Crypto adoption has been soaring. As regulatory clarity emerges, businesses are scrambling to get exposure to this new asset class, and more importantly, become experts in the underlying technology making this possible: blockchain. With a total market cap of over $4 trillion, the crypto sector is not one to be overlooked. But with a new market comes new risk, and the question on everyone’s mind is: What steps can businesses take to utilize blockchain technology, and how can blockchain expand their Total Addressable Market to reach untapped consumers?

To recognize the true benefit of blockchain, it’s crucial to understand the pain points plaguing new companies today. User acquisition, market expansion, and liquidity exposure are all huge problems that are highly fragmented and costly to address. This is where blockchain comes in with a feature that is able to simultaneously address all three of these issues: Interoperability. In the digital age, it’s hard to imagine that interoperability would still be such a large issue. If we have standards for the internet (HTTP, which is a shared communication method used by all websites for compatibility), then why can’t we have similar standards for business IT architecture that can tie different protocols together under a unified standard? On the blockchain, Decentralized Finance (DeFi) demonstrates the benefits of interoperability. At their base, blockchains utilize shared Virtual Machines (VMs) that set a standard across the entire chain, or even multiple chains, for how everything should be formatted. Ethereum, for example, utilizes the Ethereum Virtual Machine (EVM), which provides all the necessary guidelines for new tokens, NFTs, smart contracts, and everything else onchain. This creates a shared-state network where the EVM can prove at any time the exact state of any wallet, smart contract, or protocol deployed.

How does interoperability tie into TAM expansion for businesses? Simple - anyone can interact with any protocol using the same onchain identity (their digital wallet) regardless of the service or product that protocol offers. Using the same exact wallet address I can 1. access @Aave and take out a $USDC loan using my $ETH as collateral 2. go to @Uniswap Labs 🦄 and exchange those $USDC tokens I loaned out for $USDe 3. go to @Pendle and deposit that $USDe into a liquidity position for $sUDSe to earn yield 4 different cryptocurrencies, 3 different protocols, 1 wallet, and all done within the span of ~5 minutes. This is something that is simply impossible to achieve in traditional finance because of all the barriers in place. Now imagine the potential of blockchain for businesses. By tapping into public blockchains like Ethereum, Solana, and Tron, your business can gain full exposure to all of the users and liquidity currently sitting on these chains without the technical restrictions poised by today’s traditional market infrastructure. Asset conversion can be done in seconds. Currency can be sent anywhere in the world with almost no fees. Transactions can be automated via smart contracts and executed with no middlemen taking fees. These benefits are already being reaped by tons of businesses today, so what’s stopping yours from adapting to a decentralized future?

What can your business do to achieve successful blockchain integration? Cryptocurrency itself does not have to be the main offering of your business. Rather, blockchain should act as the underlying infrastructure that makes your business model possible. Recognize that in a world that has shifted to mostly digital interactions, legacy systems have not been able to effectively keep up with the requirements being set forward, and blockchain can help solve a lot of these pain points if applied correctly. Take tokenization for example. The process of tokenization revolves around taking real-world assets and creating an onchain representation, or tokenizing, those assets. How’s it being used to solve pain points? Stablecoins - represent tokenized money market funds in the form of cryptocurrency that’s pegged to the value of its fiat counterpart (ex. $USDC equivalent to value of USD). What problem do they solve? You now have a digital dollar that can be accessed anywhere in the world with near-instant transaction settlement times at a very low transfer cost. With a total stablecoin market cap over $300 billion, it’s clear this product has found its PMF. Proof of Ownership - tokenization can create an onchain proof tied to a physical object. What problem does this solve? An open-source public record that can not only trustlessly determine ownership of assets but offers seamless transfer mechanisms can remove tons of existing barriers revolving around Asset Management for businesses. Proof of Origin - tokenization can create tamper-proof records tied to the origin of a piece of digital media. What problem does this solve? In the age of AI, this system can be crucial for determining the legitimacy of everyday media by creating onchain proofs that represent the origin of any post, article, or video published online.

