In what areas of the blockchain world can trillions of market value projects be born?

Light bulb enthusiasts are all over the blockchain field and discuss who has the best filament, but no one is selling books.


The Internet has experienced decades of development, and the company’s valuation system and investment logic have been sufficiently perfect. Companies in different fields and telling different stories basically have a fixed range of valuation. For example, the final valuation of companies in the telecommunications field is at the level of 100 billion US dollars, and the upper limit of the valuation of companies in the mass consumer segment is tens of billions.

How to evaluate the Internet company, especially when it is still a small company, how to judge the potential of this track?

The ISO organization formulated the “OSI Model” as a reference model of the seven-layer framework in 1985, which laid a theoretical foundation for judging the development potential of Internet companies.

Today, the radical venture capital firm Cinneamhain Ventures has proposed an eleven-layer blockchain OSI model based on the OSI model. Of course, the model does not directly determine the upper limit of the development scale of each field, but tells you which field. More development prospects.

The original translation of Rhythm BlockBeats is as follows:

We believe that, similar to the Internet, the blockchain world will tend to become a unified, ubiquitous, and vertically integrated protocol stack (Protocol stack), and each protocol will reach Pareto optimal under effective trade-offs. (Rhythm Note: The protocol stack can be understood as a row of houses, and only neighboring houses can communicate.)

In other words, we believe that when we use the Internet, we don’t care whether they use IPv4 or IPv6. Now, we believe that the mainstream use of the blockchain field is no longer a single winner agreement. Rather, it extracts all technologies based on the application and uses multiple protocols that suit their needs.

What is the OSI model?

The OSI model, the full name of the Open System Interconnection Reference Model (Open System Interconnection Reference Model), is proposed by the International Organization for Standardization to attempt to interconnect all kinds of computers as a standard framework for networks around the world.


As we all know, the “Internet” is a collection of open source protocols and standards, and the OSI model expresses the Internet very well. Of course, most users interact with products built on the “application layer.” For most Internet users, they do not know what is happening in other layers of the protocol stack.

Starting from reality, every component of each layer of the OSI model plays a key role in the operation of the entire Internet, and has spawned multiple billion-dollar businesses.

The business value revealed by the OSI model

The OSI model is divided according to the technical attributes of the protocol, not its function. To this end, we will look for a company’s potential model that can be mapped to the OSI model.

I built a model that I call “company potential valuation”, which is based on the agreement layer where the company is located and compares it with the potential valuation range.

Generally speaking, the agreement layer of each company has an upper limit of valuation. When it is at the upper limit of valuation (sometimes 20% higher than the upper limit), the value of the company is either overvalued or the company expands to the next agreement layer. This is a good way to judge whether the value of a listed technology company is overvalued. 

The company is free to switch business segments in the OSI model. Of course, its final business determines the potential valuation range.


This model mainly helps those application layer and platform companies understand their valuation potential range. When looking for value in the OSI model protocol stack, we found that three business industries capture most of the value.

The three industries are:

Telecom link industry (Enabler Sectors)

Standards Sectors

Interaction Sectors

Telecom link industry:

The telecom enabling industry is a necessary industry for the OSI protocol stack. At the same time, it is the core part of any protocol, making communication and interaction possible, and higher-level stacks also need it to achieve.

The telecom enabling industry is mainly composed of the physical layer, data link layer and network layer. The telecommunications enablement industry can be understood as the “gatekeeper” of the agreement to achieve a larger goal, so it can capture huge value. 

For example, in the data link layer and network layer, companies with hardware infrastructure and Internet access rights, such as AT&T with a market value of US$210 billion, Verizon with a market value of US$237 billion, and China Mobile with a market value of US$139 billion.

Standard industry:

In the standard industry, the source of revenue is to create a unified industry standard and build other services around it. Document creation standards are one of the best examples, such as the PDF standard created by Adobe.

Of course, it can also achieve better development, create an open source standard, and capture value around its services. For example, ICANN’s monopoly on domain names can generate US$217 million in revenue each year.

