A Guide to Purpose-Built Blockchains

As blockchains exploded in adoption and use cases over the last decade, the number of challenges blockchains face has increased to meet the divergent and growing applications of the technology across various industries.

As cryptocurrencies and token offerings expand to more use cases and specific functions, their underlying infrastructure must specialize in creating a better developer and user experience. Programmatically different blockchains are being deployed for specific use cases, such as shipping, supply chains, financial infrastructure, and NFTs. 

Bitcoin and Ethereum are the original “catch-all” general-purpose blockchains; their purpose is to be the public blockchain network for all types of activity for all network participants. However, as adoption and usage have soared, catering to the network activity for the masses hasn’t been without problems.

While blockchain thus far has been most famous for its role in the rise of digital currencies, there is plenty of non-cryptocurrency uses for the technology. Purpose-built blockchains may make trade-offs with the core blockchain trilemma factors of centralization, security, and scalability to meet different industries’ needs with greater efficiency.

Challenges with Catch-All Blockchains

Most of the major public blockchains, like Ethereum, tend to face immense challenges with filling niche needs.

The first significant challenge in question is that of speed and throughput. Compared to Visa’s 65,000 transaction per second (tps) throughput, Bitcoin can only process 7 transactions per second, while Ethereum can do about 15-25 tps. Both are more decentralized than Visa, and permissionless, but specific use-cases might not need these advantages. 

Both the BTC and ETH networks have become busier than ever, especially with the NFT activity in 2021, and more adoption is on the horizon. As a result, the cost of sending a transaction has skyrocketed, regardless of what’s being sent. 

In Aug. 2021, Eth gas fees reached as high as $30 on average for a simple transaction, with smart contract transaction fees like for using dApps and NFTs being much higher, often in the range of $100-200 or more, which is a trend that had been increasing throughout 2021. 

“Catch-all” blockchains are like highways that don’t always differentiate the types of traffic to the extent that niche purpose blockchains can. Blockchain networks like Bitcoin and Ethereum are too slow and too expensive for the vast majority of smaller-scale, everyday transactions. 

Ethereum’s architecture isn’t customizable, but it does allow for a large array of different use cases including data recording data, supply chain management, insurance, tokenization of assets, and more. Moreover, Bitcoin and Ethereum were built with the principles of pseudonymity, censorship resistance, and transparency in mind.

This poses issues for some industries. For example, legacy regulated capital markets and financial services often have regulatory needs for identity, compliance, confidentiality, governance, and settlement, which aren’t fulfilled by Bitcoin’s and Ethereum’s functionality. 

What are Purpose-Built Blockchains?

These issues have led to blockchain projects building distributed ledgers that target specific use cases. 

Blockchains are diversifying to become more specialized to specific tasks and. For example, they can enable higher throughput activities, faster settlement time, and less fees. These three features can make supply chains more efficient, help move and store different types of information, or capture a higher volume of transactions than major public blockchains today. 

Specific purpose blockchains can be built solely around the efficient and cost-effective exchange of tokens, execution of smart contracts, or other enterprise functions.

With purpose-built blockchains, large-scale complex applications can solve their unique problems without compromising or bending to problems inherited by catch-all blockchain architecture.

Examples of Purpose-Built Blockchains

Acala is a DeFi-focused blockchain that builds a set of financial primitives including the ACA stablecoin, a DEX with unified liquidity provisioning, and staking derivatives. Acala aims to become a parachain on the Polkadot network and is fully EVM-compatible, meaning Ethereum developers can migrate their smart contracts without significant changes to the code. 

Acala is essentially a niche blockchain optimized for use case of DeFi, created with the goal of reducing public network congestion and creating a more efficient and robust ecosystem.

Solana is a high-performance public base-layer blockchain created to track historical events (using proof-of-history) and transactions in a specific sequence, optimizing scalability over decentralization, and enabling scalable apps for developers and users, with low transaction fees and high throughput.

Algorand created a highly scalable, low fee network, decentralized digital currency, and smart contract platform specifically for the financial services industry to use. 

Flow is dedicated to serving NFTs at a much more efficient scale than Ethereum.

Enterprise blockchains can be used to streamline business processes at scale and serve the needs of corporations in a permissioned and centralized manner. For the corporate use case, ledger data visibility can be restricted to a select group of people. 

A nation-state creating and using its own blockchain for central bank digital currencies is another example of a purpose-built blockchain with different parameters of centralization, security, and visibility of transactions.

