This article comes from: Zeus
Compiled by Odaily Planet Daily ( @OdailyChina ); Translated by Azuma ( @azuma_eth )
In my previous article , I discussed how the cryptocurrency industry has gradually deviated from its original vision - over-focusing on infrastructure innovation while neglecting the basic monetary properties required to achieve financial sovereignty. This deviation has led to a disconnect between the final technical achievements delivered and sustainable value creation.
However, what I hadn’t yet penetrated was that the industry had fundamentally misjudged which applications were actually worth building, and this misjudgment is at the heart of crypto’s current predicament and hints at where the real value might emerge.
Application layer phantom
The narrative of the cryptocurrency industry has gone through many stages, but it has always been permeated with a vision - to create revolutionary applications beyond finance. Smart contract platforms claim to be the infrastructure of the new digital economy, and envision that value will be fed back from the application layer to the underlying protocol. This narrative has accelerated with the spread of the Fat Protocol Theory - the theory that unlike the Internet era, when the TCP/IP protocol had little value but Facebook and Google could grab hundreds of billions of value, blockchain protocols will precipitate most of the value.
This has formed a specific mindset: Layre 1 public chains will add value by fostering a diverse application ecosystem, just as Apples App Store or Microsoft Windows create value through third-party software. However, the fundamental misunderstanding is that the cryptocurrency industry is trying to impose financialization on scenarios that are not applicable and difficult to create real value.
Unlike the Internet, which can digitize existing human needs (business, social interaction, and entertainment), cryptocurrencies attempt to inject financial mechanisms into scenarios that do not need or reject financialization. The premise of this development direction is that all fields, from social media to games to identity management, can benefit from blockchain and financialization.
But the reality is quite different:
Tokenized social applications have generally failed to gain mainstream adoption, with user engagement relying primarily on token incentives rather than product value;
Gaming apps continue to face resistance from the traditional gaming community, with players believing that financialization mechanisms will damage rather than enhance the gaming experience;
Identity and reputation systems involving token economics have never demonstrated significant advantages over traditional solutions.
These problems cannot be explained by simply saying “we are still in the early stages”. They reveal a deeper logic: the essence of finance is a resource allocation tool, not an ultimate goal. Financializing social interactions or entertainment activities actually misunderstands the core function of finance in society.
The essential difference from the game props market
It is important to explain that the skin market in CS:GO or the in-app purchase system for props in popular games seem to refute the previous point of view, but they actually have essential differences.
These markets are essentially just optional decorations or collectibles trading ecosystems outside the game, rather than financialized transformations of the core gameplay. They are closer to the peripheral goods or souvenir markets and do not change the basic operating logic of the game.
When crypto games attempt to financialize core gameplay mechanics — making playing games directly equivalent to making money — it completely changes the player experience and often destroys the fundamental fun of the game. The most critical issue is not whether a market can be built around the game, but that converting the gaming behavior itself into a financial activity will distort its essence.
The essential difference between blockchain technology and trustlessness
A core concept that is often confused in cryptocurrency discussions is the difference between blockchain technology and trustless attributes, which are by no means synonymous.
Blockchain technology: a set of technical tools for creating distributed, irreversible consensus ledgers;
Trustless property: refers specifically to the property of being able to execute transactions without relying on a third-party intermediary.
Trustlessness has clear costs — including efficiency losses, system complexity, and resource consumption. Such costs must be reasonably compensated, which only happens in certain areas.
Take Dubai’s use of distributed ledger technology to manage property registration: they primarily take advantage of the technology’s efficiency and transparency benefits, rather than decentralization. The Land Administration remains the central authority, and the blockchain is just a more efficient database. This distinction is crucial because it reveals the true value of such systems.
The core conclusion is that trustlessness has practical value only in a few areas. From property registration to identity verification to supply chain management, the vast majority of scenarios still rely on real-world authorities for final judgment or verification. Migrating ledgers to blockchain does not change this essence - it just changes the technical tools for managing records.
Cost-Benefit Analysis
This makes a simple cost-benefit analysis necessary for each platform.
Would the platform actually benefit from trustlessness?
Will this benefit outweigh the cost of achieving decentralization?
For most non-financial applications, the answer to at least one of these questions is no — either they don’t really need to be trustless (since external authority is still required) or the benefits don’t cover the costs.
This explains why institutional adoption of blockchain technology is primarily focused on efficiency gains rather than trustlessness. When traditional financial institutions tokenize assets on Ethereum (a growing trend), they are leveraging the operational advantages and new market entry of blockchain networks while maintaining traditional trust models. Blockchain here serves as an improved infrastructure rather than a trust replacement mechanism.
From an investment perspective, this creates a contradiction. The most valuable part of blockchain (the technology itself) can be widely adopted, but it may not create value for a specific public chain or token. Traditional institutions can build private chains or use public chains as infrastructure while firmly controlling the core value layer - asset issuance rights and monetary policy.