Interactive industry:

At present, some of the most valuable companies exist in the application layer. These companies are technology companies and startups that users are familiar with and often use, such as Shopify and Airbnb. Users do not need to know what protocol is used by the application they are using.

Part of the super-aggregation with higher absolute value that exists in the application layer is what I call the “platform layer.” In the company’s potential valuation model, these companies are all companies that can help other companies to emerge. Such as:

Microsoft with a market value of US$1.3 trillion;

Amazon with a market value of 1.2 trillion US dollars;

Google with a market value of US$0.9 trillion;

Facebook with a market value of US$0.5 trillion;

Alibaba, with a market value of US$0.5 trillion;

Tencent with a market value of US$0.5 trillion.

After understanding where the value capture occurred and the valuation potential of different companies, we established a hybrid OSI model to unify the technology behind the blockchain, and explored how to invest to ensure that it can be used in the future.

Blockchain OSI model with 11-layer structure 

The blockchain OSI model divides the blockchain protocol and decentralized application ( DApp ) into 11 layers according to technology and current . 


 Each of the 11 layers has an approximate range (there is a certain error), that is, the user range is from the abstract lowest value to the highest value, such as running nodes and using MetaMask; value capture also follows from low to high, such as low profit The cost of hardware and high-profit interactive agreement.

The robustness of the lower layer protocol can enhance and improve the scalability of the upper layer protocol.

The presentation layer of the blockchain OSI model is a series of standards that allow us to build various application layer products and interaction layer tools. Because the presentation layer is open source and predefined, a model that does not require a license may lead to the creation of corporate monopoly tools.

For now, the creation of the presentation layer needs to meet the following criteria: 

-Information can be processed by the processing layer;

-There is an information layer;

-Possess network layer functions;

-Possess the basic structure of the data link layer;

-Need to have a physical layer for data collection.

Although not all presentation layer standards need to have the functions of the lower stack layer, when the lower stack layer is added to the presentation layer, the performance layer standards we create will increase exponentially.

Stack layer meaning:

Physical layer

The physical layer is where a unique physical architecture is created. It can be linked in a point-to-point manner, or data can be captured from the real world and processed to form data that can be understood by higher stack layers.

For example, Helium with LoFi network, TxTenna, a relay network capable of offline peer-to-peer transactions, and FOAM with physical layer information processing.

The goal of the physical layer is to provide an infrastructure that connects and resolves our real world.

In most cases, the information collected or connected to the physical layer needs to be processed by the data link layer, then connected across the network layer, and then further into the high stack layer. However, many companies currently combine the physical layer and the data link layer, such as Helium’s network hub.

data link layer

The data link layer can be understood as a software-based physical layer. Although it generally runs on different hardware, such as the mining core in the blockchain or the hub and router in the Internet.

The goal of the data link layer is to provide connections and program logic for data transmission between objects, and to capture any errors that occur at the physical layer. In the blockchain, this process happens to miners, blockchain verifiers, and block producers.

In fact, most of the data link layer has been embedded in the open source consensus protocol that runs the blockchain.

Network layer

The purpose of the network layer is to connect any two physical nodes of the network through correct routing information.

In the blockchain field, the network layer can be divided into two types.

-Micro network layer

In the traditional blockchain world, the network layer is composed of the blockchain protocols we are using (including Ethereum), and data is transmitted between nodes on the traditional network layer Internet Protocol (TCP/IP) .

In this mode, our network layer is the “Ethereum Network”, and there is not much room for change or improvement. We are using the existing technology stack and strict standard protocols that must be followed to maintain consensus. 

However, most people fall into a misunderstanding that this is the only type of network layer that exists in the blockchain field.

6dkdyo3dndw3x8kzheading-Macro network layer

All blockchains are a homogeneous development network, rather than a different network in fact, so we must look at the network layer from a different perspective.

On the contrary, each blockchain itself can also be regarded as a node in our overall network, and the network layer is the tool and protocol that connects these nodes together, such as Cosmos The SDK is designed to bridge the blockchain data.


