The L1 Dilemma

New L1s succeed by exploiting the dogma of incumbents.

Ethereum succeeded by exploiting Bitcoin's resistance to programmability.

Solana succeeded by exploiting Ethereum's devotion to home stakers.

Hyperliquid is succeeding by exploiting Solana's unwillingness to specialize their protocol.

The reality is that all great L1s are born as cults. As these ecosystems grow, the dogma that once fueled them starts to tighten, creating space for competition. If they aren't careful, the crusade that got them where they are can distract them from credible competitive threats.

Of course, exploiting an incumbent L1's dogma does not guarantee success – after all, Bitcoin is still king. But this is what buys you the headroom to compete. Fortunately for new entrants, today's incumbents are mired in dogma.

This dynamic is the crypto equivalent of the Innovator's Dilemma – the L1 Dilemma.

What are today's L1s dogmatic about?

Here are a few candidates:

• Geographic decentralization is important
• BFT consensus is prerequisite (e.g. optimistic or whitelist-based are untouchable)
• Becoming a validator should be permissionless
• Deploying smart contracts should be permissionless
• Sharding is bad
• All apps should be treated the same by the chain
• All transactions should be subject to the same notion of finality
• One token as the staking token
• Faster is better (24h block times?)
• Chain upgrades should be manual (automate with decision markets?)

If you’re interested in or currently working on any of the above (or have ideas on alternatives), please reach out!

Special thanks to Matt Huang, Storm Slivkoff, Dan Robinson, Frankie, Arjun Balaji for discussion and feedback.