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Why does Blockchain need Web3.0

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Blockchain in the Web3.0 platform should specifically refer to the application-oriented blockchain -- which is very different from the public chain like Ethereum

By Mike Tang and Lester Li

Original source: Web3 Explorer

preface

In the last post, Why Web3.0 Needs Blockchain, we discussed why Web3.0 applications/platforms need to build and power blockchain as an underlying component. In this article, we will argue that blockchain is different from blockchain, and it is impossible for a single chain to solve all problems. Blockchain in the Web3.0 platform should specifically refer to the application-oriented blockchain -- which is very different from the public chain like Ethereum.

Let's start with the development path of Ethereum to analyze why it's impossible for a single chain to solve all problems.

The path of Ethereum

World computer

Around 2017, Ethereum was supposed to be a "world computer" -- a machine that never goes down and everyone in the world can write code to run on it.

On both counts, Ethereum does it (never down, everyone runs). But the "computer" as it is commonly understood is a tool that can do general-purpose calculations. Ethereum, on the other hand, has a very high computing cost and can't be used for general purpose computing, let alone big data computing and things like that. By this definition, Ethereum is not a general-purpose computer, but a dedicated calculator at best. Calculating without considering the cost is playing hooligan. At the moment in 2021, no one is even talking about a "world computer", Ethereum has already redefined itself as a "world computer", and its ideals as a "world computer" have failed. See: Why I Stop Interpreting Ethereum as a "world computer".

We have a good analogy for the world's computers -- the current hot post-cloud native Serverless technology stack. Serverless also has the characteristics of a "world computer" : Only care about business functions to achieve, don't care about system resources allocation and operational, don't care about expansion problem, everyone can write code in the world run on it, and so on. Because of this analogy, we can in Serverless field to illustrate some of the problems in the process of block chain if what are the problems as the world's computing opportunity:

Cost issue: Serverless is more expensive than traditional container computing for long service and general purpose computing than it is for short and fast service in a dedicated space. See also: Serverless is more expensive than you'd expect

"Serverless vs. Docker Containers -- What to Choose in 2020? (Updated)"

Capacity enlargement problem: one of the basic requirements of the world's computers is: automatic capacity expansion. There should be no upper limit to the computing power and storage capacity of the world's computers for customers (although there is a limit to each computation, it should be possible to horizontally accommodate an almost infinite number of function instance services without significant resource competition between different functions in parallel). The scaling problem is one of the most difficult in the blockchain field (see: Overview of Blockchain Scalability [2020]). From this point of view, blockchain is pessimistic in this direction.

Platform binding issues: Currently Serverless has an extremely serious issue: platform binding. If your serverless application is strongly tied to a cloud platform (Amazon Lambda, Microsoft Azure, etc.), then if you want to switch platforms, you have to rewrite your code for the new platform and re-validate it, which is too expensive. This is also one of the most important issues for many customers, especially enterprise customers. This is a problem that will have to be faced even if the world computer is implemented based on blockchain.

Finally, let's ask a soul: is the world computer another form of centralization?

In any case, Dfinity (https://dfinity.org/) is still being actively explored in this direction.

DeFi outbreak

The world's computers can't do it, so what's the way out for Ethereum?

Back in 2018, the article "Ethereum Story Ends Not" World Computer, "But" Open Finance "argued that Ethereum was best suited to DEFI, or Open Finance. As a wealth of financial protocols have been established on Ethereum, the article classifies these financial applications and sees the potential of DEFI to challenge the traditional financial system.

In 2020, due to the maturity of objective conditions and the trigger of some contingency factors (such as liquidity mining), Ethereum ushered in the explosion of Defi, which officially became the killer application on Ethereum. Head apps like Compound, Maker, AAVE, Synthetix and Curve Finance have seen significant user growth. See Defi Explosion Ethereum Price to 2020 High. Everyone is cheering that Ethereum has finally found its core value.

But the Defi outbreak has also caused some serious problems on the Ethereum platform: congestion, high fees, and limited access to mortgages and users. This is a classic case of negative network effects.

In other words, Ethereum can no longer hold that much value.

