General-purpose blockchains can't mediate disputes over construction site dirt or equipment usage logs. Specialized layer 1s are built for stateless audit trails and regulatory compliance, not for solving the existential dread of a missed decimal point.
Across verticals, the same pattern emerges, and it has nothing to do with decentralization's noble ideals. Businesses rush toward blockchain solutions to fix their daily operational nightmares, only to discover that Ethereum and Solana can't actually address the fact that Dave from accounting approved a design change over a quick phone call.
Consider a construction foreman who greenlit a last-minute design change via a hasty text, only to get sued six months later when the client claims they never agreed to it. Or consider an equipment leasing company watching its revenue share evaporate because clients dispute sensor data showing machine usage — data that could have been tampered with before ever touching the blockchain, rendering the immutable ledger beautifully useless.
We watch this pattern repeat across industries, with disputes being the primary pain point driving adoption. In asset leasing, disputes arise over how assets are used, what they're earning, and whether sensor-collected data has been altered. In construction, disputes often arise from frequent and urgent changes to pre-approved building plans, creating confusion and leading to expensive lawsuits. General-purpose blockchains have reached their limits in solving real-world problems, much like a Swiss Army knife trying to build a house.
In almost every industry where decentralized networks could be useful, there are clear technical mismatches between what general-purpose chains offer and what specific verticals actually need. Therefore, founders are increasingly building their own specialized layer 1s instead, because nothing says "I'm serious" like writing your own blockchain from scratch.
Industry-specific disputes need simpler blockchains, not more complex ones.
In construction and similar industries, disputes are frequent and expensive. An onchain audit trail of "who said what when" can anchor the handshake agreements that happen via informal texts and calls, greatly minimizing the potential for lawsuits. Audit trails — basically, signed messages — are stateless by nature. Each message added to the network has no effect on previous or subsequent messages, making them as independent as cats ignoring their owners.
These aren't financial transactions with balances to track, no double-spend problems to solve, and no cryptographic identities to verify. The only properties that really matter are immutability and ordering to establish an ironclad sequence of events. It matters because appending stateless messages to a blockchain doesn't need the full verification machinery that Ethereum provides. No need to verify complex cryptographic signatures and smart contracts for every entry; these messages can be committed to a permanent state in parallel, like multiple chefs working in the same kitchen without burning the place down.
As soon as any audit trail use case scales, founders would be wise to build their own specialized layer 1. Most signature verifications can be skipped since there are no assets to steal, resulting in significant savings of processing power. No smart contracts means avoiding Ethereum's notoriously slow virtual machine. Because stateless messages guarantee no conflicts between entries, they can be rapidly committed in parallel, turning blockchain speed from glacial to merely slow.
These customizations could dramatically improve network speed and responsiveness — all without sacrificing the security or decentralization that matters for proving "who said what when," which is essentially blockchain's version of a courtroom stenographer.
Financial regulations break general blockchains, and they're not even sorry about it.
While construction needs less complexity, traditional finance needs more control — specifically, regulatory control that general-purpose blockchains weren't designed to provide. As decentralized finance becomes mainstream, traditional financial institutions are increasingly placing real-world assets (RWAs) — including fiat currencies and securities — onchain. The trouble is these non-crypto native assets are heavily regulated everywhere around the world, and those regulatory constraints have technical implications that Ethereum can't accommodate, no matter how many hard forks it undergoes.
Regulators will increasingly demand foolproof functionalities at the foundational blockchain level to ensure maximum compliance. Know Your Customer (KYC) rules will soon require blockchains to have natively built-in connections to licensed, offchain KYC providers, ensuring every single address corresponds to a verified identity. Anti-Money Laundering (AML) and sanctions requirements will demand that every wallet and every asset can be blacklisted, blocked, and frozen, and that all transactions be reversible, which is the exact opposite of what blockchain was designed to do.
Even the computers running these blockchains may be treated as security brokers or money transmitters, requiring specialized financial licenses and making these networks fully private and permissioned. All of these regulatory functions must be natively integrated into the consensus protocol to ensure maximum compliance. Since none of these are possible on a general-purpose layer 1, financial institutions need to build their own — and they have been, rapidly, like toddlers building a fort out of expensive furniture.
A few notable examples include JPMorgan's Kinexys for interbank settlements, Stripe's Tempo for payments, and Robinhood's Arbitrum-based layer 2 for onchain securities. As mainstream institutional adoption grows, these regulated and permissioned blockchains will increasingly become the norm in the crypto space, turning the wild west into a gated community.
Generalized layer 1s are not going anywhere, despite the industry's mid-life crisis.
The obvious question: If every industry builds its own blockchain, don't these smaller networks become vulnerable to attacks? Generalized layer 1s, especially those with significant scale, can still play a critical role as security anchors for these industry-specific custom blockchains, serving as the reliable old guard.
A few large-scale networks — Bitcoin and Ethereum — have tremendous numbers of participants, node operators, and onchain financial interests that make them very difficult to compromise. This stands in stark contrast to smaller, more vulnerable industry-specific chains that could be taken down by a script kiddie with a grudge and too much free time.
These specialized networks can use Ethereum, for example, to anchor periodic snapshots that prevent historical rewrites, include ETH as part of their staking requirements, or use Ethereum to settle disputes by replaying transaction histories. Think of it as specialized blockchains handling day-to-day operations while periodically checking in with Ethereum for security backup, like a teenager sneaking out but keeping their location shared with mom.
This resolves the dispute problem in an unexpected way: Specialized chains can be optimized for their industry's specific needs — whether that's simple audit trails or complex regulatory compliance — while still maintaining robust security guarantees by anchoring to established networks, creating a symbiotic relationship that actually makes sense.
As mainstream adoption continues to accelerate, the bulk of industry-specific use cases won't be handled by today's one-size-fits-all layer 1s, but they could help bolster the security guarantees of the industry-specific networks. We'll see an ecosystem of purpose-built blockchains, each solving the precise problems their industries face — from construction disputes to equipment leasing conflicts to regulatory compliance — while relying on Ethereum and Bitcoin to strengthen their security, proving that even in crypto, sometimes you need your parents to co-sign the lease.