In view of these two different sub-models of the network layer in the blockchain OSI model, I think it can be speculated that as we begin to move towards a single network view of the blockchain space, the main goal of this layer’s development will be to realize each chain Develop communication between.

When we talk about linking nodes and data, we also need to treat users as nodes in this system.

Tools that help us connect to network communications in a meaningful way belong to this layer. Tools such as Infura and API3 can help us access blockchain information in other environments.

Information layer

The information layer is a set of standards, procedures and protocols for how we index, store and classify information.

Blockchain is good at storing the information set of the unchangeable general ledger in its agreement.

However, they are inherently bad at storing other data. However, the blockchain is inherently not conducive to storing other data. From file hosting to web hosting, structured identity information or private data, the storage of information on most standard blockchains is not satisfactory. To make matters worse, the information on the blockchain is constantly growing and it is difficult to parse and categorize.

The information layer provides us with tools such as TheGraph for creating indexes and querying information standards, Sia and Sia for storing files and data Filecoin And 3Box and other tools used to create structured personal data standards.

Processing layer

In terms of specific final goals, the processing layer is the most extensive and diverse layer.

If the blockchain is regarded as a unified network like the Internet, then the system that exists on the processing layer is the dedicated hardware we run.

The processing layer is an impact layer that helps us conduct specialized or fast transactions.

The purpose of the processing layer can be diverse, but the ultimate capability of the processing layer is to expand the set of functions of the settlement layer. Many protocols that exist at this layer are powerful enough to become their own independent products, but they add new advantages to decentralized systems in the way they process information. Just like Ethereum can access the decentralized settlement layer, processing layer products need to be trade-offs, which means that they do not have the ability to perform some special high-performance processing requirements.

The processing layer consolidates the concept of a unified homogeneous blockchain network, because no chain can realize the ability to integrate with these systems by itself.

Golem’s rendering system,Solana The high-speed transactions of xDAI and the random number generation on the chain of xDAI, these chains have added a wide range of new forces to the blockchain ecosystem. Instead of looking at it antagonistically, it is better to think of it as a new function of the blockchain.

Presentation layer

The presentation layer is one of the most important stacking layers in the growth and development of an open system, but at the same time it is also the layer where funds are scarce, the least profitable, and the most easily forgotten.

The goal of the presentation layer is to establish systematic standards for how we encode and interpret information. The JPEG standard is a good example of a classic information system.

All the information on the computer is a simple set of 1 and 0. All programming, procedures, and standards are rules for further abstraction or coding.

We can think of the presentation layer as an encoding loop used to encode secret information, where A=1, B=2, C=3, and so on. The difference between these abstract methods is that we try to make the data at each layer more effective (take up less space or be more efficient) or add new features. This also means that our coding is more complicated. Maybe we still follow the rules of A=1 and B=2, but we have added some new rules, such as the word “And=27”. So “1, 27, 2″=”A And B”, but it takes up less character space and is more efficient.

There is a problem in creating the above rules. Other people (or programs) don’t know how to deal with this information, which will lead to a decrease in efficiency. Instead of trying to encode and abstract information in your own way, it is better to create standards.

These standards enable us to know how to interact with data in a specific way. When the computer sees a file named .jpeg, it knows to read all the bytes and convert them into colors and pixels, and if the same file is named .mp3, it will try to play it as a sound .

In the blockchain, we started to develop some very important standards in the presentation layer, the most common ones so far are the ERC-20 and ERC-721 standards.

These are the standard set of rules that tell us which features, functions and procedures a token must contain (or in some cases not contain). After the standards are established, DApps can more easily support different tokens, and there is no need to establish their own standards for each token.

Uniswap It exists because most tokens follow the ERC-20 standard (or some of its derivatives).

The interesting part of the presentation layer is that it rarely adds new features to the technology stack. Instead, it creates a set of standard rules to classify, code, and structure existing components to achieve brand new features. Investment in the presentation layer is conducive to unlocking the potential of the system.

Software layer

The software layer creates the tools we use to develop, deploy, and manage application layer or interaction layer programs, which are usually implemented using existing presentation layer standards.