The value of the overflow

Since Ethereum is so congested at this stage, and ETH 2.0 is far away, there has been a lot of discussion and innovation on the issue of capacity expansion in the community, and now basically a consensus has been reached on building a two-layer network first -- to expand capacity through the two-layer network. At present, the Layer 2 network has multiple directions at the same time, such as Exploration, Optimistic Rollup, ZK Rollup, Arbitrum, Polygon and so on. There is fierce competition in different directions.

Polygon is taking the spotlight right now (see: "Dappradar Q2 Report: Defi Locks Still Focused on Ethereum, Polygon Ecosystems Grow Fast"). The current implementation of Polygon, however, is not technically a two-layer network, it is actually a side chain. Side chain itself is just a concept, and can not be regarded as a specific capacity expansion technology means. A side chain is a relationship, that is, two chains connected by a bridge, they are side chains to each other. But the current ETH is basically a dominant, almost all the valuable assets are in ETH, ETH itself is weak, so it will make people feel that all the "bridge to ETH" chain, can be regarded as ETH side chain (see: "Blockchain expansion history: state channel, DPOS, large block and side chain"). From this point of view, Polygon's scheme can actually be classified into the same category as NEAR, BSC and other public chains expanding the capacity of Ethereum.

To put it another way, Ethereum is like a reservoir. Although we try our best to dig it wider and deeper, we can't keep up with the inflow of water, so gradually we can't hold so much value, so it will overflow. This is the value spillover effect of Ethereum.

Not only two-layer networks, but also various public chains (which can be classified as side-chain networks) are trying to seize the opportunity to compete for this spillover effect. Such as: BSC, Solana, Near, Polkadot and so on. See: Analyzing Layer 1 Competitive Pattern: Where Are the Opportunities for New Public Chains? .

From this, we see a phenomenon, the blockchain world, is no longer a single chain alone in the world, the future will certainly (in fact, it has already) is a multi-chain world. Even if Ethereum 2.0 is successfully launched, it is unlikely to solve Ethereum 1.0 DEFI congestion, see DEFI in Ethereum 2.0: Cities, Subs and Countryside.

The layered structure of the blockchain

As mentioned above, we firmly believe that the future is a multi-linked world. So, between these chains, is it a chaotic, chaotic existence?

To study the structure of a system, one should find a fundamental quantity. From different fundamental quantities, the system can be divided into different structures. Here, we stick with the basic quantity mentioned in the previous section: value capture.

From the perspective of value capture, we can divide the blockchain world into a three-layer concentric circle structure:

Blockchain Universe Hierarchy Map

This hierarchy diagram is explained as follows:

Let's start with Circle0 or C0 at the very core layer. At the innermost level are Bitcoin and Ethereum, which account for the majority of the current blockchain market by total value (roughly 64% at the time of writing). Bitcoin entered the DEFI domain by encapsulating and pledging on Ethereum. Ethereum is the core of the value of the entire blockchain universe, and the source of the value output.

The second layer, Circle1 or C1, contains Ethereum's various layer networks, as well as various side chains, as well as other so-called layer1 public chains. They capture the value spillover from Ethereum and are involved in building the Defi ecosystem. It's worth noting that all contracted dApps fall into this layer.

The third layer, Circle2 or C2, is a variety of application-specific Blockchain (Appchain for short). These AppChains are used to carry a variety of real-world applications, namely Web3.0 Apps. I tend to distinguish these applications from those related to financial (DEFI) or asset (such as NFT) attributes. Web3.0 APP corresponds more to the application of the traditional Web2.0 world, or some new scenarios. AppChain is the core component of these Web3.0 apps (see Why Web3.0 Needs Blockchain). Blockchain in Web3.0 refers to Appchain.

There are three layers C0, C1, C2, where C0, C1 are mainly used for asset and DeFi related applications, and C2 is mainly for concrete landing applications, namely Web3.0 applications.

So why can't C2 be used as DeFi? It's not ruled out. But in general, C0 and C1 have already solved the DeFi problem, so there's no need for C2 to get involved. The C2 layer should focus on Web3.0 issues.

Here, the stratification theory we propose has several implications:

The first is the stratification of value capture: one chain cannot hold all the value, so it must be distributed across multiple chains.

The second implication is the layering of security: not all chains need the same level of security, some seek greater security, some seek greater performance, and some seek greater extensibility. From the inside to the outside of the three circles, it can be seen that the security requirements gradually weaken and the performance requirements gradually improve.

