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Why is blockchain an integral part of Web3.0

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As the core carrier of Web3.0 application organization evolution and benefit distribution, blockchain technology is an indispensable part of Web3.0 application. Web3.0 requires blockchain.

Why Web3.0 Needs Blockchain

原文作者： Mike Tang, Lester Li

Original source: Web3 Explorer

preface

This article is the second in a series on Web3.0 Explorer, the first of which is a review of Web3.0 concepts. (The full article is reprinted by Routes Blockbeatslink). This article will also carry on the idea of the last article to continue to explore. Due to the author's limited level and the current industry is still in the enlightenment stage of development, so many places in this paper are only briefly mentioned, not in-depth.

Let's briefly review the core idea of the last article:

●Web3.0 is an open protocol cluster. Agreements based on openness can stimulate strong innovation capacity on all sides

●Web3.0 to solve the core issue is the platform benefit distribution problem. Break the monopoly of the big intermediary platform caused by Web2.0, so that value can be smoothly distributed from the platform to every value creator in the platform. Web3.0 will still exist on a (large) platform, but the platform will be community-owned

The Web2.0 platform is owned by the company, the Web3.0 platform is owned by the community

The following diagram breaks down the concept:

Web2.0 Platform does

Web3.0 Platform does

Compared to the Web2.0 platform, the core part of the Web3.0 platform has the following participants:

Community Validators/Nodes: Maintainers of the platform network, operators of the underlying blockchain Nodes, and Validators. Used to provide service security

●Community Modeling: Includes Community developers, publicists, and more. Direct contributions to the project

● All other value contributors: including, but not limited to, platform content contributors.Value contributors also cover end consumers

In other words, the Web3.0 platform for the Web2.0 platform, the platform is no longer owned by a company, it has an organizational form of evolution.

The evolution of organizational forms

For platforms, the evolution of organizational form is holistic: both internally and externally. The following terms: project, platform, application, Web3.0 App, all mean the same thing by default, unless otherwise specified.

Let's start with the evolution of organizational form within the project.

The project will maintain a lean team size, with only the most essential components:

● Core management team

● Core R&D personnel

● Core developer community operators

● Core marketing personnel

● Core designers

● Other necessary staff

With the exception of the above core staff, all positions are open to the community. This means that the community can participate in the progress of the project. Such as:

● Because it's open source, community developers can contribute code, fix bugs, etc. For these developers, Bounty support can be in place

● Community developers can participate in the application and implementation of the whole block of functions. The project team can issue an issue to the community developer as a grant

● A few community KOLs can be set up outside the core team to help run the entire community. Where appropriate, there can be some incentives

● All nodes participating in the Validator can help promote the project spontaneously. The Validator has its own incentives, so you don't need any more

Working with the community in this way can change the way traditional companies do research and marketing. In other words, the corporate form may be under attack.

We did some analysis on the cost of the project:

● Keeping only the core team can greatly reduce the cost of human resources

● Not even a centralized office is required, or only a small office is reserved. You can also save money

● The active participation of the community in the early stage of the project can collect the needs of more people, make better product design, and reduce the design cost

● Strong cooperation with the community, can greatly save the cost of marketing promotion, as well as the cost of the early public testing of the project

● Strong collaboration and good interaction with the community can improve the iterative efficiency of product bug fixing and function upgrading, and reduce research and development costs

● As long as the product reaches or is close to the expected goal, the strong sense of community participation will make each user spontaneously spread, easy to form a positive network effect. Reduce marketing costs

These cost savings can be allocated to the true value creators on the platform.

Then talk about the relationship between the project and the user.

● In Web3.0 platform, users contribute content or data to the platform and create value for the platform. As for what that value is, quantitative (but never precise) metrics can be used to estimate it, and this estimate is generally not real-time or preset. The revenue generated by this value will eventually be distributed to users in one form or another

● The quantitative indicators and supporting calculation methods will be completely open, clearly and accurately recorded, and implemented in a reliable and credible form

● Platform and users, truly integrated into one, users are willing to create value for the platform, the platform clearly and reliably feedback revenue for users

And then the relationship between the project and the capital side changes.

● The traditional angel round, seed round, ABCDEFG IPO route will no longer work on the Web3.0 platform. Generally speaking, a new form of project is sufficient to achieve at most round B.

