Blockchain Capital Partner: Most people's understanding of on-chain economy is narrow

Author: Spencer Bogart, General Partner at Blockchain Capital

Translated by: Hu Tao, ChainCatcher

Most people view on-chain technology as a faster, more efficient version of existing technology: faster payments, lower settlement costs, and more efficient capital markets. Their perspective is not wrong. This alone holds tremendous opportunities and will spawn numerous venture-scale outcomes in the next decade.

But I believe this is just a small part of the story.

When I examine this technology and the various possibilities that programmable assets can achieve in a global, composable, always-on environment, I think we have only scratched the surface. The most astonishing things have yet to be created. The reason they have not been created is not that the technology is not mature, but that we have not yet completed our vision for them.

The Email Trap

At the dawn of the internet, the most obvious use was communication. Email was faster and cheaper than letters. Email was significant, but its original intent was not to speed up the operations of the post office. It stood on its own and quickly became widespread. Therefore, if you were to evaluate the internet in 1995 and saw email being widely adopted, you could reasonably conclude that previous theories had been validated.

But most opportunities had not even begun to sprout at that time. Search, social networks, e-commerce, cloud computing, software as a service (SaaS), streaming—these were not "accelerated versions of existing things," but entirely new domains that could not exist before the internet created the conditions for them. Google is not a faster library, Facebook is not a faster phone book, and AWS is not a faster server room. They only became meaningful after having a globally interconnected, programmable network.

Overall, these new categories are several orders of magnitude larger than the "faster communication" use case.

I believe cryptocurrency is currently in a period of flourishing. Most attention is focused on how to make existing financial products work better on-chain, such as faster settlements, cheaper cross-border payments, tokenized government bonds and stocks, and more efficient lending markets. And these efforts have also yielded results: by 2025, the settlement amount of stablecoins will reach $33 trillion, and the market value of tokenized government bonds recently surpassed $15 billion. The world's largest asset management firms and banks are building businesses on public chains.

This is fantastic. I am excited about all of this. I invest energy in it every day. But this is just the most obvious application scenario, perfectly fitting into our known knowledge system, and it is large enough to easily mislead people into thinking this is all the opportunity.

What I am more interested in is: what can only be achieved when programmable resources exist in a global, composable, always-on, permissionless environment? What new verbs are there, what unnamed categories exist?

What New Verbs Look Like

We have at least one clear example worth examining closely because it illustrates what I believe we will often see.

What would you think if you could borrow a billion dollars without collateral, and the lender had a mathematical guarantee of repayment?

This is flash loans: borrowing any amount of funds without collateral, as long as it is repaid in the same transaction. If repayment fails, the entire transaction is automatically reversed, as if it never happened. The lender has no risk. No credit checks. No relationship building. No collateral. Just relying on the system's own logic to provide guarantees.

Before flash loans appeared, no one needed them. Why? The concept is completely at odds with the traditional financial system. Even before programmable assets existed, it was useless, so there were no existing categories to improve upon. A lending function that is uncollateralized, unlimited, and guaranteed to be repaid is impossible in any system that requires time to transact. It can only be realized when the execution process is atomic, assets are programmable, and the entire sequence of operations either completes fully or does not happen at all.

Once atomicity makes it feasible, flash loans become a standard tool in the on-chain economy for arbitrage, liquidation, collateral swaps, and capital efficiency strategies, which are unattainable in traditional payment systems. Of course, any powerful new technology is not immune to being maliciously exploited, which only highlights the innovation of its underlying mechanisms.

Flash loans do not make lending faster or cheaper. They create a way of lending that was structurally impossible before the advent of programmable assets and atomic execution. This is what I refer to as "new verbs" or "new actions." The system can now do things it could not do before, not because someone found an optimization, but because the fundamental principles themselves have changed.

The Limits of Imagination

But I must honestly confront the limitations of my own imagination.

I can describe this design space in abstract terms. Public blockchains introduce a set of fundamental concepts that did not exist before: atomic execution, shared global state, programmable custody, deterministic settlement, composability across independent participants, and software assets. We have never had a financial system that integrates settlement, custody, clearing, and execution all in the same programmable environment. When previously separate layers merge into one, new things become possible.

But I cannot tell you exactly what those things are. And I think that is precisely the point.

Human imagination looks backward. We are very good at improving upon existing things, but not so good at envisioning things that were simply impossible yesterday. We look at on-chain technology and instinctively ask: what existing products can it improve faster and cheaper? But the harder and more valuable question is: what unprecedented things can it create?

I have some intuitions. Programmable custody systems that enforce complex protocols without intermediaries. Capital can be entrusted to software agents operating within defined parameters. Financial structures can be built and dissolved in real-time based on on-chain verified conditions. These directions feel right. But the most important applications may be those I cannot yet describe because they are fundamentally different from anything I have seen before.

The inability to enumerate them is precisely the strongest manifestation of this argument: if I could easily list all the brand new things, they would not be truly new. The design space is vast and largely unexplored, and it cannot be depicted solely by intuition. That is the crux of the matter.

Therefore, most attempts in this field will fail. A broad design space does not mean that results are easy to achieve. But the opportunities contained in truly effective solutions are enormous, and we have been dedicated to building pattern recognition technology for the past thirteen years to identify them before they become obvious. It is this opportunity that fills me with anticipation for the next decade.

Most opportunities are still ahead.

If the analogy with the internet holds, then the services corresponding to search, social, cloud computing, and SaaS in the on-chain economy have yet to be built. Email was a trillion-dollar industry, and the other services that derived from it are worth tens of trillions.

I believe that when we look back a decade from now, what will excite us the most will be things that do not exist today. This is not just about improving the efficiency of banks, exchanges, or asset management companies, but about things that can only be realized when programmable assets exist in a composable, global, always-on environment. These things will seem obvious in hindsight, but we cannot foresee them now because there are no precedents to follow.

Flash loans give us a glimpse, but this is just the tip of the iceberg. The design space is incredibly vast, and we have only just begun to explore.

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