The third implication is that the business focus is layered: Defi and the Web3.0 business are separated from each other, each focusing on a different focus and solving its own problems. At the same time, the appropriate mechanism needs to be worked out so that the two parts can interact and cooperate.

Simply put, different blockchains do different things at different layers.

With Web3.0 DeFi

If we look back at the development of blockchain, we can see that it started out as a series of innovations around financial issues. It was on the back of this massive accumulation of innovation that DEFI broke out. As mentioned earlier, we separate Defi from Web3.0. Defi stands for Decentralized Finance which refers to financial applications built on a blockchain network, while we define Web3.0 specifically to refer to all non-financial applications built on open protocols. There is a clear boundary between the two.

So, what is the relationship between Defi and Web3.0? This is a subject worthy of further discussion.

Let's start with finance. What is finance? Professor Liu Qiao once concluded in How to Reshape Chinese Finance in Our Times that under the modern economic system, finance is a complex ecosystem formed by the interaction of modules such as real economy, financial system, government macro policies, international capital flow and asset pricing. At the same time, he believes that good finance must be the finance that minimizes the intermediary cost.

In the Web2.0 Internet era, Professor Xie Ping and Dr. Zou Chuanwei put forward the concept of Internet finance. In the article "Fundamentals of Internet Finance", they believe that the Internet can reduce transaction costs and information asymmetry, improve the efficiency of risk pricing and risk management, expand the possibility boundary of transaction, and enable the supply and demand of capital to trade directly, thus changing the form of financial transaction and organization.

Ideally, in the Internet age, capital should flow as seamlessly as information, and transaction costs should be minimal. But Liu Qiao argues that the average cost of financial assets has remained essentially unchanged over the past 130 years, a phenomenon he calls the "financial development puzzle" -- that is, finance has evolved without bringing down the cost of financial intermediation.

How to bring down the cost of financial intermediation? This is what the engineers and entrepreneurs who built Defi's crypto world are exploring and experimenting with.

Defi hopes to use blockchain technology to create a more open and transparent financial services system, characterized by permissionless openness and transparency of transaction data. While settlement is instantaneous, financial services are available 24/7. 7* 24 hours, and at the moment our global financial system operates only during 9-5 (non-weekends and holidays).

Internet Finance/Fintech and Decentralized Finance Defi, the technical architecture of the two is compared as follows:

Image Source: "Crypto assets are not a monster, understand the basic characteristics of the DEFI infrastructure and its transformative potential"

By simply comparing the architectural diagrams of the two, the DEFI application is trying to recreate financial services at the base level, with operating costs that are several orders of magnitude lower than traditional finance.

At present, DEFI mainly focuses on financial functions such as payment, clearing and settlement, and capital financing. It falls far short of the development of fintech in financial risk assessment, social resource allocation, especially financial compliance and supervision. Contrast this with the example of traditional lending, where a business lends money to do business, generates value income to repay the loan, and the bank charges interest. However, most DEFI only circulate between agreements, without capital entering the social field, without forming an effective closed loop, and without giving play to the function of financial allocation of social resources.

Thus, DEFI was just a pioneer in financial services, with representative projects such as Makerdao, Compound, Uniswap, Synthetix, etc., starting the DEFI wave. But after nearly a year of explosive growth, Defi's development status is "coiled in", with the tracks (Ethereum, Poca, etc.) packed with homogenous projects. Defi urgently needs to break out to find new market space and a true value closed loop that can be integrated with the real industry.

The relationship between traditional finance and the Internet can be shown in the following figure:

Traditional finance and the Internet

Traditional finance provides financial support (angel, seed, loan, etc.) for Internet start-ups, while Internet companies return part of their profits to financial institutions as principal and interest, thus realizing a closed loop between finance and the real industry.

Similarly, in the Web3.0 era, we think DeFi is related to Web3.0 as shown in the figure below:

Decentralized finance and Web3.0

In the figure above, DEFI funds a Web3.0 application project (APP), which generates a sustainable profit (analogous to the sustainable profit of a Web2.0 Internet application) and generates (returns, distributions) interest income to the investors, thus providing a real input of value to DEFI.

Blockchain development to the DEFI stage, if the value of blockchain technology is to be truly utilized for a long time, it needs to rely on the value input of Web3.0. Web3.0 is Defi's interface to the real world.

