Op-ed by Pepper, Marketing & Growth, Alephium.
Hello and welcome! This is the 3rd column article from Pepper, our Head of Marketing & Growth. His last article explored how fee-generating models may be set to replace inflationary design in a market saturated with low-quality entrants and centralized competitors. This new op-ed follows that up with a closer look at the dangers of permissioned L1s.
Note: The views and opinions expressed in this column are those of the author and may not reflect the official stance of Alephium.
I saw a renewed enthusiasm for Layer 1 blockchains across Crypto Twitter and Web3 media outlets last year. Unfortunately, as I’ve written about in a previous column, the encouraging side of this trend is met with an equally troubling reality that there are now far too many corporate-backed, public-facing blockchains. These blockchains, backed by Google, Circle, Stripe, and others, prioritize compliance and permissioning over decentralization.
They present a seductive offer of institutional speed and security, yet it’s a trap. It’s a Trojan horse.
For builders and investors who still believe in and are committed to the Satoshi-esque principles of decentralized finance, these new L1s are an existential threat. They fundamentally destroy the core value of composability. Instead, they offer a single, centralized point of failure and “kill-switch” for every application built on top of them.
How I see it, the moment the base layer accepts a single permission, the entire ecosystem inherits the risk of censorship. It is compromised. Now, call me a purist, but this is unacceptable.
The Spine of DeFi is its Trustless Composability
DeFi’s utility is defined by its inherent composability.
To me, this means the ability for distinct decentralized applications (dApps) to interlock and interact without requiring permission or needing to trust intermediaries. All these cool DeFi primitives, like lending protocols, DEXs, and stablecoins, could, and should, co-exist, automatically.
The freedom for this setup to work relies on two core philosophical Web3 pillars: permissionlessness and credible neutrality.
A permissionless system allows any user, anywhere, to interact with the system at any time, while being credibly neutral means that the base layer protocol (the L1) cannot discriminate for or against any user, transaction, or outcome.
The architecture of a permissioned L1 guarantees the violation of both these pillars, thus striking directly at the heart of DeFi's innovative potential.
The Threat Model: The Kill-Switch at Layer 1
Let’s put it another way. When a corporate entity builds a base layer that is centralized by design, they introduce a fundamental security flaw that destroys composability. This is the aforementioned kill-switch that all dApps will inherit.
Consider a blockchain that enforces Know Your Customer (KYC) or is secured by a small, known Proof-of-Authority validator set. To comply with a regulatory request, that centralized entity may be required to freeze an address or censor a specific transaction.
The implications are catastrophic for all of the applications stacked on top.
The dApp is Compromised
A DEX built on this permissioned L1 can no longer guarantee that a user's funds, even if secured by smart contract logic, are safe. The protocol layer can simply render the input Unspent Transaction Output (UTXO) unspendable or block the transaction from being included in a block.
The Token is Centralized
Every kind of token minted or transferred on this chain is subject to the same central authority. The token's immutability and resistance to seizure are thus instantly negated, as the L1 can effectively de-platform the token owner.
Don’t believe me? It has already happened, and with some of the biggest chains out there.
Recent research found that certain blockchains had built in the ability to blacklist wallets and essentially freeze their own users’ funds. Sui did it publicly, after funds were hacked, raising a lot of questions and causing a great deal of concern. It inspired the research from ByBit, which investigated a reported 166 blockchains. The results shocked even me.
The Value is Extracted
The system’s economic model shifts from creating collective wealth (as is the Web3 ethos) to creating control for the few. The convenience of speed is then paid for by surrendering decentralized AND autonomy.
To repeat, if a single layer of the base chain is permissioned, that permission layer acts as a 'kill-switch' for every dApp built on top, destroying the system’s utility, security, and censorship resistance. If I was building a dApp, I’d be very concerned about whether the chain was truly decentralized.
Alephium is an Uncompromised Foundation of Credible Neutrality
Alephium’s journey started long before I joined the team. However, I’m inspired by what it has become, what it has achieved, and in such a principled way, building the necessary antidote to this compliance trap I’ve spoken of.
The core team’s decision to build a new class of blockchain from scratch, avoid the EVM compatibility shortcut, and negate the compromises of older chains, is a clear commitment to philosophical purity and structural integrity. This is much closer to the Web3 you and I were promised, or at least the one we thought we were getting, even if most people haven’t realised it yet.
Alephium guarantees credible neutrality and permissionlessness by weaving those principles into its core technological fabric. This design prevents the kill-switch from ever being part of its makeup.
PoW Guarantees Decentralization
Also, by embracing and scaling Proof-of-Work, Alephium ensures that consensus gets distributed globally among its open network of miners, instead of being concentrated among a small hand-picked roster of corporate validators and “friends”. This structure is inherently more resistant to corporate or political censorship.
sUTXO Guarantees Security
Our sUTXO model and purpose-built Virtual Machine (VM) were engineered to enable security-first smart contracts. This foundation is resilient by design, preventing many different smart contract exploits at the VM level, guaranteeing large parts of the system's security with mathematics, not some form of centralized (and thus compromised) oversight.
Scalability Without Fragmentation
Alephium’s Blockflow sharding technology ensures high performance and low fees. These are the same practical benefits that corporate L1s tout, but Alephium delivers them without the need for cross-chain complexity or sacrificing decentralization.
Remember when I mentioned “the Web3 we were promised” - this is what it should look like.
A Solid Choice for Builders
The rise of corporate L1s and permissioned blockchains force every Web3 builder to make a critical ideological choice. Do you build on a fast and convenient foundation that contains an integrated kill-switch, or do you build on a platform designed for true endurance, autonomy, and security? It’s a tricky one.
I argue that Alephium’s core technology, from its PoW consensus to its sUTXO model, eliminates the risk factors endemic to other platforms. We offer the only open alternative that is structurally built to last for generations, ensuring that the hard work of developers today will not be compromised by a boardroom vote tomorrow.
