Original author: Rapolas
Compiled by: LlamaC
“Recommendation: This article shows the future potential of the Gravity chain to be launched by Galxe from the perspective of the metaphor of chain as city, and analyzes the concept of the rise and existing problems of "chain abstraction". Galxe has a unique position in the ecosystem. They distribute resources by gathering upstream and downstream. Its growth history is obviously similar to that of the original Cex. However, in the future, under the large competitive landscape of parallel EVM chain VS non-EVM parallel chain, what height will Gravity lead users to? It is inevitable that people are curious and continue to examine! Do you copy this homework?”
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How much chain abstraction do we really need?
Crypto infrastructure is overinvested. The feedback cycles in infrastructure are too long, which allows the lack of product-market fit (PMF) in this space to be hidden for a long time, much longer than it has been for consumer crypto applications.
The lack of infrastructure establishment at the protocol level has resulted in excess value being captured by venture capital in numerous infrastructure and middleware projects. Layer 1 (L1) creates tremendous value by leveraging the unlimited total addressable market (TAM). Infrastructure projects then want to get as close to L1 valuations as possible because they have their own network consensus, block production, etc.
This is one reason why the crypto infrastructure space is so full of meme culture. Everyone knows the one strategy that works, and the results you’ll get if you follow it:
Claim you are scaling the blockchain;
Raising too much money from venture capitalists;
Announcing “partnerships” with other infrastructure projects before your chain goes live;
Release a testnet (which may break) and then hype some crazy metrics.
Launching tokens in the $1 billion to $10 billion market cap range.
The rise of chain abstraction
Recently, we’ve observed attempts to further obfuscate step 1. Instead of claiming to scale the blockchain, they’ve moved to chain abstraction. This sounds like the ultimate holy grail of infrastructure, the cherry on top, the end of the game.
Every infrastructure founder has a natural desire to build a chain. Some people are afraid to admit it.
The question is: if there are no users, who do we provide the abstraction for? Chain abstraction is VC’s solution to the chain fragmentation problem that was originally caused by VC’s ruthless investment. Without a product, chain abstraction is not a real solution to a real problem. It doesn’t even bring dramatic changes and solutions to new problems to consumers like Ford or the iPhone did (both of which were quantum leaps from previous consumer experiences).
Consider that every infrastructure project is created as a response to the solution of the previous one:
L1 can’t scale, so we created Rollup;
Rollup divides liquidity, so we built a cross-chain bridge;
There are too many cross-chain bridges, so we aggregate them;
There are so many aggregators, so we built intent;
Intent is hard to explain, so we built an intent interpretation layer;
… Do you think it will stop here?
User experience and chain abstraction challenges
Chain abstraction may come with some centralization tradeoffs, as a stack is only as decentralized as its weakest link. Abstraction requires coordination around state proofs, solver execution, block confirmations, and cross-chain transaction guarantees, so consensus must be reached on this. Capital markets will always have another faster/cheaper/newer buzzword chain abstraction solution that is better than the currently adopted one. Founders and VCs will create new rules of the game, but play the same way they always have, to win the same rewards.
Building infrastructure is often a response to poor UX, because high fees and slow settlements are part of the UX problem. But when adoption fails to meet expectations, poor crypto UX becomes an easy excuse to blame. Criticizing UX requires little effort, so everyone is doing it. Whenever a crypto cycle turns to apathy, people blame it on bad products, forgetting that these products were so exciting in the first place that they took us to the top of the market.
In the past, we talked about crypto superapps that started with products rather than infrastructure. Whether it's Uniswap, Metamask, Magic Eden, StepN, Blur/Blast, dYdX or Hypeliquid, it's clear that the idea of web3 is being turned on its head. Instead of collaborating on a composable stack, each party builds its own technology stack based on its own incentives. And that's okay.
But it also means that the chain will be abstracted by those who don’t claim to be the chain abstraction; instead, it will be the people who build the most popular applications in crypto.
The most popular applications in the field Galxe
Galxe (formerly Project Galaxy) is the most widely adopted web3 application by a wide margin. It has more network traffic than Uniswap, Opensea, or Etherscan. Over 20 million unique addresses interact with Galxe. Over 1 million unique visitors use the Galxe website every day.
Before you dismiss this attraction as a bot airdrop extravaganza, consider that every on-chain use case is dominated by bots. The majority of token trading is done by bots. Crypto games are also played by bots, as they are still primarily driven by financial incentives. NFT market making is also done by bots. AI agents (smarter bots) are beginning to participate in the on-chain economy. Even our social finance darlings rely heavily on bots, making social finance even less social. Crypto is about incentives and resource coordination, and so far, bots have proven to be excellent target users for harvesting on-chain incentives. The future, proxy DAOs, and UBI are already closer than we thought.
But it doesn’t matter whether the users are robots (it’s worth noting that Galxe’s 1 million daily active users are actual site visitors, not robots); what matters is the amount of economic activity, and the value that can be captured as a protocol or application.
Galxe found its entry point in the airdrop distribution. But it has come a long way since then, by building out the identity layer including Galxe Passport (identity) and Galxe Score (reputation).
The most successful businesses are those that create new bundles or unbundles for everyone. Galxe has aggregated the supply side of projects looking to build communities and distribute their tokens, and the demand side of users looking for opportunities to earn tokens. What was previously the core business of centralized exchanges has now become a larger market by enabling projects to build communities before a Token Generation Event (TGE).
We’ve seen countless early attempts to build platforms that monetize identity or data, but they always fail because they don’t start with a product that people want to use (most users don’t care who owns their data). Galxe builds a unique use case and provides a strong enough financial incentive for people to reveal their identities. Data like this will become valuable in ways we haven’t yet foreseen, especially if policymakers make a sincere attempt to consumerize cryptocurrency.
Almost 1 million people have already created a Galxe passport using their real life identity.
Aggregating users not only allows for the construction of a valuable identity layer, but also allows for the construction of consumer type products that otherwise would not have been successful as standalone ideas. This includes the Galxe mobile app, money transfer and spending, AI-assisted trading products, research centers, etc. Galxe has become the first stop for many new users in the crypto space.
The question now is: How many valuable products can Galxe build so that these users never have to leave its ecosystem?
Galxe spans 34 different chains. This is likely more than any cross-chain bridge or centralized exchange could integrate. With Galxe’s Smart Balance feature, users can deposit funds into a single vault and use the balance to pay transaction fees for Galxe smart contracts on multiple chains, without the need for bridging. Soon, Smart Balances will be upgraded to Smart Savings, enabling users to earn yield on deposited assets.
Many people don’t know that Galxe has been abstracting chains and accounts while people look elsewhere. After the just announced launch of Galxe’s Gravity chain, it will become the largest blockchain by transaction activity, with approximately $100 million in transactions per month.
Aggregating user identities, their transactions, and controlling blockspace is a combined strategy for chain abstraction. To us, it seems that only a few crypto companies - Galxe, Coinbase, and perhaps TON - are fully capable of making consumer-friendly chain abstraction a reality. While they are approaching it from different angles, the desired outcome, blockchain onboarding combined with identity, looks the same to us.
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