As we mentioned earlier, every Web3.0 App should include an AppChain. Then, a lot of Web3.0 apps came together to create Web3.0. Their relationship is shown below:

Web3.0 Times

It can be seen that compared with Web2.0, in the era of Web3.0, we have more kernel of blockchain (application chain).

Contract with Appchain

There is a difference between the blockchain in the DEFI infrastructure layer and the blockchain in the Web3.0 application.

Looking back at the development history of blockchain again, the Bitcoin project that gave birth to the concept of blockchain opened the door to challenge the central bank's monopoly on the monetary and financial system. From this point of view, Bitcoin is the original form of DEFI. BitShares (Chinese BitShares BTS), which was subsequently created by Daniel Larimer (BM), can be seen as the first project to try DEFI. However, the exploration of BTS failed in the end. Later Vitalik Buterin came up with Ethereum, which built a programmable, Turing-complete blockchain for smart contracts with the goal of becoming a decentralized application development platform. Based on smart contract technology, cryptographic developers around the world have been actively exploring various types of decentralized projects (finance, games, social media, etc.). Based on the currentCoingecko Value of classificationAccording to the data, we can find that the top three in market value are stablecoin, trading class and DeFi, which are all financial asset trading class applications. From this point of view, smart contracts are not suitable for developing dApps in all domains, but are more suitable for the Defi application in the financial domain.

With the development of blockchain technology, blockchain development frameworks such as the Cosmos SDK, Substrate, Muta and others have emerged, which provide developers with a completely different way to create decentralized applications than smart contracts. The contract is developed for a general virtual machine, which is limited to the underlying virtual machine and has weak customizability. With the blockchain development framework, developers can choose from the various modules available in the framework (such as consensus, governance, etc.) or build custom modules to quickly customize and launch a blockchain, which greatly increases flexibility. For example, because security tokens require more functionality at the infrastructure layer to ensure regulatory compliance and increase institutional confidence, Polymath built a blockchain specifically for that purposePolymeshTo better realize the creation, issuance and management of security tokens. Compound is built specificallyGatewayBlockchain to implement cross-chain interest rate markets. These teams chose to build an App chain due to some limitations of the smart contract platform, which in some ways suggests that App chains are more suitable for developing Web3.0 apps.

Here are the differences between Smart Contract and AppChain.

Smart Contract vs. Appchain

As can be seen from the above table, Smart Contract has strong composability, which is conducive to the innovation of DEFI application. AppChain is self-controlled and highly customizable, which is suitable for Web3.0 applications under specific scenarios. Therefore, AppChain clearly has more technical options when building decentralized applications that require customization for specific business scenarios.

Appchain related research

In the previous chapter, AppChain was defined and compared with smart contracts in detail. This section goes further and does some research on the general nature of AppChain.

The Token Appchain

As we discussed in our previous post "Why Web3.0 Needs Blockchain", tokens are an essential part of blockchain.

But there is a serious misconception that all tokens are cryptocurrencies. In fact, not all tokens issued on the blockchain are currencies (digital currencies). Tokens can be broadly classified into the following three categories:

Currency tokens: Currency tokens

Utility tokens: Utility tokens

Security Token: Security Token

Untitled Inc goes a step further and gives the tokens currently on the market a more detailed classification of five dimensions: purpose, use, law, underlying value, and technology. See "Five Dimensions of Token Classification"

Five Dimensions of Token Classification

This article is not intended to elaborate on the classification theory of tokens. Readers may refer to the reference materials at the end of this article for further understanding.

In June 2017, the SEC declared DAO Tokens a security, Concluding the SEC Issues Investigative Report that DAO Tokens are a Digital Asset. Were Securities), and Were regulated in accordance with Securities related laws. This is a major characterization of blockchain tokens.

The article "Regulatory Paraparadigm Shift of Security Token Offering" also believes that the tokens issued by STO (Security Token Offering) should be included in the regulatory framework in the form of securities. On the premise of effectively guaranteeing the national financial stability and maintaining the market order, we should reserve enough innovation space for the financial innovation mode and conditionally accept the institutional reform. Among them, the way of obtaining profit becomes the key factor to determine whether it constitutes a security.

However, Appchain or Web3.0 APP, as landing applications entering People's Daily life, should naturally actively embrace supervision.