For many users who do not understand blockchain technology, the software layer is not transparent enough, so it can be regarded as the automatic interaction, creation, and programmatic deployment of the standard creation of the presentation layer.

For example, each decentralized wallet is actually a unique smart contract , which is created based on the decentralized wallet factory and deploys a new copy of the wallet code for each user.

Application layer

The application layer is a collection of the underlying protocols of most user interaction actual programs. Apps have inherent value for users. For them, apps can be games or a currency market that provides financial opportunities . Applications are designed for user consumption, not for adopting, enabling, or accessing the underlying technology.

For example, users of Axie games only care about whether it can continue to operate. Don’t care about the stack situation.

Interaction layer

The interaction layer is a specific set of software tools that allows users to interact with applications or lower stack-level protocols, usually through connectivity to capture value, such as MeaMask helps us connect to Infura and enable Web3 in the browser; sometimes through UI/UX Capturing value, such as Zapper, makes it easy to interact with the protocol.

The interaction layer is generally where the user value is captured. For example, the classic network interaction layer uses the Chrome browser, and its users do not care what stack layer it uses. Chrome can direct its users to any new protocol. Even if Chrome changes its default interactive experience service, users will still agree.

Platform layer

The platform layer is a layer that has not yet been captured in the blockchain space. Others can build lower-level solutions through the platform layer, or solve construction problems or consumer problems through platform-level applications.

At present, there are signs of the blockchain space. For example, some tools and standards created by OpenZepplin around smart contracts, Gnosis Safe’s fund and multi-signature management, and QuikNode’s operating node. However, these few examples are scattered applications, and there is still a lack of a large and unified platform to appear, and a series of complex and abstract things are simply presented to ordinary users.

Some people believe that Microsoft Azure or Amazon AWS is the most valuable platform business in the traditional Internet. From the perspective of raw income, this view is correct. However, I think the application that provides the most value to the Internet is WordPress. With WordPress, anyone can easily build a website. In other words, WordPress drives the value of the web and people’s demand for websites, which in turn will increase the demand for hosting services. 

It will be an interesting thing to simply present the complex system of the blockchain to ordinary consumers.

Settlement layer

The settlement layer is unique to the blockchain world. Compared with the traditional Internet, the concept of the settlement layer is more abstract.

The settlement layer is a backbone that connects multiple stack layers together, similar to the core backbone cable in the physical layer of the Internet.

More importantly, the settlement layer is something that does not exist in the traditional Internet. In the blockchain world, the settlement layer has the characteristics of universal sorting, finality, and security .

The goal of Ethereum is to be the easily accessible and safest blockchain. After sharding, the goal of Ethereum is to make it affordable for anyone and able to run the Ethereum validator on any device.

Other blockchain protocols prioritize affordability/efficiency, so they have a partial trade-off between accessibility and decentralization. It is necessary to make trade-offs, because even if Ethereum has sharding and roll-up, it still has things that it is not good at, such as file storage or image processing. In any case, the throughput of Ethereum has an upper limit, which may be lower in efficiency than those chains that make different Pareto efficiency trade-offs.

However, Ethereum can always be used as an accessible, secure, and decentralized settlement layer, and as a source of “universal truth” in a multi-chain world. In this world, other chains may argue with each other about their status, rather than the status between network verifiers.

Why is blockchain OSI important?

Now, the blockchain industry is in a strange state of competition. Many users do not realize that the competition of the blockchain may be a non-zero sum game, and the use of the blockchain in the future may be the same as the Internet.

Starting from the reality, mainstream users do not care what technology they use in the program, they are more concerned about their own experience. Just as no one has ever bought light bulbs because they like light bulbs, the reason for buying light bulbs is that they have a good book they want to read in the dark. Now, light bulb enthusiasts are all over the blockchain field and discuss who has the best filament. No one is selling books.

By understanding the layered components of the blockchain OSI model and how they work together, we can determine the areas of investment opportunities, vulnerabilities, monopolistic areas, industry gaps, and the missing links that we need to seize on the mainstream.

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