Why Most Web3 Apps Are Just Databases with a Token

The app's core logic and transaction ordering are controlled by a single entity, making it indistinguishable from a traditional cloud service. This creates a single point of failure and censorship.\n- Rollups like Arbitrum and Optimism initially launched with centralized sequencers.\n- Users have zero recourse if the sequencer censors their transaction.\n- The promised decentralization is a roadmap item, not a current feature.

Upgradeable contracts controlled by a multi-sig wallet mean the protocol's rules can be changed on a whim. This negates the credible neutrality of an immutable smart contract.\n- Over 90% of DeFi protocols have admin keys.\n- The multi-sig is the real governor, not the token.\n- This creates systemic risk, as seen in the Nomad Bridge hack where a fixable bug led to a $190M exploit.

The front-end and core data queries rely entirely on centralized indexing services like The Graph or proprietary APIs. If these services go down, the dApp becomes unusable.\n- Data availability is delegated to a handful of indexer nodes.\n- The user experience breaks if the centralized RPC (e.g., Infura, Alchemy) fails.\n- This recreates the client-server model, with the blockchain reduced to a slow settlement layer.

Replaces order books and centralized market makers with a permissionless liquidity pool formula. The protocol is the counterparty.

• Creates a new financial primitive: Constant product formula (x*y=k) for price discovery.
• Eliminates rent-seeking intermediaries: Liquidity providers earn fees directly; no central exchange taking a cut.
• Composable money Lego: Pool tokens are themselves fungible assets, enabling deeper DeFi integrations.

Traders face high slippage and failed transactions navigating dozens of isolated DEX liquidity pools. This is a database routing problem.

• The Solution: Intent-Based Aggregation (UniswapX, CowSwap)
• User declares an outcome: "Swap X for Y at this minimum rate." Solvers compete to fulfill it across all venues, MEV, and private liquidity.
• Gasless & efficient: Users sign intents off-chain; solvers batch and optimize execution, often absorbing gas costs.
• Better price discovery: Aggregates fragmented liquidity without requiring a central, custodial order book.

Turns Ethereum's staked ETH from a passive asset into active, reusable cryptoeconomic security for new protocols (AVSs).

• Solves the bootstrapping problem: New networks no longer need to bootstrap a token and validator set from scratch.
• Creates a security marketplace: Stakers choose which services to secure, earning additional yield; AVSs rent proven security.
• Aligns with Ethereum's trust layer: Leverages the largest decentralized validator set instead of fracturing security.

Storing all application state on-chain is prohibitively expensive and slows down nodes, turning L1s into bloated global databases.

• The Solution: Stateless Clients & Verifiable Computation (zk-Rollups)
• Off-chain execution, on-chain verification: Apps run computations off-chain and post a cryptographic proof (ZK-SNARK/STARK) to L1.
• State is a verifiable claim, not stored data: L1 only needs to hold the state root; validity proofs guarantee correctness.
• Massive scalability: Enables ~2,000 TPS on zkSync and StarkNet versus ~15 TPS on Ethereum base layer.

Provides the critical off-chain data and computation layer that smart contracts cannot access natively, enabling complex logic.

• Moves beyond simple price feeds: Offers Verifiable Random Function (VRF) for gaming, CCIP for cross-chain messaging, and Automation for contract upkeep.
• Decentralization at the oracle layer: Data is aggregated from numerous independent nodes, preventing single points of failure and manipulation.
• Creates hybrid smart contracts: Logic (on-chain) + data/computation (off-chain) = vastly more powerful applications.

Most cross-chain bridges hold user funds in a centralized multisig, creating a $2B+ hack vector. This is just a token-wrapping database with extra steps.

• The Solution: Native Asset Bridges & Light Clients (LayerZero, IBC)
• Authenticated messaging, not custodianship: Protocols pass messages between chains; assets are minted/burned on the destination chain, never locked in a bridge contract.
• Verification via light clients: Destination chain verifies the source chain's block headers, achieving crypto-economic security without new trust assumptions.
• Unlocks universal composability: Enables true cross-chain applications, not just asset transfers.

Storing data on-chain is a $1B+ annual mistake. Applications like NFT marketplaces and GameFi use Ethereum as a slow, expensive key-value store, paying for finality they don't need.

• Cost Inefficiency: ~$10 per write vs. $0.01 on a cloud DB.
• Architectural Mismatch: On-chain state bloat without corresponding value capture.
• Real Solution: Store mutable state off-chain (e.g., L2s, Celestia), use the base layer only for settlement and proven state transitions.

Shift from transaction execution to user intent fulfillment. Protocols like UniswapX, CowSwap, and Across demonstrate this by outsourcing routing and execution.

• User Declares 'What': "Swap X for Y at best price."
• Network Solves 'How': Solvers compete off-chain, settle on-chain.
• Key Benefit: Better UX, MEV protection, and atomic composability via protocols like LayerZero and Hyperlane.

Most L2 rollups (Arbitrum, Optimism) and app-chains replicate Web2 centralization at the sequencer layer, creating a single point of failure and rent extraction.

• Censorship Risk: Single entity controls transaction ordering.
• MEV Capture: Value leaks to the sequencer, not users or dApps.
• Real Metric: Time-to-Inclusion and proposer/block builder separation are the new KPIs, not just TPS.

Decouple execution from consensus and proving. EigenLayer, Espresso, and Astria are building shared sequencer sets that multiple rollups can use.

• Shared Security: Leverage Ethereum's validator set for sequencing.
• Atomic Cross-Rollup Composability: Enables native interoperability.
• Future-Proof: Creates a market for specialized provers (Risc Zero, SP1) and DA layers (Celestia, Avail, EigenDA).

Most app tokens are glorified discount coupons for network fees (see: GMX, dYdX), failing to capture the value of the underlying economic activity.

• Weak Value Accrual: Fees are often paid in the base asset (ETH, USDC).
• Voting-As-A-Service: Governance is a feature, not a product.
• Real Question: Does the token's utility require its existence on the same ledger as the core application state?

Embed yield directly into the asset's property rights. LSTs (Lido's stETH) and LRTs (EigenLayer's restaked assets) are primitive examples.

• Protocol-Owned Liquidity: The application's treasury is its own best customer (see: OlympusDAO mechanics).
• Restaking as Collateral: Use EigenLayer to bootstrap cryptoeconomic security for new networks.
• Endgame: Tokens that are productive assets by architectural design, not marketing.