Based on the above background information, going back to Appchain, in the Web3.0 App, we should issue securities tokens and functional tokens instead of Currency tokens in Appchain. In fact, in the entire blockchain universe, there are very few tokens that can be classified as cryptocurrencies. As a general equivalent, currency is a medium of exchange of value, and only a very limited number of tokens (such as Bitcoin) have the potential to play this role. In addition, if the application layer tokens are not classified as security tokens or functional tokens, they will encounter serious obstacles at the regulatory level.

On the other hand, security/functional tokens also need to enter the market circulation. When it comes to asset circulation, we should strip the business logic to the DeFi layer for execution. In the AppChain layer, you should try to process only the transactions related to the specific application business.

By the way, the Chinese translation of Token is more accurate using "Token" than "Token". It is recommended not to mistranslate Token as "Token" in the future.

Consensus in AppChain

In general, the consensus most suitable for AppChain is the POS class consensus.

First of all, we exclude POW consensus in Appchain for the following reasons:

PoW is so energy-intensive that the world will eventually be able to accommodate only a limited number of PoW chains, perhaps only a few.

It is very difficult to start PoW chain cold. When the platform finally fails to reach a critical value, the security of PoW chain is very fragile

In contrast, the POS chain has the following basic characteristics:

The energy consumption is very small (compared to PoW), Ethereum is estimated to be less than 1% of the energy consumption of PoW

When the POS chain starts, it needs to use other assets as collateral. Its security is guaranteed from the beginning, and as the value of the application chain increases, its collateral for security will increase accordingly, that is, security is also a positive correlation growth curve

Of course, PoS has its own problems, and countless bright minds around the world are trying various innovations to solve these problems and come up with various improved PoS protocols, such as DPOS, NPOS, LPOS, etc. The comparison of pros and cons between POS and POW is not the focus of this paper. You can refer to relevant materials for in-depth study.

PoS type agreements, on the other hand, are more like traditional joint-stock companies, only now become community-based companies (see: "Future Companies: Blockchain Technology + Token Economy"). Appchain or Web3.0 APP entrepreneurial teams based on POS protocols still need to rely on their own characteristics and efforts to make innovations, push them to the market, solve specific problems, generate value feedback and achieve great development, just like the entrepreneurial teams in the Web2.0 era. It eventually evolved into a community-owned platform-level project.

In terms of classic POS, it is not suitable for small teams to use directly. It is a bit like a Mustang and difficult to handle. A startup team can easily be led into a pit by POS. For it is not only a technical problem, but also a sociological one. And once governance goes wrong, there is often no turning back.

In general, AppChain does not have too many nodes. There may be only a few at the beginning, and only a few dozen at the mature stage. Too many nodes will affect the operating efficiency of the business system. Appchain attaches great importance to user experience, and the project needs to balance security, operating efficiency and user experience.

Considering that Web3.0 apps are the products that really affect people's lives, it will definitely embrace regulation in the future. In the case of regulatory involvement, POS is more appropriate for Appchain. Because in theory the supervisor can join the network directly as a node, conduct first-hand data supervision and analysis.

Appchain independent chain issues

Although Appchain has many advantages, its disadvantages are also obvious. This section takes a detailed look at the disadvantages of AppChain as a standalone chain.

Difficulty of development. In the past, it was very difficult to develop a separate blockchain from the underlying blockchain. Many blockchain projects are to clone the source code of Bitcoin or Ethereum, change the parameters, change the module, and then create a new blockchain project. Even so, development is still difficult. It is more difficult to operate and maintain a separate chain online. But then, with the advent of frameworks such as COSMS-SDK, Substrate, Muta, etc., it became very easy to start a new chain, and these development frameworks greatly reduced the development cost of blockchain.

Startup difficulty and security. Start-up difficulty refers to the difficulty of successfully starting a chain, and it is closely related to security. For POS chain, the initial amount of pledge, the number of verifier nodes, the rationality of STO allocation and the issuing mechanism of tokens all directly affect the security of the chain. It is not easy for an entrepreneurial team to be considerate. The start-up of the independent chain also needs each verifier to start its own node, which has certain requirements on the technical ability and operation and maintenance ability of the verification witness. There are some auxiliary services such as third-party managed nodes acting as operators, which can reduce such requirements to a certain extent.