The proportion of investors in the project will not be too large. Specific values will vary from project to project

● Core team shares in the project will not be too large. Specific values will vary from project to project

● The profit distribution ratio of the project will be distributed to the value creators in the platform as far as possible

That is to say, after the platform reaches the stable maturity stage, the primary service object of the platform itself is the value creator of the platform, rather than the majority shareholder of the investment in Web2.0. Finally, only impact investing survives. See Thin Heads and Fat Tails: Understanding the Crypto Reinvention of Capitalism.

There's a caveat here. When we say community has a platform, we do not mean that the team is completely broken up and the project is fully decentralized in the form of community. The founding team doesn't need a lot of equity, but it's still important. The overall ability of the founding team is still the number one factor in the success of a Web3.0 project. In the whole process of the development of the project, play the role of the core promotion and the core decision. Completely decentralized on-chain governance is undesirable and extremely inefficient. We can't jump from one extreme to the other. If human society could solve all its problems by voting, human society would not be so complicated.

We can even call this form of organizational governanceWeakly centralized governance.

We mentioned earlier that there will be some changes in the organization of Web3.0 projects compared to Web2.0 projects. And the distribution of benefits is closely related to the organizational form. Are there tools that can support this new organizational structure? New models call for new solutions.

Enter Blockchain

Blockchain actually offers two core capabilities:

● A fairer and more open way of participation, that is, openness in organizational form

● Assets are settled by contract and circulate reliably without obstacles

These two capabilities are built on the various underlying features of the blockchain, since we are talking about a higher level of concept here, and the underlying features will not be repeated.

That is to say, the blockchain as a bottom benefit distribution system, on the blockchain, can

1. Support the openness of organizational form

2. Let all parties involved unconditionally trust the distribution method and reach consensus on it

3. Guarantee the reliable execution of benefit distribution

Let's talk about each of these three points.

1. Support the openness of organizational form

Blockchain itself is open.

● No matter POW consensus protocol, or consensus protocol such as POS, its underlying design is open, not exclusive

● An open source software development model that gives the entire community the opportunity to contribute to projects at low cost

● Open source software development mode, so that the project content/algorithm open to the audit and verification of various institutions

● Open source software development model, so that project decisions can be publicly reviewed and participated by all

Therefore, the Blockchain-based Web3.0 system embraces openness at the genetic level. On the blockchain system, an effective new open organization form adapted to the characteristics of Web3.0 can be established.

2. Let all parties involved unconditionally trust the distribution method and reach consensus on the distribution method

Because of the open nature of the protocol (code), the content of the protocol can be unconditionally verified by all parties. The distribution is part of the overall agreement and is therefore trusted unconditionally by all parties. The content of the protocol can be changed by governance, and each change is openly and clearly presented in the protocol. The allocation pattern will remain stable over a certain period of time and changes will not be particularly frequent. Everyone believed in the agreement, and a consensus was reached.

3. Ensure the reliable execution of interest distribution

Once the assignment rules are clearly defined, they are implemented into the on-chain code. The basic features of blockchain ensure the safe and reliable execution of code on the chain at all nodes. If there is a change in the allocation rules, it will be updated on the chain. Each node upgrades the protocol, and the consensus agreement between nodes guarantees the safe and reliable execution of the new upgrades.

In conclusion, Blockchain is crucial to Web3.0 and is a necessary infrastructure for Web3.0 applications.

It should be noted that the blockchain technology itself may have other uses in other fields, but these are not the subject of this article.

Web3.0 Token system

As discussed above, Blockchain is the infrastructure of Web3.0 application platform organization and benefit distribution, which actually implies two basic elements:

● Account system

Low Token system

Accounts are used to distinguish participants, and Web3.0 App Tokens are a mapping of traditional options/shares. As a means of encouraging community participation, each Web3.0 App blockchain can have its own Token. Especially for the participants of the verification node, obtaining the Native Token of Web3.0 APP is almost a necessary incentive measure.

Under an open protocol, there is a cost to attracting other nodes to perform validation and provide security services. For this open system to run smoothly, there must be some mechanism to incentivize it and guarantee a certain amount of profit. In this sense, local tokens are a must for Web3.0 apps.