Ant Group launched AntChain, its own in-house productivity blockchain platform, that it claims offers an “all-in-one workstation that reduces the deployment time of the company’s blockchain-based solutions by as much as 90 percent.” Today, AntChain handles over 100M digital assets on its blockchains daily, and affiliate AliPay handles 1B transactions per day.

Final Thoughts: 

Blockchain technology is expected to expand global GDP by nearly $1.8 trillion in the next decade. The technology of purpose-built blockchains can be used for specific and optimized use cases to serve large-scale and complex applications while meeting both the growing needs of enterprise and consumers. 

Without any updates to the core networks, catch-all blockchains would continue to experience immense challenges if they were used for every niche need: think more cars and trucks funneling into a bustling highway. 

Purpose-built blockchains solve for speed, throughput, and other architectural limitations to meet the global needs of varied industries, spanning public, private, and enterprise needs. 

Top NFT-Based Games: Play-to-Earn Meets the Blockchain

Backed by blockchain technology, NFT-based games incorporate player-owned economies, providing gamers monetary incentives to play.  

Most of these games offer much more than just one single gameplay. They’re actually social metaverses where players are encouraged to actively participate in future game development. These economies are built around games’ native currencies. 

The following guide goes over the most popular NFT-based games. 

As you’ll learn, the explosive growth behind NFT-based games is due to the increasingly more robust and versatile functionality of the games. 

 Axie Infinity: Battle, Collect, and Breed Axie Characters

The Pokémon-style blockchain game Axie Infinity became very popular because players can actually make a notable income simply just by playing it. Around 50% of its users come from the Philippines and Venezuela where, due to pandemic-related lockdowns, many people were forced to find alternative income sources. Today, Axie Infinity’s total market cap is around $6.2B, and its price gravitates under $100. 

Axies are fantasy pets that players can battle, collect, and breed, and each Axie is an NFT. The entirety of the game’s play-to-earn model is based on these three aspects. You can earn in-game tokens by winning battles, collecting and selling Axies. Players can create new Axies by breeding the existing ones; because these newly born (“minted”) Axies are also NFTs, the player can sell and trade them in the Axie Infinity marketplace.

AXS is the in-game token that can be bought and sold on third-party exchanges, such as Binance and Coinbase. It’s also a governance token, meaning its owners can influence the game policies.

The disadvantage of Axie Infinity is that at least three Axies are required to start playing. This initial investment can cost more than $1,500, depending on market prices. As a remedy, there are Axie Infinity scholarships programs where Axie owners, who are called managers, loan their Axies to scholars who actually play the game. 

Axie Infinity plans to launch a free-to-play version that will allow players to familiarize themselves with the game by removing what may be too high an entry barrier for some. 

Alien Worlds: Mine the Land to Receive Trillium (TLM)

With more than a million monthly users, Alien Worlds is the number one game on the Wax blockchain. It’s a social metaverse that consists of seven planets, and it uses an in-game currency called Trillium (TLM).

Players can enjoy play-to-earn opportunities while exploring these planets. The gameplay revolves around mining TLM. There are several types of NFTs in Alien Worlds. Owners of Land NFTs can mine the land themselves or receive commissions by letting others mine their Land. A player starts with selecting a Land in one of the seven planets.

To mine the Land, you need Tool NFTs. After mining, you receive a share from the planet’s TLM pool. Another type of in-game NFT is Mission NFTs, which players get by going on missions. These NFTS have utilities in the games created by the members of the community. 

The TLM token comes with governance rights; holders can cast a vote in elections for council candidates and submit proposals on how to distribute the incentives.

The Sandbox Game: Create Your Own NFT Game Assets and Experiences

Sandbox is a voxel-based project, similar to Minecraft. A voxel is a 3D pixel. Users can design and launch their own NFT assets and game experiences in the Sandbox metaverse using the intuitive tools provided by Sandbox which are Voxedit and Game Maker.

Voxedit is a voxel art generation program. It’s even possible to create Minecraft assets using it. Asset creators don’t have to use Voxedit for Sandbox assets, other voxel art programs also work. But they need to export assets created in other programs to Voxedit to turn them into NFTs. It’ll be possible to upload these NFT assets to the Marketplace.  Learning VoxEdit 9: Importing and Exporting Different Formats

Game Maker is the platform Sandbox uses to launch and play the game experiences. Players integrate the assets they created in Voxedit into Game Maker. These experiences can be built on LANDs owned by players, which are digital pieces of real estate in the Sandbox metaverse.  

Platform’s native currency is SAND, which functions as both a utility and a governance token.  It’s possible to stake SAND tokens on LANDs. SAND is also used to buy and sell NFT assets from the Sandbox marketplace.