Difficulty in operation. Validation person node, need to operate and maintain its own independent server. Operation and maintenance are reflected in several aspects:

Low & have spent Stable operation of the server. Monitor its CPU load, memory load, network load, storage space, etc., and increase the configuration timely to prevent node failure due to hardware reasons

Low & have spent The attack. Do a good job of node protection, to prevent external hackers or unknown sources of attack, the security of the chain impact

Low & have spent Follow up the on-chain code update in time. Some versions can be upgraded automatically with a technology like WASM, while others require an upgrade of the entire node content, which requires manual or DevOps to follow up automatically

By contrast, contract developers on contract platforms don't have to worry about such details of operation and maintenance.

Cross-chain interaction difficulty. If all the chains are independent and non-interacting chains, only islands of value will be formed in the end. Chain and chain through, increase the liquidity of value, in order to create more value. So cross-chain interaction is something AppChain must consider from the very beginning. For Ethereum, the contract above doesn't need to be concerned: Internally, Ethereum assets share the same state space, and different contract assets can be combined and interactively with each other. Externally, as long as Ethereum has a cross-chain bridge with other chains, it can easily use these Bridges to transfer assets. However, Appchain has to face this problem by itself, either by implementing cross-chain Bridges with other chains, or by using cross-chain communication interfaces such as Cosmos IBC, or by joining Appchain network clusters such as Polkadot and Octopus.

Among them, it is not feasible to realize cross-chain bridge with other chains, because in multi-chain architecture, there are so many cross-chain Bridges, and the loss is outweighed by the gain to realize them one by one.

In addition to the above four difficulties, there are other difficulties such as governance: Appchain governs on the chain through POS mechanism, and contract governs on the chain through DAO type facilities, which are equally difficult. How to make good use of POS itself is a non-technical problem, which is quite difficult. Difficulty in design of Token economics: Appchain can do more things and is more flexible in design of Token economics, but the implementation is more complicated and more difficult than the contract (or this is objective complexity).

Taking all these factors into consideration, we can conclude that the founding small team is basically unable to afford the development and operation of the independent chain of Appchain.

Clusters of AppChain independent chains

In order to solve these problems of AppChain independent chains, some teams have proposed solutions. Each of these schemes has its own characteristics and focuses on solving problems.

Cosmos

Cosmos is dedicated to solving the problem of cross-chain interaction between different blockchains, with the goal of forming an Internet of blockchains.

First of all, the Cosmos-SDK is used to quickly develop and start a chain, which solves a problem that is difficult to develop.

Then, it designed the IBC protocol, which is a general scheme. In the implementation of the IBC protocol between the chain, cross-chain messages can be barrier-free exchange. The independent chain developed by Cosmos- SDK can easily integrate the implementation of IBC protocol. In this way, chains based on COSMOS-SDK can communicate with each other barrier-free.

However, Cosmos AppChain still failed to solve the security startup problem in the initial phase of the chain, leaving it to AppChain itself to solve the security startup problem.

Polkadot

Polkadot's goal is to be the perfect blockchain expansion solution.

Polkadot's Substrate is an excellent framework for rapid development of blockchains. See "Why Compound Gateway USES Substrate for Independent Chain Development" for details.

Polkadot shares security, and its pledge security is very high, which is the same level as the contract platform.

Polkadot also supports cross-chain messaging between parallel chains, allowing for seamless asset flow between parallel chains.

These three things solve three of the biggest problems described above, and Polkadot's plan looks perfect.

But it also brings new problems. The security level of Polkadot relay chain is very high, and the security mechanism is very complex, which leads to very high auction and pledge cost of parallel chain slots, which leads to very high annual rent of its parallel chain, which brings a lot of pressure to the design and issuance of the Token economy of parallel chain. From this point of view, it is not friendly to the development of parallel chains. As a result of this feature, Polkadot gradually went from being a relay network for Appchain to a Platform of platforms, or Layer0 as Gavin calls it. Each slot in Polkadot is actually connected to an isomorphism[1] [2] Shard. And each shard is a platform. So 100 slots, that's 100 shards. So Pocket can connect to 100 platforms, a network of 100 shards. The development model of the application in the Polkadot network is back to the model of contract development and deployment on a parallel chain. In terms of this model, it is the same as Ethereum 2.0.

Octopus

The goal of Octopus is to provide a complete infrastructure protocol for AppChain.

