From Protocol to Platform Reimagining Blockchains

So, we've been talking all day about bringing assets on chain. What does that mean? What does that look like? And I was asked to speak about this topic from protocol to platform. And it's kind of in line with the things that I've been talking about and that we've been talking about in this industry for a while now.

So, I want you to take a step back and think about what comes to mind when you think about blockchains and what you think about crypto in general. What comes to mind to me is technological innovation. We've seen first, second, third, fourth keep going generation blockchains that are faster, that are cheaper, that are more scalable, that have technological advancements since the days of Bitcoin till now. We have come a long way and we will continue to develop that. However, we are still stuck in a first generation business plan and that's a problem.

That first generation business plan is what people what comes to mind when people think about blockchains and about crypto in general and I believe is a limitation to bringing the trillions of dollars of assets onchain and identity and a million other use cases that these new rails allow for. So the problem we have nowadays is that there's simply too many blockchains and there's simply too much block space. new blockchains that are a little bit faster, that are a little bit cheaper, that are a little bit more insert your, you know, special thing that makes it that much better incrementally though than the one before. How is this really going to change anything? What have we seen that is a differentiator that's going to unlock the capability for trillions of dollars to flow onchain and to transfer with other assets and be utilized in a supportive fashion?

These blockchains effectively are generalpurpose blockchains and generalpurpose blockchains first and foremost have a single product and that is their token. They use that token to then go and get users and use cases and everything else in between. But these general purpose blockchains also have shared block space. So your bonds, your stable coins, your meme coins, your NFTts and everything else in between all share a single pipe. That might be great for the early stages of the industry.

And we see people like Black Rockck and Franklin Templeton and every other institution enter this space, but they do it across a number of blockchains. They do it kind of to test the waters, but nothing is really being done yet at a massive scale. That's because to me this reminds me of the early days of the internet and in particular AOL, America Online. It's a very American centric reference. But for those of you that remember the early days of the internet and are familiar with AOL, you used to log on to a single website where you had chat and email and finance and sports and games and and and all these applications or tools that you could use.

Well, that was great for the early days. That was great to get people accustomed to being online. That's kind of where we are today. The world onchain is not being built to get people to to transact on chain and to bring trillions of dollars and millions if not billions of users. No blockchain can do that.

My our solution or the solution that I propose paradoxically is more blockchains and more block space but purpose-built institutions, enterprises, startups, banks, innovators, governments, regulators will all need their own blockchains and their own unique block space for their assets, for their compliance, for their use cases, for their jurisdiction. These purpose-built blockchains focus specifically on the [clears throat] business or the application. If you're a startup or a neo bank or an asset manager, as was previously discussed on this on on this stage, you're going to want your own environment. You want that to be fully customizable. You might want to have KYC or accreditation or the number of different things that regulated assets need alongside of them to facilitate their transfer or their trade.

And you need networks that are infinitely scalable. To me, that is the WordPress moment for web 3. So, we talked about AOL as a single page with everything on it. WordPress came along and changed the internet for a lot of people. It allowed anybody and everybody to have a website.

If you asked me 20 years ago or if I asked any one of you, would you like a website or do you need a website? You would think I'm crazy. You would say, I'm not a bank. I'm not a university. I'm not a government.

Why would I have a website? We forget that today. We take for granted how easy it is to click a few buttons, spin up a website, and monetize your persona or take your business to the next level online. Why can't we do the same thing with blockchains? The current state as we see it to me looks like this.

You have the legacy systems. This is indicative of the Ethereum ecosystem which we love and has brought smart contracts and a lot of technological advancement to the space. But it was simply not built for the moment that we are at today or for where the future is going to take us. You have a base layer, layer 1, with layer 2 for general purpose execution and layer 3es for assets. And I've even heard layer fours and fives.

That is literally an inverted pyramid with a single point of failure that just cannot scale to a the global needs and demands of trillions of dollars and billions of users. Where we are today with your favorite blockchain pick whatever it may be is the one big fat pipe thesis. You have a pipe that pipe infinitely expands and everything gets shoved through it. meme coins, speculative assets, NFTts, bonds, stable coins, tokenization, everything. That's just not the way the world is built.

Banks are not operating alongside casinos, alongside uh retail stores, alongside mom and pop shops. Different businesses need their own system. So the way we look at it and the way I look at it is an infinite lane highway where multiple chains sit in parallel all going towards the same direction working in unison and in harmony to support that vision. We at Avalanche have this vision and it's been built from the ground up for the protocol. But effectively what we're doing is what we believe the industry needs and we encourage and welcome others to follow suit.

That single chain thesis will just not hold. What works for Abu Dhabi does not work for Saudi Arabia, does not work for Korea, does not work for the United States. How is it to think that one single infrastructure layer can handle all of these assets and jurisdictions and complexities? It's simply not true. Despite what anyone tells you, you will need private permission chains.

That is permission at the validator level. So, who controls it is decided. who uses it privately is also decided. This could be KYC, this could be accreditation, this could be a million different use cases. Permissioned public.

So you have the chain controlled by the entity or its affiliates or a syndicate but open for public use or what has been commonly known to this industry public permissionless. This is more innovative cryptonnative. Anybody can run a node, anybody can validate the network and anybody can use it. Now the true unlock is when these three have the ability to work together to have interoperability for a bank to issue an asset on their private permission chain but let that asset trade on a public permissionless chain. Up until now we do not have that interoperability.

We have lived in a world that is a bunch of islands. Every one of your favorite layer 1 blockchains is its own island. But what if every layer 1 blockchain lived alongside every other one? Like cities in a country. Cities work with other cities.

Countries work with other countries. Regions work with other regions. We should architect the technology of the future to resemble the world that it is supposed to bring on chain. We're really proud of some of the work that we've been doing, especially in the region as well. Today, we just uh we just uh got approved for our ADGM license.

Abu Dhabi is going to be the home for uh Avalanche in the region, both in the UAE and broadly speaking. We have OMLA out of the Kingdom of Saudi Arabia. That is five banks in association with Sama working to do Islamic repo on a private permission chain where all of the nodes are located in the kingdom. Abu Dhabi can have the same. So can Dubai.

So can any other any other GCC nation and work in unison. So you could start to see the recreation of how these networks and subn networks work in their own networks but connect to others just as the way the world is. FIFA I think everybody knows FIFA. FIFA doesn't want to launch their assets on a chain alongside everything else. They want to own their entire stack.

They have a chain on Avalanche where they sell collectibles first. They recently announced and they have been selling right to buy which is a reservation for the World Cup. Toyota took a look and said for our global mobility needs we need four blockchains not launch on one existing one we need to build four of our own blockchains we're doing that with them Lulu financial is doing financial we're doing crossber payments with Lulu as well in the region kite AI is allowing for agentic AI payments AI payments the growth of AI and that expansion needs its own chain and Kopi loyalty and reward rewards for all the users out in the UAE. Qtopia will be tokenizing their their reward system and the endless opportunities that exist from digital ID to payments and AI and all the technology and all the assets that exist the trillions of dollars that need to come on chain will need their own environments will need their own rules will need to be relevant to the jurisdictions that they are a part of but should be able to reach out and work with others and have that interoperability between those chains. To me that is the end of the beginning of the first generation business plan of this industry and I welcome you all to join us in the next one.

Thank you.

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