Industry Adaptive Evolution
As this reality becomes clearer, we are witnessing a natural adaptation process unfold:
Technology adoption skips the token economy: Traditional institutions only adopt blockchain technology, circumventing speculative token systems and using it as an upgraded “pipeline” for existing financial activities;
Efficiency takes precedence over revolution: the focus shifts from disrupting the existing system to incremental efficiency gains;
Value migration: Value flows mainly to specific applications with clear utility, rather than underlying infrastructure tokens;
Narrative evolution: Industries realign narratives around value creation to match technological advances.
This is actually a good thing. Why let enablers of activity suck all the value away from value creators? The Internet would be very different (almost certainly worse) if the majority of value was captured by TCP/IP rather than the applications on top of it, as the “fat protocol theory” predicted. The industry hasn’t failed — it’s just finally facing reality. The technology itself is valuable and will likely continue to evolve and integrate with existing systems, but the distribution of value within the ecosystem may be very different than the early narratives implied.
The root cause of the error: the forgotten original intention
To understand how we got to where we are today, we must go back to the origins of cryptocurrency. Bitcoin did not initially emerge as a general computing platform or the basis for tokenization of everything. Its mission was very clear - as a monetary systems response to the 2008 financial crisis and the failure of centralized monetary policy.
The core concept of Bitcoin has never been everything can be put on the chain, but currency should not rely on trusted intermediaries.
As the industry developed, this original mission was gradually diluted and eventually abandoned by most projects. Although projects such as Ethereum expanded the technical capabilities of blockchain, they also blurred its core positioning. This led to a strange split in the ecosystem.
Bitcoin is still focused on currency positioning, but lacks programmability and cannot achieve other functions beyond basic transfers;
Smart contract platforms provide programmability, but abandon currency innovation and turn to the everything on the chain route;
This divergence is perhaps the most serious course error in the cryptocurrency industry. Instead of building on Bitcoin’s monetary innovation to create more sophisticated functionality , the industry has pivoted to the financialization of everything — a misguided approach that misjudged both the problem and the solution.
The road ahead: Returning to the essence of money
In my opinion, the way forward for the industry lies in realigning the blockchain’s greatly enhanced technical capabilities with its original mission as a currency. Not as a panacea to all problems, but focused on creating better money.
The reasons why currencies are particularly well suited to blockchains include:
Trustlessness is critical — Unlike most applications that require external enforcement, currency can operate entirely in the digital realm, with rules enforced solely by code;
Native digital attributes - Currency does not need to map digital records to physical reality, but can exist natively in a digital environment;
A clear value proposition — removing the middleman from the monetary system can truly improve efficiency and autonomy;
Natural connection with existing financial applications - the most successful crypto applications (trading, lending, etc.) are naturally connected to monetary innovation;
The key point is that currencies are essentially infrastructure layers that don’t require deep interaction. This is exactly where cryptocurrency has put the cart before the horse — instead of creating a currency that integrates seamlessly with existing economic activity, the industry is trying to rebuild all economic activity around the blockchain.
The power of traditional currencies lies precisely in this tool layer feature. Companies do not need to understand the Federal Reserve to accept dollars, exporters do not need to restructure their entire business to manage exchange rate risk, and individuals do not need to become monetary theorists to store value. Money facilitates economic activity rather than dominates it.
The same should be true for on-chain currencies - available to off-chain businesses through simple interfaces, just like using digital dollars without having to understand the banking system. Businesses, institutions, and individuals can stay completely off-chain and use blockchain currencies only for specific advantages, just as users now use the traditional banking system without having to become part of it.
Instead of building a vague concept called “Web3” that attempts to financialize everything, the industry should focus on building a better monetary system - not just a speculative asset or inflation hedge, but a complete monetary mechanism that can adapt to different market conditions.
The changes in the global currency landscape have made this direction even more urgent. The inherent fragility of the current system and geopolitical tensions have created a real need for a neutral alternative in the world.
The tragedy of the current ecosystem is not only the misallocation of resources, but also the missed opportunities. Incremental improvements in financial infrastructure are valuable, but they are insignificant compared to the transformative potential of solving the fundamental problems of money.
The next stage of evolution of cryptocurrency may not be to continue to expand its boundaries, but to return to and fulfill its original mission - not to be a universal solution, but to serve as a reliable basic monetary facility so that other constructions do not need to delve into its operating principles.
This is the profound innovation that cryptocurrency originally promised — not the financialization of everything, but the creation of a currency worthy of being the invisible infrastructure of the global economy. A currency that works seamlessly across borders and institutions while maintaining sovereignty and stability. An infrastructure that enables rather than dominates, serves rather than restricts, and evolves without interfering with the human activities that give it meaning.