While tokenization can be used as a direct product offering, it’s also important to consider the economic feasibility of blockchain and why it creates real benefits for protocols built onchain: How do current DeFi projects create sustainable flywheel effects for their products? This is yet another aspect of blockchain that can’t be executed in traditional financial markets - protocols can create mutually beneficial relationships with their customers by offering them clear incentives to use their product. A prime example of this is a protocol called @EigenCloud which utilizes the following model: 1. Users can go onto their platform and deposit, or restake, a bunch of different cryptocurrencies in exchange for yield. 2. EigenLayer then uses the liquidity generated by these depositors to create Autonomous Verifiable Services (AVSs). 3. Other projects can then tap into these AVSs and their validators to complete various services (data validation, offchain computing, bridging, etc.). 4. In return, these protocols pay fees to access EigenLayer’s AVSs, which generates revenue for EigenLayer. 5. EigenLayer uses a portion of this revenue to reward depositors, attracting new users through competitive yields. This creates a flywheel effect for the business, where they attract users through a clear incentive (yield on their crypto) and generate their revenue by using the provided liquidity to offer a service. This is all possible to achieve on blockchain because of interoperability - every protocol uses the same token standard, users can access any protocol using the same wallet, and businesses can directly tap into the entire public blockchain ecosystem as their potential TAM.

What else makes blockchain a go-to ecosystem for TAM expansion? Blockchain’s interoperability standards offer unique solutions to user acquisition, market expansion, and liquidity exposure, addressing some the key pain points of TAM expansion. Accessibility Anyone can access blockchain with just an internet connection, regardless of their physical location or geopolitical restrictions. For market expansion, this means that you have essentially a global community that lives on these public blockchains. This creates opportunity for businesses to provide their services to places that would be otherwise much harder to reach via traditional market expansion. Stablecoins, for example, have found great PMF in countries with devaluing local currencies and government overreach - Nigeria suffers from government crackdowns on fiat withdrawals from banks, so tons of locals now use stablecoins for daily transactions and to retain wealth. Liquidity Money is not siloed to one physical or virtual location and can instead be used anywhere onchain. Because of the standards provided through EVM and other virtual machines, all cryptocurrency can be seamlessly exchanged, deposited, or borrowed with very minimal conversion barriers. You can send someone $ETH and they can exchange it for Euro or USD stablecoins in a matter of seconds, something that’s unimaginable in traditional finance. Instead of constantly competing to attract liquidity, different businesses can easily collaborate to enhance their product offerings - like how various protocols use EigenLayer’s liquidity to power their own services. Accountability The immutability and transparency of blockchain creates trust and reduces risk by showcasing the underlying processes directly to users, maintaining a trustless relationship. Full auditability and accountability can be achieved through proper implementation procedures, creating little room for deceptive business practices and significantly decreasing the risk of scams. Additionally, public blockchains are built to be neutral and treat all transactions the same, regardless of their origin - this means that issues that arise within individual cases/transactions can be settled by the parties involved instead of by the blockchain provider, which creates limited liability for this method of infrastructure. Innovation Cryptocurrency, while by far the most recognized, is just one use case of blockchain technology. Distributed ledger systems have been used for a long time across various industries, but blockchain takes it to a new level. Today’s chains often prioritize a specific aspect of operations, for example Ethereum prioritizes security at the cost of speed, while Solana is significantly faster and cheaper than Ethereum but has faced issues with consistent uptime as a result. As more chains are developed and technology evolves, these systems will only get better, and blockchains will offer infrastructure for tons of emerging use cases - ZK-powered privacy infrastructure, global DePIN networks, AI agent transactions, proof of humanity/onchain identity, and decentralized social graphs are all concepts currently under development that will add significant value to the overall blockchain sector.

Ticket to Ride - a blockchain analogy There’s a board game called Ticket to Ride, where players compete to build train routes between cities on a map. Player score is determined by the length of the route and the number of routes built, and the player with the most and/or longest routes wins. Think of this as traditional IT infrastructure where companies invest in proprietary rails to serve their customers, and the one with the largest market share and highest efficiency (i.e. most routes) beats out competitors. While the original version is in the United States, there’s also a Japan version that has one key difference - bullet trains. These are special routes that can be used by anyone to complete their own route, but at the end of the game, the player that’s built the most bullet train routes gets extra points. This reflects the blockchain paradigm shift: public blockchains provide standardized infrastructure rails for any business to use and build on, but the protocol that builds the most efficient systems (i.e. the most bullet trains) gets rewarded. Think about Uniswap, who pioneered the Automated Market Maker (AMM) model. Tons of different decentralized exchanges benefit from their AMM, yet Uniswap sees the most volume and collects huge amounts in fees. However, there is still competition amongst DEXes to be the go-to provider, leading to aggressive innovation and increased efficiency with every new protocol launched. Blockchain’s shared infrastructure creates huge TAM effects for businesses. Any business moving onchain can tap into scalable, interoperable networks that build on existing systems, while simultaneously spurring competition and encouraging innovation and growth. Stay onchain, and stay bullish.

If you enjoyed this thread and want to learn more about these types of systems or have questions about any of the ideas discussed, check out http://dcft.site for a free course on the fundamentals of blockchain or to reach out for a consultation! Become a blockchain pro today!