Similar to traditional sovereign currencies, there is exchange rate exchange between different Web3 App tokens. Generally speaking, you can use the stable US dollar as the benchmark for exchange rate conversion.

Similar to the form of salary and option of traditional Web2.0 enterprises, the local Token of Web3.0 corresponds to the option, and accordingly there should be a Stable Coin for the daily operating income and expenditure of the project. Stable coins such as USDT and USDC should be universal in the industry, rather than Native Stable coins issued by the project itself. The project party should not issue Stable coins that cannot be universally used.

Stable Coins in the Web3.0 APP project can only be obtained in one of the following ways:

● Investor Investment

● Donor donations

Low borrowing

● Income from external economic activities of the project

The expenditure of Stable Coin in the project includes but is not limited to the following forms:

● Project R&D expenditure

● Project promotion expenses

● Project operation expenses

● Project source material supplier expenses

● Community project support spending

Low...

Every Web3.0 App should design its own economic system (this sentence is a bit redundant, in fact, every Web2.0 App also needs to design its own economic system, commonly known as the business model. Generating power with love, after all, is unsustainable. In other words, the economic system is part of the underlying mechanism of a project. Blockchain-based Web3.0 Apps are able to design their own economic system more flexibly, which can stimulate more innovation in this field.

But blockchain is not a panacea.

Limitations of blockchain

Blockchain, since its inception, has been known by another name -- distributed ledger. A ledger is a book in which information about transactions (economic activity) is recorded. So, is it possible to make a statement that blockchain should only deal with transactions related to economic activities?

If you look at the history of blockchain (starting in 2008), almost all of the innovations that have been effective have been in the economic and financial sector, and there have been a lot of attempts to extend blockchain to other areas, but with very little success. Think carefully about whether there is an internal logic at work.

Applying blockchain to other fields runs into some limitations of rationale.

One of the limitations: low computational efficiency (energy consumption ratio) and high redundancy of multi-node storage

Let's say our blockchain has 100 nodes. Compared to traditional centralized service, each logical computation needs to compute 100 pieces, which consumes 100 times (more) more energy than centralized service. If there are more nodes, the energy consumption will also be higher. Storage is also the case, for the traditional centralized database, plus disaster recovery backup services, calculate the duplication of 5. Blockchain storage, 100 nodes is 100 pieces, 20 times more than the traditional centralized database storage. If there are more nodes involved, this multiple is even larger.

Limitation 2: Storage space is not efficient

Due to the requirement of encryption and Proof, the block chain state storage adopts a structure such as MPT, which occupies a large storage space and is not of high economic efficiency.

Third limitation: query efficiency is not high, even weak

Transactions are chained in the form of blocks, and states are stored in the form of MPT structure KV database. Different from the traditional SQL database, the storage mode of block chain is very weak in query ability and low in efficiency. Traditional SQL database for structured data storage and query optimization to do a lot of work, decades of development has reached a very mature stage, the new progress in the distributed capacity in areas such as a large number of innovation, do the seamless expansion at the same time, ensure the simplicity, consistency and efficiency in the query. Blockchain generally provides RPC interface by default, which can only realize the most simple query function.

Due to the above limitations, it is impractical to attempt to use blockchain as a general-purpose distributed database.

Look at it from another Angle. Information in this world is not only about economic affairs, but also about various levels of information. Like a cup. Its shape, size, color, weight, whether it is transparent, whether it has a lid, the ratio of the lid to the body of the cup, the capacity of the cup, the material of the cup, whether it is made of glass, stainless steel or plastic. Can it withstand high temperature, if it is stainless steel, is it 304? How much impurity, what was the production date of the cup, where it was sent from, which Courier company it was sent to, and when it was received. What is the printing process on the cup, what words are printed, what color pattern is printed, who is the designer. What is the material of the rubber pad between the cup body and the lid? How long is the valid period? Is it for home use, or office use, or car use? Mainly used for drinking water, coffee or tea. Whether the cup is easy to wash, whether the tea is easy to deposit tea stain. What is the heat conductivity of the cup? Is it equipped with heat insulation pad? Is it one of a set of cups? If so, is there any difference between his brother's cup and it? If one is broken, is there any reissue measure? What is the expansion rate of the cup after adding hot water? Not to mention the kinematics of the molecules on the walls of the glass after the addition of hot water. And so on and so on. Expanded from one thing, information is endless on all levels.

