Problem Statement and Objectives

Numerous smart-contract-supported blockchain networks exist in the market today, but they generally impose problematic limitations on assets and applications built atop them. Specifically, in these networks: (1) all asset and application data is permanently and publicly transparent to all users, lacking necessary privacy tiers; (2) applications compete for global network resources (such as block space), and application operators cannot independently scale their performance or autonomously choose their deployment infrastructure; (3) network fees are interlinked and difficult to predict, where a surge in usage by one application can drive up costs for all other users.

These limitations of existing blockchain networks severely hinder the onboarding of most traditional real-world assets and business processes onto a unified, internet-like network, undermining the potential of public blockchains to build substantive, large-scale network effects beyond crypto-native assets.

Compared to the traditional internet, the internet architecture allows high-traffic, low-value services and low-traffic, high-value services to coexist on the same physical network. Each application provider possesses sovereignty, independently controlling its application-specific permission settings, fee structures, scaling elasticity, and service level agreements. The internet inherently possesses unlimited horizontal scalability and grows with each new application's addition, and continues to grow and expand. When a service's traffic increases, its provider can correspondingly increase resource investment; the growth of one service does not diminish the resources available to others. The heterogeneity of applications and services on the internet is precisely the key to its ability to serve billions of global users, even though these users access the same internet.

The lack of support for application heterogeneity in public blockchains has led to two significant negative outcomes. First, due to the inherent privacy limitations of these networks, only assets and data that can become part of a permanent public record are brought onto public blockchains. We have seen experimentation and flourishing of cryptocurrencies and Non-Fungible Tokens (NFTs), but rarely have enterprises or governments migrated their traditional core assets and records to public blockchains. Second, to overcome the competition for shared global resources, the core logic of many blockchain applications is forced to be built "off-chain" under the control of centralized application providers. This means critical business functions operate outside the shared network, depriving users of the independent verifiability and trustlessness they expect from public blockchains.