Will interoperability define the winners amongst blockchain networks?

As an ecosystem, there are a couple of things we focus on and discuss extensively when it comes to picking industry winners.

Many times, we look at total value locked (TVL) and other times, transaction settlement time and low or high fees.

What most people don't realize is that at some point, fast and cheap transactions will be something most or all blockchain networks will be able to afford, in some form.

Total value locked in itself isn't a metric that proves winners from losers because value can be centralized to a few and real economic value generation requires diversified participation.

As the number of blockchain networks grows into several thousands, what will prove most valuable will shift to something that seems so just "nice to have" but in reality is of critical importance.

The value in being interoperable

Usually when people look at interoperability, they think about how this solution helps assets move out of an ecosystem, so it feels like building a means to lose value but this perspective is reflective of perceived structural and product flaw.

A network that's has established some level of product and structural superiority would not concern itself with potential outflows from building interoperability rails.

That said, interoperability makes way for not just outflows but also inflows. Whilst some worry about the former, real builders recognize it for what it is: an opportunity!

Idle money doesn't generate value

It generally only creates debt.

But let's focus on why money needs to move.

As aforementioned, at lot of people focus on TVL when assessing the value of a network, whilst that is something worth looking at, there are things that are probably far more important.

Like moving capital.

When money sits Idle, it creates little to no value. What blockchain economies need to build for is for money to move more frequently.

With blockchain's fast, programmable and cheap transactions design, this shouldn't be that difficult.

Interoperability takes this a step forward but enable cross-chain value movement.

It has to be a feature for every network to be able to communicate with others and exchange data. This will be a defining factor for the real winners amongst blockchain networks.

A blockchain that cannot participate in the broader ecosystem is, increasingly, a blockchain that cannot participate at all. Economies don't grow in isolation, maybe they can self-sustain for a while, but at some point will need contact with other networks.

The reason traditional finance is currently building rails into crypto and embracing the broader blockchain technology isn't because it loves the idea, it is because long-term growth and survival depends on consistent adaptation onto new markets.

Isolation kills momentum. Users will feel trapped, developers and business builders will look at the cost of the rigidity and conclude that it isn't worth the risk.

Interoperability isn't a "nice to have feature" but a necessity that all blockchain networks must build towards.

Posted Using INLEO