This information is an intrinsic or intrinsic property of the thing. They have nothing to do with economic affairs; they are information about things themselves. The economy is external property, or social property. Economy is the product of society.

Blockchain has several limitations that make it impossible to store data on the intrinsic properties of these endless things, but should only be used to store data related to economic transactions. This echoes the original name of the distributed ledger.

Web3.0 APP system architecture

If you can't store complete information on a blockchain, then where? There is also a lot of exploration going on in this area. The IPFS project, for example, aims for distributed storage; Project Arweave, for example, aims for permanent storage. Both of them can cooperate with the blockchain. By storing the hash value of an external data blob in the relevant object of the blockchain's account and transaction data, data association and relational binding can be realized. This model has been adopted by a large number of projects. This type of infrastructure used to store large amounts of data is collectively referred to as Distributed Storage (DS).

But this model still has a lot of details to work with:

● To be stable and durable. Since it is hashed, it is important to keep the Hash value fixed and always valid. Therefore, these DS projects put forward relatively high requirements, requiring the data to be permanently valid, the Hash value is fixed, and there is no conflicting Hash

● High access efficiency. These DS projects need to be able to support data storage and access efficiently without too much latency

● The deposit and withdrawal fee should not be too high. The cost of data storage and access must not be too high, or it will not be truly universal

● Convenient access. Easy access will enable various projects to connect quickly and quickly establish DS service ecology

Many projects in the industry are trying to explore these aspects, and I believe this is a reasonable direction.

This separation of data leads to changes in software architecture. Blockchain storage and on-chain logic processing should only be responsible for business related to economic affairs, while other data and business should be processed off-chain. The reasons are as follows:

● To DS to save data and get data, are network operations, is an asynchronous request. The return time of such a request is quite variable, with up to two or three orders of magnitude different from that of a local request. Therefore, this kind of operation is not suitable to put on the chain, but should be taken off the chain processing

● A large number of non-economic transaction data calculation and processing, may take a lot of time, such processing, should be placed under the chain to perform

The results of off-chain processing, if relevant to economic transactions, should be submitted to the chain for subsequent processing. If not related to economic affairs, the DS should be accessed directly.

Thus, there are now two logical processing engines: one on the chain and one off the chain. How well these two engines work together, maintain and upgrade, is actually quite a big problem. We're seeing the industry starting to come up with solutions. For example, the Off-chain Worker (OCW) in Substrate aims to solve such integration and maintainability problems.

In the whole system, in order to improve the efficiency and stability of system execution, load balancing, cache layer and other components may be needed.

Below, we compare and draw the system architecture of Web2.0 APP and Web3.0 APP to help readers to understand more clearly.

Web2.0 APP architecture, with database as the center. The operation process is as follows:

● User access service address. DNS or IP location to the gateway;

● After the request passes through the gateway, it enters the service logic;

● The service logic works with the database to store, retrieve or update data;

● The service logic returns the processing result to the gateway;

● The gateway returns the result to the user;

● In addition, there is another set of branching processes directly based on the original data of DB, namely the analysis, mining, AI training and so on of big data

Web3.0 APP system architecture, centered on Blockchain and Distributed Storage. The operation process is as follows:

● User access service address. Distributed DNs (such as IPFS IPNs, Arweave DNS Gateway, etc.) are located to the Gateway;

● After the request passes through the gateway, it enters the service logic (off-chain Worker and index service);

● Service logic works with DS to store, fetch, or update data. When necessary, deal with the blockchain, send transactions, update status and obtain results;

● The service logic returns the processing result to the gateway;

● The gateway returns the result to the user;

● In addition, the original data directly based on distributed storage can have another set of branching processes, namely the analysis, mining, AI training and so on of big data. However, in the Web3.0 scenario, this kind of analysis can be handled more professionally by the third-party big data AI service to achieve more professional analysis.

Here, we clearly give a system architecture of Web3.0 APP, and it can be found that this architecture is similar to the system architecture of Web2.0 APP to a certain extent. There are other architectural patterns and computing paradigms (such as Arweave's Turing Ribbon computing paradigm, see "Blockchain Storage Arweave: Turing Ribbon, a New Paradigm for Trusted Computing" and "The Change of Conconsensus, A Journey to the Evolution of Blockchain Application Paradigm").