Mines of Dalarnia: Discover the Rarest Resources

Mines of Dalarnia is a free-to-play action-adventure game. The Dalarnia universe consists of minerals, rare relics, and artifacts. A player’s success depends on their ability to mine these in-game items.

The gameplay resembles the concepts of NFT scarcity and bitcoin mining. The stronger your skills, the rarer resources you can acquire. Dig deeper to collect rarer minerals, use minerals to upgrade the equipment of your character. To do that, travel through four different mine types with increasing difficulty.

By participating in Mines of Dalarnia competitions, it’s possible to earn in-game currency DAR that you can stake for rewards or use to buy and rent in-game assets from the game’s marketplace. The Mines of Dalarnia team also plans to build governance functionality into the DAR token, so players can vote on the game’s developmental direction.  

Blockchain Monster Hunt: Catch the Monster in the Block

Blockchain Monster Hunt is a multichain hunting game where valuable NFT monsters are born in blocks. You can either catch the monsters in the game or buy them from the Marketplace. To earn Blockchain Monster Coin (BCMC) tokens, you need to battle the monsters you possess

Players must command catch and battle mechanisms to succeed. There are some rules to take into consideration while playing. For example, you’re allowed to catch only one monster from the same block, but you get multiple tries to do so. 

Blockchain Monster Hunt’s play-to-earn model is based mainly on the BCMC token’s utility; BCMC carries in-game benefits like increasing the hunt’s success rate and helping prevent monsters from dying, and token holder benefits like voting rights on proposals for the game development, staking, and farming.

Cryptoblades: Defeat your Enemies and Earn SKILL

Cryptoblades is an NFT role-playing game launched on Binance Smart Chain.

By leveraging in-game currency SKILL and using characters and weapons, players enter into combat. Character and weapon NFTS can be traded in the game’s native marketplace. Players need SKILL tokens to recruit their first character.

SKILL can be swapped on ApeSwap when pairing with BNB.

Players earn character experience and SKILL tokens when defeating enemies in combat. Experience allows the related character to level up. Weapons can be forged to increase their combat power. Skill reward depends on the power of the enemy defeated. 

Outside of in-game token benefits, SKILL can also be staked. 

Town Star: Build Your Farm 

Town Star is a farming-style-strategy game where players with limited resources and space produce goods to sell to nearby cities so as to make money and grow their farms. Whoever develops the necessary skills to manage the limited resources can play more strategically, and as a result, rise on the leaderboard.

Town Star’s buildings and characters are NFTs with several utilities. They give the players unique benefits while they’re growing their farms. For example, some character NFTs help finish certain tasks very fast and some resource NFTs provide crop supply continuously.

These NFTs are also the way to reach more play-to-earn rewards throughout the game. Players receive TOWN tokens, which are tradable on third-party exchanges, such as Okex and Bitrue, with a 24-hour trading volume of $1.8M.

Final Thoughts: Ready Player One

Town Star and other NFT gaming ecosystems enable earning rewards while having a good time. Perhaps their greatest benefit for the crypto ecosystem is that they help increase cryptocurrency and blockchain literacy, gamifying an experience that facilitates widespread blockchain adoption.

Contrary to conventional online games, players own their assets, and the blockchain allows for asset authenticity to be proven. Besides utility, in-game currencies offer governance rights, which enables community members to vote on proposals and decide on the game’s future. 

By combining the benefits of tokenization and a fun gaming environment, these early GameFi iterations may serve as landmark innovations for games to come. 

What is NFT Metadata & How Does It Work?

The word “meta” is all the rage lately since the Facebook name re-brand, but let’s get our crypto fundamentals in order before everything is referred to as metadata. 

A Non-Fungible Token (NFT) is a token that represents a single specific digital asset, whether that be a .JPEG file, .GIF, .MP4, or whatever else. That file itself can’t be hosted on the Ethereum blockchain, so it’s hosted off-chain. NFT metadata specifies what that data is and includes things like the visual or auditory asset and other information like transactional history. 

NFT metadata is essentially a workaround to avoid the technical and financial catastrophe (or, impossibility, rather) of hosting large files natively on-chain on Ethereum or other blockchain environments. 

For example, if you wanted to run a full Ethereum node, you’d have to download the full Ethereum blockchain of about 1,050 GB (the archival nodes, or the entirety of the Ethereum blockchain since it launched, is about 9,000 GB). 

That’s to run the entire Ethereum network– yes, all ETH-related matters, DeFi, NFTs, and dApps make up just under 1,100 GB. 

