galaxy; Compiled by Jinse Finance

In the past few weeks, news about new “enterprise-level” blockchains designed for specific application scenarios has been emerging one after another. DTCC is working on tokenizing securities held at DTC on Canton. Stripe has launched a testnet for its payment-focused blockchain, Tempo. Robinhood is building its own L2 layer for storing real-world assets.

For crypto natives, these developments may trigger a familiar anxiety: the cypherpunk values that underpin cryptocurrencies are being diluted. The general-purpose, permissionless blockchains that facilitated the adoption of cryptocurrencies will be bypassed by existing regulated institutions that have distribution channels and balance sheets.

If tokenization, real-world assets, and stablecoins are increasingly deployed on private or semi-permissioned rails, what role is left for decentralized protocols? This is a very reasonable question. The answer is: a significant role.

Our Perspective:

To borrow a phrase from Mark Twain, the claims about the death of universal L1s have been greatly exaggerated. These networks are fulfilling their intended purpose. They remain the only environment where new financial technologies are emerging on a large scale. As technology accelerates, regulations improve, and experimental costs decrease, this role will become even more crucial.

Yes, the competitive landscape is becoming increasingly crowded. However, competition from specialized or permissioned blockchains does not negate the role of open networks. On the contrary, it highlights the different problems they are solving (and please do not misunderstand, this is not to say that we need to launch more general-purpose L1 blockchains).

The core mistake lies in assuming that blockchain is an interchangeable infrastructure. This is not the case. Enterprise-grade blockchains excel at tokenizing existing assets within known legal and financial frameworks. This is both an advantage and a limitation. In contrast, general-purpose L1 blockchains serve as a place to create new assets, markets, and coordination mechanisms. Bitcoin did not originate from a UN working group, nor did decentralized finance (DeFi) and stablecoins. These systems require an environment where anyone can deploy code, issue assets, and iterate without permission. This capability is not an ancillary feature of decentralized blockchains but rather the main driver of their long-term value. Almost all crypto-native technologies that later attracted institutional attention (blockchains, stablecoins, etc.) were born in permissionless environments.

In this sense, permissionless blockchains often “self-cannibalize”. Once a model is validated and market demand is clear, their most successful innovations will ultimately be adopted, replicated, or internalized by centralized institutions. But this is not a failure of public blockchains; it precisely demonstrates their role as discovery engines within a broader financial system.

In an AI-driven economy, this dynamic is particularly important. As AI lowers the startup costs of products, services, and even entire businesses, the demand for programmable, neutral financial infrastructure will also increase. Permissionless L1 layer payment systems provide global settlement, composability, and instant distribution capabilities for economic experiments, which could not previously obtain approval from any regulatory body or existing institution. They are optimized for exploratory innovation. Most experiments will fail, but the few successful ones can reshape the market landscape.

It is also a mistake to think that regulatory clarity will inevitably benefit centralized or permissioned blockchains. If the recently passed Clarity Act by the U.S. House of Representatives can indicate the ultimate direction of market structure, then decentralization may increasingly play a protective role rather than become a burden. A more decentralized network can provide developers and applications with greater freedom to innovate within a clearer legal framework. In other words, as regulation matures, decentralization may shift from being seen as a risk to being viewed as an advantage.

Finally, the market sentiment of L1 tokens is closely tied to their prices. When L1 tokens perform poorly, irrelevant discussions about them become rampant. This cycle is not new; rather, it is a recurring feature within the boom and bust cycles of cryptocurrencies. In fact, blockchains like Ethereum and Solana are closely related to innovation cycles, rather than quarterly product releases. Their value should be measured in decades. Bitcoin is the best example.