The Blockchain Industry Hinges on the Deployment and Success of Purpose-built Blockchains

The Web3 industry has yet to fully enter the mainstream, according to John Nahas, chief business officer (CBO) of Ava Labs.

Ava Labs chief business officer (CBO) John Nahas recently shared his thoughts on the blockchain industry’s evolution, the importance of purpose-built blockchains, and effective partnerships among blockchain projects. He also highlighted some regulatory instances that he believes have positively impacted the industry.

In an interview with Bitcoin.com News, Nahas discussed various topics, including the missing element hindering the blockchain industry’s full potential, the difference between general-purpose and purpose-built blockchains, and the essential qualities to seek when building a blockchain development team.

Below are Nahas’ answers to all the questions sent.

Bitcoin.com News (BCN): The decentralized blockchain industry has evolved in phases. Bitcoin’s initial era focused on “alternative money,” while Ethereum emphasized smart contracts and decentralized applications (dapps). Today, Web3 development and third-generation decentralized solutions are at the forefront. However, the industry has not fully entered the mainstream. As a long-time observer, what do you see as missing or hindering the blockchain industry’s full potential?

John Nahas (JN): The current problem with the Web3 space is the constant proliferation of the general-purpose Layer 1 blockchain. Their primary product is their token, and they seek to lure developers and users to their slightly better technology. There are constant incremental improvements at the blockchain layer, which is more blockspace, but there’s not enough innovation.

The solution to this problem, and what has been missing, is the rise of purpose-built blockchains (or application chains). The future will be multi-chain, however, a plethora of general-purpose chains does not solve the unique needs of projects building across a variety of sectors, from banking to gaming to AI to consumer. Purpose-built chains –which are an asset, jurisdiction, compliance, and use case specific –are needed to scale the numerous use cases. This will lead to mass adoption. No single chain can absorb all the potential demand, and we’ve seen that general-purpose chains alone have failed to deliver a solution the market needs to expand.

BCN: General-purpose and purpose-built blockchains have both found success, but purpose-built chains are currently gaining significant attention. Can you explain the difference between the two and what problems they address that general-purpose blockchains cannot?

JN: General purpose blockchains provide “slight” improvements over existing Layer 1 chains, but they do not meet the demand of all the use cases, businesses, and scale that is needed to make blockchains go mainstream.

However, purpose-built chains (previously called application-specific, or app chains) are where the industry is inevitably going. Purpose-built chains can accommodate specific uses, manage fees, use specific virtual machines (VMs), have their own gas token (or no gas token), and are customizable to the particular requirements of the business, asset, jurisdiction, and developer. They are needed solutions to fix technical bottlenecks, whereas general purpose chains (and their excess) are oftentimes solutions in search of a problem.

BCN: As the blockchain industry continues to evolve, participants will increasingly form partnerships to enhance the user experience or leverage each other’s strengths. Can you briefly explain the essential elements for effective partnerships among blockchain projects, and highlight some common reasons for failed partnerships?

JN: Most failed projects had an outsized focus on the headline and the name recognition and association that came with it. They made news but did not solve a problem. We saw this for a couple of years, where a company or a builder would have a great idea and then say “put on blockchain” like it was a special ingredient or an automatic bonus. The blockchain element should facilitate the use case, and be the technology that allows for a product or asset to succeed, not the highlight.

Effective partnerships are built around three key components: technology, team, and incentives. If a team is building a successful product, they should look for the best technology to facilitate that product – that is the foundational decision. After the tech, the team you work with is as important, if not more important, than the tech. People like working with people they like, and if there is a good relationship that is built on trust and clear goals, then the likelihood of success is much higher. If these two tenets are there, then the incentive (financial or support) is easy since both sides have a shared goal of winning. However, we often see teams in this space chase the incentive first, which is the wrong priority.

BCN: Many analysts believe blockchain projects are only as strong as their teams. As a seasoned blockchain industry veteran involved in multiple projects and teams, what are the essential qualities to seek when building a team? What factors contribute to a successful blockchain development team that can drive ecosystem growth and broader adoption of blockchain projects?

JN: Two things stand out the most – curiosity and hustle. These are the soft skills that often cannot be learned on the job. Technical, operational, and informational skills can be learned