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This piece is a collection of random thoughts I've had about the blockchain industry lately. It builds on my previous article, “Why Crypto Businesses All Look the Same Now”.
Source: Kalshi
Today brought some big news for the crypto industry. The US CFTC announced that it would allow trading in single-stock perpetual futures, or equity perps. And this wasn't just a regulatory announcement. Kalshi actually launched live trading in equity perps on the very same day.
But wait. Is this really crypto news?
Understanding Kalshi
As most people know, Kalshi is a centralized derivatives exchange regulated by the US CFTC, offering prediction markets and perpetual futures.
People generally think of Kalshi as a company deeply connected to the blockchain industry. But the reality is that Kalshi has surprisingly little to do with blockchain.
Kalshi doesn't use blockchain to power its core products, including prediction markets and perpetual futures. Orders are matched offchain through its proprietary matching engine, while clearing and settlement are handled by Kalshi Klear, a CFTC-registered derivatives clearing organization.
Kalshi's actual connections to blockchain are fairly limited. Users can deposit and withdraw funds through stablecoins, and its prediction market positions can be tokenized and made accessible through Solana-based platforms like DFlow and Jupiter.
So why do people associate Kalshi so closely with the blockchain industry?
I think there are a few reasons.
- A competitor to Polymarket: When Polymarket initially offered prediction markets to users outside the US, it actually used the Polygon network and UMA oracle as components for resolving market outcomes and settling trades. This helped establish the perception that prediction markets were a core part of the blockchain industry. But even Polymarket US, which operates prediction markets under CFTC regulation, has relatively little to do with blockchain, much like Kalshi.
- John Wang joining Kalshi: In August 2025, John Wang joined Kalshi as Head of Crypto. He had previously been a Fellow at Paradigm, one of the largest crypto venture capital firms.
- The launch of perpetual futures: Perpetual futures are another financial primitive that people often assume is inherently tied to blockchain, much like prediction markets. And the association isn't entirely unreasonable. Perpetual futures first emerged as a new trading instrument on crypto exchanges. Crypto trades 24/7, making it a natural fit for perpetual contracts. We also have prominent blockchain-based perpetual exchanges like Hyperliquid and Lighter. So perps certainly have strong roots in crypto. But from a technical standpoint, blockchain is not required to offer perpetual futures. Regulated US exchanges like Kalshi and Coinbase don't use blockchain to execute or clear their perpetual futures trades.
The bottom line is simple.
Prediction markets and perpetual futures are trading products with strong ties to the crypto industry. But neither actually requires blockchain to function.
Blockchain Is Just the Rails
In my previous article, I argued that the onchain ecosystem was becoming increasingly polarized.
Looking at the performance of major sectors throughout 2026, the picture is pretty clear. Onchain-native sectors like DeFi have performed poorly. Meanwhile, the sectors showing meaningful growth have largely fallen into two extremes.
- On one side, we have speculation-driven sectors like prediction markets, perpetual futures, and memecoins.
- On the other, we have sectors connected to traditional finance, including stablecoins, RWAs, and vaults.
Considering that 2026 has been one of the worst years for crypto, the fact that these sectors still managed to grow significantly suggests that they have found at least some degree of product-market fit.
At first glance, these two extremes couldn't look more different. But they actually share one important characteristic.
They mostly use blockchain as financial rails.
As we discussed earlier, prediction markets and perpetual futures don't fundamentally require blockchain to exist. Blockchain mainly provides utility for things like deposits, withdrawals, and tradable assets.
The same goes for memecoins. Blockchain makes it easy for anyone to issue tokens and trade them freely. That's essentially where its utility lies.
On the other end of the spectrum, stablecoins and RWAs also primarily use blockchain as next-generation financial rails, replacing outdated backend infrastructure in traditional finance.
To be clear, I'm not saying that financial rails aren't valuable. Far from it.
A financial backend that allows anyone to trade and utilize a wide range of assets, 24/7, is a massive improvement over traditional financial infrastructure. That capability alone is a major differentiator.
But here's what I find interesting. In the sectors where blockchain has actually found PMF, blockchain itself is rarely the core of the business. Something else is.
The real business logic sits elsewhere. Blockchain simply makes that business easier, faster, or more accessible.
Where Does the Blockchain Industry Go From Here?
Source: The Commanding Heights
A recent essay titled “the COMMANDING HEIGHTS,” which has been getting a lot of attention in San Francisco, makes an interesting argument.
Historically, value doesn't necessarily accrue where a technology originates. It tends to accumulate where that technology is distributed. The essay argues that the AI industry will follow the same pattern.
I think this has already happened in crypto.
Blockchain has found PMF. The problem is that the value isn't flowing back into the onchain ecosystem or its underlying infrastructure.
Most of the value is being captured by platforms that own the relationship with users. For these platforms, blockchain isn't the core business logic. It's just another feature in the product stack.
So what should the blockchain industry do?
Right now, blockchain has proven its utility as financial rails and found PMF in that role. But I think we need more than that.
We need businesses where blockchain is genuinely indispensable. Businesses where blockchain isn't just supporting the product but sits at the very center of its core logic.
Of course, we've seen this movie before. Plenty of projects started with exactly that ambition. They wanted to build something that could only exist on blockchain, something fundamentally different from what came before.
And yet, very few of those projects are still around today. Still, I think we have to keep pushing in that direction.
If blockchain's utility remains limited to being the next generation of financial rails, there's a good chance the blockchain industry will end up as just one of many financial infrastructure providers in an era of hyperfinancialization.
And to be fair, that's not necessarily a bad future. But if we want the blockchain ecosystem to become something much bigger than it is today, we need to find an answer.
Maybe an entirely new category of blockchain-native applications will emerge, something none of us has anticipated, and solve this problem.
Or maybe the catalyst won't come from technology at all. Perhaps political or social developments will fundamentally change how people think about blockchain, bringing renewed attention to applications that already exist.
I don't know which path we'll take. But I think that's exactly what we should be watching.
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