What is modularity?
A curious experiment in Ethereum has led to modularity as a result of the low scaling of blockchains. To address this bottleneck, developers have taken the radical approach of auctioning off core functions of the main chain to… other blockchains.
This modular transformation, based on rollup technology has revolutionized the way products and services built upon Ethereum are designed. The stack can be broken down into its individual components, allowing for different architectural designs to suit the needs of each user. Understandably this has led to a proliferation of… blockchains.
I kid you not. It’s true.
They also create a bizarre coordination issue. While every new consensus protocol provides novel and intriguing scaling opportunities, it is not without its own peculiar problems. What can be done to make the economy more efficient when users are spread across multiple networks? How can everyone be synchronized with this distribution? Maybe one more… blockchain?
The turtles go all the way.
The fragmentation of this ecosystem has led to a number of obvious outcomes. One of the consequences is that users become trapped in intermediaries. Rollups may have the ability to reduce trust, but the costs associated with the inefficiency of the system transfers creates an unreasonable cost for the users. This exposes users to riskier options such as bridges and central services.
The lack of interoperability between platforms causes friction for developers and encourages them to compete rather than collaborate. Each day, a new protocol for existing and new teams is developed to create yet another version of the same application. Many teams opt to “bet on themselves”Spin offs into the ether own Blockchain is an ecosystem. The appeal of the model that allows customization and optimization for diverse components is crucial. Anyone can contribute to this flexible architecture and create new designs with its unique frameworks. It’s endless possibilities.
Unfortunately, these incentives have led to the fragmentation and loss of network effects. Users will concentrate on a few networks if nothing is built to fit together. In turn, the economic activity gets concentrated on fewer and fewer permitted systems.
The modularity of this brand has led people away from their goal, when they shouldn’t have. It is perfectly acceptable to use different interfaces for the protocol’s consensus. Ethereum’s approach is problematic, as it treats interoperability less like a fundamental design principle and more like an optional feature. The debate will remain as long Ethereum is committed to scaling by creating multiple blockchains. This provides ample opportunity for rivals to take advantage of these divisions in order to create discord. Divide and conquer.
Bitcoin – the opportunity
A new architecture for Bitcoin is gaining traction, which favors an entirely different design. Developers are gradually moving towards Bitcoin’s peer to peer model using Lightning as their interoperability foundation.
Instead of trying to duplicate global shared states like Cashu, or Fedimint optimizes for local interactions and without permission. The Lightning Network allows financial services to be distributed across multiple economic hubs while remaining connected.
The ecash, the atomic bridge, and liquidity providers. A novel financial Networks that share a common settlement layer.
Nostr provides the abstraction of social interaction that brings it all to a logical conclusion. It is a social network that uses similar rules to Bitcoin. This allows for maximum interoperability. Nostr unleashes innovation by not being restrictive about its functions. a Cambrian explosion Open innovation is a form of creativity.
Different projects today are exploring ways to make Nostr an integral part of the Bitcoin experience. This protocol’s public key infrastructure is an ideal match for payment apps and wallets, as it allows them to exchange secure messages and communicate. The communication layer allows users to connect with each other and the various services available on the network. Standard standards like Nostr Wallet Connect The following is a list of the most popular and effective ways to create new opportunities Nostr is a growing ecosystem that allows Bitcoin-based applications to interact with it.
Case study
The following projects are similar to Mutiny The differences between the Bitcoin modular vision are perfectly embodied in these images. You can use services such as Nostr Relays and Fedimint Federations to connect simultaneously. Lightning Service Providers (LSPs). Each one of them grants you access to more and more features and applications. Nostr, as a service of discovery, allows us to use our social networks to find and access natively applications and services that are endorsed by peers. The web of trust is an alternative that offers a unique solution to the so-called “trustless” systems. Participants will be able to rely on the market’s incentives for more efficient transactions that don’t require them to make tradeoffs like more decentralized systems.
Markets for lenders, electronic cash mints and liquidity providers will eventually emerge. coinjoin coordinators Nostr is a platform that allows businesses to market their products or services. Civkit, which is a project for decentralized order books, could easily integrate with Mutiny to allow peer-topeer transactions. Each integration is built around permissionless participation, so users maintain complete sovereignty in their interactions.
Platforms vs. Protocols
Bitcoin’s modularity is not without its own story own risks. LSPs, for example, are fundamental pieces that require significant capital. This will allow them to compete on a scale. Regulators and operator fraud may hinder ecash’s growth. There have been some indications that Nostr Relays are working. centralization tendencies It is still unclear what the topology of the network will be.
It is important that barriers to entry remain low. For this purpose, several different initiatives are in place. Lightning is currently being used by multiple companies to collaborate on various projects. specification Any market participants could implement their own strategies. own LSP.
As yet, it’s difficult to predict how these architectures or protocols will develop. It’s possible that as the two worlds merge, rollups will find their niche within the Bitcoin eco-system. Rollups can be designed for specific applications, such as those used by exchanges. zkCoins Lightning could be made interoperable without requiring global state.
It is reminiscent of early internet days that there was tension between the two methods. Platforms that let them capture a portion of the network effects in order to monetise them may be preferred by commercial interests. The adoption of more permissionless and open protocols could be slower. Internet consolidation into walled-gardens that control services and apps is a warning. Bitcoin’s current development will lead us to an interoperability-focused future, with permissionless accessibility. financial silos.
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Source: bitcoinmagazine.com