Octopus design: a contract chain platform is selected as the master chain, and instead of running its own main chain or relay chain, all appchains directly interact with the main chain. The advantage of doing this is to reduce the cost of operating and maintaining another relay chain independently, which also reduces the access cost of Appchain ([3] The running costs of a relay chain like Polkadot are passed on to the access costs of Appchain[4] [5] [6] [7]& NBSP;) . Make Appchain Track's startup cost lower and survival rate higher.[8]

On the other hand, due to the DeFi feature of the main chain (contract chain), Octopus actually makes a two-sided market: on the one hand, DeFi investors and on the other side, Appchain entrepreneurial team. An investor Staking voluntarily for an Appchain (similar to the traditional Angel, but more decentralized) becomes a Validator for that Appchain. When the amount of Staking is over a threshold, AppChain moves into the pipeline for startup. At the same time, Octopus also provides a complete set of cloud platform automation tools, so that investors who lack sufficient operation and maintenance knowledge can also do it. The Validator. Because Octopus Staking is a strong binding of the Validator role to the Validator role, the security problem with Appchain is conveniently solved in the process of initiating mortgages. That is, Appchain security is a byproduct of Staking and Staking. However, the value of this security is relatively low at the beginning of the startup. With the development of Appchain, this value will gradually increase. This security is called rental security. This kind of design is also more in line with the valuation growth curve of the traditional Internet entrepreneurial team.

The problem with Octopus is that because its main chain is an existing contract chain, its flexibility and customizability will be limited, which is not as flexible and controllable as a fully autonomous relay chain. The Octopus protocol is designed to comply with the basic rules of capital and finance, but it remains to be seen how effective it will be in practice.

In this section, we analyze several typical AppChain cluster solutions on the market. As you can see, the problem is really very complex, and it's not easy to get a perfect solution. The infinite possibilities of innovation lie at the heart of the art of compromise. The future does not rule out better designs that can solve the problems of AppChain in a better (compromise) way.

Introduction to the AppChain development framework

Almost every blockchain has its own SDK, but not all SDKs are designed for AppChain development. Here we focus on several development frameworks for developing AppChain.

Cosmos-sdk

https://tendermint.com/sdk/

The Cosmos SDK Developer Documentation describes the Cosmos SDK as follows:

Cosmos-SDK is an open source framework for building multi-asset public blockchains such as Cosmos Hub based on POS consensus algorithms, as well as licensing chains based on authoritative proven consensus algorithms. Blockchains built using the Cosmos SDK are often called application-specific Blockchains.

The goal of the Cosmos SDK is to allow developers to quickly build a customizable blockchain that interoperates with other blockchains in a native manner. They envisioned the SDK as a Web application framework that would allow developers to quickly build secure blockchain applications based on Tendermint's algorithm. Developed by the Cosmos SDK, the blockchain is built of modular modules, most of which are open source and available to any developer. Anyone can create new modules and integrate already built modules for the Cosmos SDK as easily as importing them into your blockchain application. Also, the Cosmos SDK is a capabilities based system, which allows developers to better consider the security of interactions between modules.

Substrate

https://substrate.dev

In the process of developing Polkadot, ParityTech dismantled all the functions of blockchain into abstract designs, implemented them into an open source, universal blockchain framework, and used this framework as a tool to build Polkadot products. This frame is the Substrate.

Substrate is a blockchain development framework developed in Rust with the goal of generality. Its design elements, such as cryptography algorithms, storage structures and MPT trees, and account systems, are largely borrowed from the most successful Ethereum infrastructure of all time (understandably, ParityTech started as an Ethereum client, co-founded by Gavin Wood). A framework, to be universal, needs to be highly abstract. The price of high abstractions tends to be complex and difficult to use. So Substrate also offers a number of DSLs for beginners to learn. In summary, Substrate has the following characteristics:

General-oriented. It is designed for a general purpose domain, rather than an SDK developed for a single chain. Each team can use Substrate to develop a completely independent chain that is not dependent on any existing network (for example, a blockchain developed using Substrate can be completely independent of Polkadot, which is one of ParityTech's design goals). It can cover almost all scenarios of blockchain, which can be said to be the most comprehensive blockchain framework Runtime code compiled into WASM for execution on the market at present. WASM is the mainstream VM bytecode selection in today's blockchain industry with super customizability. Substrate itself is a collection of discrete components that can be freely substituted and combined within a set of specification constraints

As one of the strongest blockchain development frameworks to date, Substrate is gaining popularity among a growing number of innovative teams.

