The Scale Boundary of Cryptocurrency: A Discussion on the Hard Limits of Blockchain Technology

I am once again amazed by the ingenious design concept of Bitcoin.

In the field of artificial intelligence, DeepSeek R2 did not come out in May as rumored by the market, and only made a minor update to the R1 version on May 28. Similarly, Musk’s Grok 3.5 has been frequently delayed, and its landing is not even as substantial as the SpaceX Starship program.

Under the frenzy of massive capital pursuit, the scaling law ( in the large model field has completed its lifecycle more quickly than Moore’s Law in the chip manufacturing industry.

If there are limits to scale effects in software, hardware, even human lifespan, and entities like city-states, then the blockchain field must also follow similar laws. As SVM L2 enters the token issuance cycle and Ethereum returns to the L1 battlefield, I attempt to propose a version applicable to the cryptocurrency domain based on the law of scale.

![Cryptography Scale Rule: What is the hard cap of DeFi?])https://img.gateio.im/social/moments-61705a686485f961717a2e63a5607d49(

Ethereum’s soft scale vs. Solana’s hard cap

Let’s start with full node data scale.

Full nodes represent a complete “backup” of the public chain. Holding BTC/ETH/SOL does not equate to owning the corresponding Blockchain. Only when we download full node data and participate in the block generation process can we truly say we have “owned the Bitcoin ledger,” while also adding a decentralized node to the Bitcoin network.

The Solana network has approximately 1500 nodes, struggling to maintain a balance between decentralization and consensus efficiency. Meanwhile, its 400TB of full node data size is far ahead of other major public chains/L2.

If not compared to Bitcoin, Ethereum is already quite good at controlling the amount of data. Since the genesis block was born on July 30, 2015, Ethereum has only about 13 terabytes of data in full nodes, far lower than the 400 terabytes of its “competitor” Solana. Bitcoin’s 643.2GB data size is a work of art.

Satoshi Nakamoto strictly considered the growth curve of Moore’s Law in the initial design, limiting the data growth of Bitcoin strictly below the hardware expansion curve. It must be said that the camp supporting large Bitcoin blocks finds it difficult to stand firm, as Moore’s Law has gradually approached the boundary of its marginal effect.

In the CPU field, Intel’s 14nm++ process has been jokingly called a “family heirloom”; In the field of GPUs, the Nvidia 50 series has not achieved a “significant leap” compared with the 40 series; Technological progress in the field of storage is also facing bottlenecks, and under the Xtacking architecture of YMTC, 3D NAND stacking technology is gradually approaching the upper limit, and Samsung’s 400-layer storage technology may be the current foreseeable engineering limit.

In short, the scalability law makes it difficult for the underlying hardware of public blockchains to achieve qualitative leaps. This is not a short-term technological limitation, but a status that will be maintained over a considerable period of time.

In the face of this dilemma, Ethereum focuses on ecological optimization and reconstruction, and regards trillions of real assets )RWA( as a place to compete. Whether it is to follow Sony’s self-built L2 or fully accelerate the embrace of the RISC-V architecture, the core of its strategy is not to “pursue the ultimate in software and hardware synergy”, but to firmly defend its own advantages.

In contrast, Solana chooses to go for the ultimate speed of transactions. In addition to current technologies such as Firedancer and AlpenGlow, its hyperscale node data has in fact excluded individual participants. A 13TB hard drive is barely configurable, but a 400TB is a dream. Bitcoin’s 600GB data scale can theoretically be met even with the continuous efforts of semiconductor giants.

The key question is: where are the lower and upper limits of on-chain scale?

![The Hard Cap of DeFi: Where is it?])https://img.gateio.im/social/moments-d866e9ef32d3ecd487be6627817ce460(

The Limits of the Token Economic System

The AI space has yet to embrace cryptocurrencies as expected, but that hasn’t stopped projects like Virtuals from rising in price. In fact, the dual layout of blockchain and AI technology has become a popular strategy in the current political environment in the United States. The concept of 5G and the metaverse is getting old, and the current market focus is on stablecoins and certain leading projects.

Let’s briefly discuss the limiting indicators of the token economic system. Bitcoin has a market capitalization of 2 trillion dollars despite the lack of large-scale practical application scenarios; Ethereum is around 300 billion dollars; Solana is about 80 billion dollars. Taking Ethereum as a reference standard, we can consider the current limit of the public chain economic system to be around 300 billion dollars.

This is not to say that Bitcoin is overvalued, nor does it mean that the new public chain cannot exceed this value. However, in terms of high probability, the current performance of the public chain market may be the optimal solution at this stage - “we believe that the current market performance is the most reasonable existence”. Therefore, it is more efficient to choose this value directly than complex calculations, following the principle of “do not add entities unless necessary”.

From the book “Scale”, we can introduce two core concepts:

1. “Super-linear scaling” )superlinear scaling(: As a system scales, its output or benefits do not increase proportionally, but at a faster rate.

2. “Sublinear scaling” ): When the system scale expands, certain metrics ( such as cost, resource consumption, maintenance demand, etc. ) grow at a rate lower than linear proportion.

Understanding these two concepts is not complicated. Ethereum grew from $1 in 2015 to $200 in 2017, which belongs to super-linear scaling, taking about half the time compared to its growth from $200 to its historical peak in 2021. The latter exhibits typical sub-linear scaling characteristics.

Every system has its limits; otherwise, blue whales, elephants, and North American redwoods would infinitely surpass themselves, but the gravity of the Earth is a hard limit that is difficult to overcome.

So, has the (DeFi) of decentralized finance reached its limits?

The scale limit of DeFi can be estimated using the Ethereum ecosystem. Take a closer look at its yield – this is also a core proposition of DeFi. The driving force behind entropy increase lies in the extreme pursuit of gains. We can refer to three criteria: Terra(UST)'s 20% annualized yield, DAI’s 150% over-staking ratio, and the current 90-day moving average annualized yield of 5.51% for Ethena’s sUSDe product.

We can assume that the yield capture capability of DeFi has decreased from a theoretical 1.5 times to around 5% in practice. Even when calculated at the former 20% of UST, DeFi may have already approached its limit.

It is important to note that putting trillion-level real assets on the blockchain will only reduce, rather than increase, the average yield of DeFi. This is in line with the sub-linear scaling law — the extreme expansion of system scale does not bring a corresponding improvement in capital efficiency.

It is worth mentioning that there is a market motive behind DAI’s 150% over-collateralization ratio: participants can seek additional returns on this basis. Therefore, it can be regarded as a market benchmark, although this is just a personal opinion.

In short, the current on-chain economic system is based on a token economy model, with a practical scale limit of approximately 300 billion dollars and a yield of around 5%. This does not refer to the total market value or the upper and lower limits of a single token, but rather to the overall effective scale that is tradable.

In fact, even if the theoretical market value reaches 2 trillion, it would be impossible to actually sell an equivalent amount of Bitcoin— even the U.S. Treasury market would find it difficult to accommodate such a scale of selling.

Conclusion

Looking at the development history of Blockchain since the birth of Bitcoin, the technical path differences between public chains have not narrowed. Bitcoin has increasingly decoupled from the on-chain ecosystem, and the development dilemmas of on-chain reputation systems and identity systems have led to the over-collateralization model becoming mainstream.

Whether it is a stablecoin or a physical asset on-chain (RWA), it is essentially a leveraged on-chain of off-chain assets - off-chain assets naturally have higher credibility. Under the current on-chain law of scale, we may have reached the upper limit of the law of scale or Moore’s law. It’s only been 5 years since the summer of DeFi 2020, and it’s only been 10 years since Ethereum was born.