In comparison, a 1080 full-feature length movie is about 2 to 4 GB on its own, and most high-quality images can be around 2 to 20 MB. There simply isn’t a way to store these files on the Ethereum blockchain because it would make running the network prohibitively storage and data-consuming.

How expensive are we talking? Gemini estimates that simply storing 1 GB of data on the Ethereum blockchain costs about 17,500 ETH (or $75.75 million as of November 2021). The costs to simply just store a blockbuster movie like James Cameron’s Avatar on the Ethereum blockchain would be more than the costs of making the $237 million film. 

That’s where NFT metadata comes in. It’s a careful balance of utilizing the blockchain without burdening it with the data. 

But, NFT metadata existing off-chain creates a few other issues, which we’ll get into below. 

Let’s Get Technical: NFT Metadata

We’ll use the classic Ethereum ERC-721 token standard for the following NFT discussion.

Each ERC-721 contains a “metadata” string in its definition, which defines what the non-fungible token actually is. For example, this metadata could point to a specific .JPEG, which makes all the difference; although a CryptoPunk .JPEG and a DeadFellaz .JPEG are of comparable file size, they’re worth significantly different amounts. 

The crux of the matter that trips people up about NFT metadata is where exactly files are stored off-chain– is it a Google Drive of some sorts? Is it some Amazon Web Services file storage? Who runs the show of hosting NFT metadata online?

Each NFT references the visual or auditory (image, audio, etc) file that exists online somewhere. It makes a request for the content at a specific location, which returns the content for you to see or hear. NFTs usually point to an IPFS (InterPlanetary File System) hash or an HTTP URL somewhere on the Internet. 

This “somewhere” is generally hosted by the website that hosts the NFT. ERC-721s specify metadata in a standardized JSON (JavaScript Object Notation) format, that looks something like this

The information is stored as a URI (Universal Resource Identifier) inside the Ethereum contract, rather than a JSON; storing a JSON would be prohibitively expensive and resource-demanding. The URI string, however, points to a location where the user can find the token’s JSON description. 

The token’s metadata exists as a permanent, unalterable record on the blockchain, and this record describes what the token represents (its URI string to JSON), the token’s ownership and transaction history. The JSON file contains the image’s name, description, URL of where it’s hosted, and sometimes more granular information like the project’s total supply, type of encryption, and a unique signature. 

Limitations of NFTs 

This JSON metadata typically only identifies the asset, and doesn’t provide much in-depth information beyond the bare essentials. 

The data isn’t very searchable or readable by other smart contracts, which is a kink and limitation of the Ethereum network that multiple projects are attempting to address. 

The data is created by the token minters, who actually own the NFT contract. However, users can’t update the data, for better or for worse, which can be problematic for a few reasons.

For one, as we’ve seen in the evolving Internet ecosystem, links can break. Since the NFT metadata links you to somewhere else to view the art, if that link dies, you’ll essentially be pointing to a very expensive 404 error page. The JSON data can’t be updated by users, and neither can the links be fixed. 

The crux of the issue is that if the data were able to be updated, the inherent value of the NFT could be compromised. For example, let’s say a malicious third-party found an exploit to change all the Bored Ape Yacht Club image metadata with pictures of real-world apes found on Google; the market would respond, and likely negatively.

Hosting Mechanisms also have their fair share of limitations:

  1. HTTP server owners could theoretically change the content of a specific server to whatever they like.
  2. IPFS is designed for decentralized hosting, but is still operated by centralized entities like NFT marketplaces that serve the role of IPFS nodes that keep the gateway live. 

Final Thoughts: What is NFT Metadata Exactly?

As we’ve learned, NFT metadata is the second of the two key pieces to the NFT value proposition. 

The first is that NFTs have a unique ID that distinguishes each token as unique from every other token. The ERC-721 tokenization standard utilizes Ethereum smart contracts to record transfers and changes of ownership of each particular NFT, which is a fairly computation-heavy endeavor. This is why gas fees are generally much higher for trading or minting NFTs compared to simply sending ETH on the network. 

NFT metadata is baked into the second fundamental feature that makes NFTs tick. NFTs can link to data external to their smart contract, essentially allowing the network to reference data that exists off-chain. This keeps the computational costs of running NFTs on a network like Ethereum lower than they would be. 

The Non-Fungible Token that defines the provenance of an asset lives on the blockchain, whereas the asset itself typically lives off-chain. There are few exceptions; for example, OnChain Monkeys is a collection created entirely on chain with a single transaction.  There is no file storage solution needed since the entire collection is hosted on-chain.