A Case For "Bad" Blockchains

Polkachu Intern | 2022-12-12

Today, the main issue with the universe of app-chains is not that we have a few "bad" blockchains; rather, it is that most good blockchains are too similar. We might be able to improve the app-chain diversity by tolerating "bad" blockchains.

The universe of app-chains should have a mechanism similar to evolutionary biology:

• A diverse set of chain features competes in a free market for user adoption, and only the fittest survives and thrives
• A chain should be able to adopt any feature as long as it is upfront with its users (in other words, no deceptions)
• If a chain does not like specific features, it can choose not to adopt them and, in extreme cases, refuse to engage in the Interchain economy with any chains adopting those features
• A chain is easy to start and easy to die. The death of a chain should be celebrated as we now know some feature combination does not work

Most App-Chains Are Too Similar

Most app-chains are too similar these days: 6-second block time, token-based governance voting, 50-100 validators, Nakamoto coefficient of 5-10, high staking inflation, a sizable community pool to fund projects and teams, etc.

Maybe it is just easy to adopt CosmosSDK in a wholesale fashion; maybe it is just easy to copy/paste a chain already with profit-market-fit; or maybe we have already formed a view of what is right/wrong and good/bad to run a blockchain in such early days of blockchain technology. One way or another, most app-chains are similar.

However, if we truly buy into the app-chain thesis, we should be disappointed by the lack of diversity of app chains these days.

"Wait wait, you lowly intern," you might say, "I am all for chain diversity as long as a chain adopts only good features". Indeed, it is easy to say so rhetorically, as who doesn't want to have good chains only? In practice though, we will pay an innovation cost for only allowing good chains for two reasons:

1. Good and bad are subjective
2. "Bad" features are essential to explore the frontier

Good and Bad Are Subjective

Some people may view a particular blockchain as bad because it lacks certain features. For example, a blockchain is too centralized by its foundation nodes, its inflation is too high with massive selling pressure, it requires high-spec machines that prohibit home stakers, its code is not open-sourced, some key contracts are controlled by the team, etc.

While these features are undesirable for the end state of a decentralized future, people have different opinions about whether they are good or bad when a chain starts its journey to bootstrap user adoption while balancing its security and competitive concerns.

As long as a chain is not deceptive and the public are clearly communicated with the trade-offs, the ultimate yardsticks are user adoption and interchain economy integration. Each user can choose to enter and exit any app-chain, and other app chains can decide whether they want to engage with a chain via IBC.

Because of the subjectivity of good/bad question, we do not see a clear alternative other than "let the market decide" as outlined above. The last thing we want to see is an Interchain-mgmt-like entity that adjudicates what is good/bad of a sovereign app-chain.

"Bad" Features Are Essential to Explore The Frontier

Each app-chain team wants to explore the possibilities of blockchain technology. In evolutionary biology, most mutations are unsuccessful. In blockchain competition, most bad features do not survive, at time taking down the whole blockchain.

As stated above, most app-chains are too similar. Maybe it is because we generalize a specific failure too easily without further exploration. Terra failed, so is algorithmic stable coin a forever bad idea? FTX failed, so is overseas CEX a forever bad idea? OHM failed, so is protocol-own liquidity a forever bad idea? Solana is rekt, so it monolithic blockchain with parallel transactions and high through-put is forever NGMI?

In my view, these experimentations are essential to explore the frontier despite the failures. Even after they fail, we can still ask if the failure is due to the specific implementation, the bad timing, or the flaw of the whole thesis.

At times (especially in the crypto winter), we tend to learn the lessons so hard that we learn the wrong lesson. Yet, we are still early, the whole blockchain movement still young, much of the frontier yet to be explored. Let's not foreclose explorations by attacking "bad" chains as long as they do not deceive the public with the trade-offs.

A Hill To Die On

I would rather live in an app-chain world with many bad chains each bad in its unique ways than live in an app-chain world with only homogenous good chains.