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The Evolving Landscape of Blockchain Design: Insights from the Protocol Prism (Report review)


In the ever-evolving world of blockchain technology, the recent “Protocol Prism Report” provides critical insights into the fundamental differences in blockchain design that various protocols adopt for mass adoption. These designs not only aim to create performant and secure public rails but also highlight varying approaches and timelines to achieve these goals​​.

The Evolution of Modern Blockchains

Blockchains have transitioned from simple peer-to-peer networks for secure money transfers to complex platforms underpinning decentralized finance (DeFi). This transformation is largely due to the introduction of smart contracts on platforms like Ethereum, which have expanded blockchain capabilities significantly. As of November 2023, about $125 billion

in fiat-backed stablecoins such as USDC and USDT are held on smart contract platforms, illustrating the immense trust and capital in these modern blockchain systems​​.

Core Functions and Design Philosophies

The Protocol Prism Report introduces an objective framework to categorize blockchains based on their key functions and architectural design. This categorization takes into account the various trade-offs made within different initiatives to optimize components like data storage or execution. The report also emphasizes the scalability trilemma, which highlights the interdependent relationship between scalability, decentralization, and security in blockchain architecture​​.

Data Storage in Blockchain Systems

Data storage, a critical part of blockchain functionality, is divided into global state and historical data. The global state represents a live snapshot of all accessible and modifiable data at any given time, while historical data encompasses all data generated throughout a blockchain’s lifespan. Over time, the buildup of this data leads to state bloat, increasing the computational and economic load on validators and potentially centralizing the network by limiting the number of participants capable of running a validator​​.

The Role of Governance in Consensus and Settlement

Governance in blockchain networks plays a pivotal role in achieving consensus and settling transactions. It serves as a coordination mechanism among users, developers, validators, and stakeholders, dictating the process for network upgrades and acting as an adjudicator in consensus disputes. Effective governance is crucial for the security and future development of blockchain networks​​.

Risks of Modularization and Liquidity Fragmentation

The report warns about the risks associated with modularization and liquidity fragmentation in blockchain networks. The low economic value of a network can lower the barrier for consensus-based attacks and inadvertently lead to centralization. Moreover, it explores how transaction execution and its underlying components can become a source of centralization, despite efforts to maintain economic security​​.


The Protocol Prism Report provides valuable insights into blockchain technology’s current state and future directions. It emphasizes the importance of balancing scalability, security, and decentralization while considering the implications of data storage, governance, and economic security. As the blockchain landscape continues to evolve, understanding these elements will be crucial for the development of robust and efficient blockchain systems.

Read full report here:

Roland D.  

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