Web3.0 vs. Web2.0

Web3.0, as a new thing, is sure to compete with the existing, solid Web2.0 ecosystem. In different industries, the pace of development will vary. Here is a brief analysis of how Web3.0 competes with Web2.0.

The competition between Web3.0 and Web2.0 should first be consistent or similar in user experience, which is the starting point of the competition.

Simply rely on the so-called distributed, decentralized, more secure, privacy protection, open slogans, is not enough to impress the majority of consumers. Given the choice between security, privacy and user experience, the vast majority of users will choose user experience first. So Web3.0 apps should also focus on the user experience and try to align it with the user habits of Web2.0 apps in order to smooth the transition to a new and better integrated experience. But you can't give up the most basic requirement of Web3.0 for the sake of user experience -- security. In general, there are higher requirements for application development.

At a similar starting point of competition, Web3.0 has the following competitive advantages over Web2.0 platform:

●Web2.0 traditional business model, advertising, membership, games, etc., can be used in Web3.0, the form may have a little evolution. In these respects, Web3.0 will not lag behind Web2.0

● A clear return for value contributors on a Web3.0 platform will motivate users to use the new platform rather than the old one

● The behavior of users under the new platform is more secure and privacy protection is better, which will promote users to use the new platform more confidently

● More users use, means more data precipitation, will eventually form the ultimate unfair competitive advantage of data. Thin Heads and Fat Tails: Understanding the Crypto Reinvention of Capitalism argues that the ultimate unfair competitive advantage is the accumulation of open platform data and the big data mining and AI training on top of it over time. Will make it impossible for traditional closed Web2.0 companies to compete

●Web3.0 in the data level, both privacy protection and open access characteristics. As an open platform for raw data, it can inspire endless innovation: data processing, big data analysis, AI training, and so on. And some of the benefits of these innovations can be fed back to the data provider -- the user. In the end, it will form a large and stable open data ecology of Web3.0 with rich levels

However, in the early stage, there will also be some problems to be studied, such as:

● Open data is used by closed property companies, and no longer open in reverse. As a result, for some time, the quality of the products of large enterprises is still ahead of the Web3.0 App

● The closed camp will not wait for death. Will the open product form prompt the closed property right enterprises to allocate some resources to join the open camp? What does this mean for the open camp versus the closed camp

In what areas will Web3.0 be the first to challenge the Web2.0 platform?

● In the end, which areas will Web3.0 cover and which areas are not suitable for the survival of Web3.0?

The rent-seeking problem of the Web3.0 platform

If the Web3.0 platform is as we think it is, it is very competitive indeed. It is also possible to develop into a monopolistic platform. Theoretically speaking, an organization in a monopoly position must have the power to seek rent. So, can the Web3.0 platform meet this inherent challenge?

Blockchain's forkability and legitimacy requirements help solve this problem. For a more detailed discussion on this, see: "Decentralization is not the nature of crypto protocols, but forkability of blockchain", and "Vitalik: Justification is the scarcest resource in the crypto ecosystem". No more to say in this article.

Above, we have given the system architecture of Web3.0 APP. Now, combined with the bifurcability of blockchain, we have actually added another requirement: the openness of DS component. This means that the data storage component should not be tied to a single blockchain, but should allow all forks of the blockchain to have 100% functional access. This requirement should have been a preset policy from the beginning of the Web3.0 system design. This strategy, in itself, serves as a deterrent to limit the evil motives of the governing body of the Web3.0 system.

Exploration in this area should yield some very interesting results.

conclusion

This paper discusses that Blockchain, as the core carrier carrying the organizational evolution and benefit distribution of Web3.0 applications, is an indispensable part of Web3.0 applications, and Web3.0 requires Blockchain.

This paper also makes a brief discussion on the architecture of Web3.0 APP system, the competitive advantages of Web3.0 and the rent-seeking problems of Web3.0 platform.

Reference:

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2. Thin Heads and Fat Tails: Understanding the Crypto Reinvention of Capitalism :& NBSP; https://knowledge.wharton.upenn.edu/article/web-3-0-welcome-new-sober-internet/

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