Muta

https://docs.muta.dev

Muta is a blockchain Appchain development framework developed by the Nervos team. Its documentation describes it as follows:

Muta is a multi-faceted, high-performance blockchain development framework that makes building blockchains simple and flexible. Blockchain developers can use Muta to quickly build their own blockchains, focusing on business functionality and eliminating the massive effort of building the underlying network and consensus mechanisms from scratch.

The basic core components that Muta provides are:

Low & have spent A newly designed consensus algorithm, Overlord, has high throughput and low latency

Low & have spent Fast and stable storage

Low & have spent Modular P2P network

Low & have spent High performance memory pool

Muta provides customized parts such as:

By developing services -- including governance mechanisms, business logic, and even virtual machines connected to the blockchain -- developers can easily customize the functionality of the chain.

In Muta, a service is an abstraction layer that extends the Muta framework. Each service is a relatively independent unit that maintains its own storage and operation interface. Together, these services form the state machine part of the chain, which, when connected to the underlying components of the blockchain, becomes your own unique blockchain.

There are many other blockchain rapid development frameworks, which I will not list in this article.

conclusion

This paper proposes a theory of C0, C1, C2 stratification in the current blockchain universe from the perspective of value capture. In this paper, the difference and connection between DEFI and Web3.0 are analyzed theoretically, and the reason why blockchain (DEFI part) needs Web3.0 is demonstrated. Then, the advantages and disadvantages of Smart Contract and Appchain are compared in detail. Finally, a comprehensive study is made on the application chain, the main block chain used to carry Web3.0 APP, which lays a theoretical foundation for practical innovation based on application chain in the future.

The transformation of Web3.0 from an ideal to a reality will require numerous teams in various fields to fully implement it. In practice, we summarize experience, revise theory, and explore new programming paradigm, product paradigm and governance paradigm. In the battle of the market, we can get the first-hand feedback from users, improve the product form, upgrade the user experience, and finally make a bright road.

Dawn has risen, only to be brave to move forward.

reference

Why Web3.0 Needs Blockchainhttps://mp.weixin.qq.com/s/h76lTnFWlvpXs72aBVs3FA

Why I No Longer Explain Ethereum as the "World Computer" :https://ethfans.org/toya/articles/why-i-no-longer-explain-ethereum-as-a-world-computer

Serverless is more expensive than you'd expect:https://dev.to/colinchartier/serverless-is-more-expensive-than-you-d-expect-30o1

Serverless vs. Docker Containers -- What to Choose in 2020? (updated) :https://medium.com/techmagic/serverless-vs-docker-what-to-choose-in-2019-80cb80f4b680

Overview of blockchain scalability [2020] - Zhihu (zhihu.com) :https://zhuanlan.zhihu.com/p/111750788

Ethereum Story Ends Not 'World Computer', But 'Open Finance' :https://mp.weixin.qq.com/s/8WvURohy1WD4tbf0nfbdrw

Defi Explosion Ethereum Price to 2020 High:https://dappradar.com/blog/defi-explosion-pushes-ethereum-to-all-time-high-price

Dappradar Q2 Report: Defi Locks Still Focused on Ethereum, Polygon Ecosystems Grow Fast:https://www.chainnews.com/articles/805269754120.htm

Before Blockchain Capacity Expansion: State Channels, DPOS, Large Blocks and Side Chainshttps://www.chainnews.com/articles/692744578850.htm

Analyzing Layer 1 Competitive Pattern: Where Are the Opportunities for New Public Chains? :https://www.chainnews.com/articles/281730625621.htm

Defi in Ethereum 2.0: Urban, Suburban and Rural:https://ethfans.org/posts/defi-in-eth2-cities-suburbs-farms

How to Reshape Chinese Finance for Our Time:http://finance.sina.com.cn/zl/china/2020-08-19/zl-iivhuipn9458143.shtml

Fundamental Theory of Internet Finance:http://www.jryj.org.cn/CN/abstract/abstract373.shtml

Crypto assets are not a monster, understand the basic characteristics and transformative potential of the DEFI infrastructure:https://mp.weixin.qq.com/s/Zm-RCSJWRzFfGur4XQ4pqw