Blockchain Architecture
Where is the value in building your own blockchain from modular components?
A quality UX demands focused alignment on what is most important with tight integration of components to realise those ambitions.
Infrastructure Layers
| Layer | Protocols | Notes |
|---|---|---|
| Interop | Open Intents and AggLayer | The Dream layer where everything connects... |
| Layer 3 | Consumer App Layer | Dedicated consumer App layer for vertical specific with domain-specific UX flows |
| Layer 2 | Arbitrum, Optimism, Polygon | Represents networks built on top of existing blockchains helping to solve their underlying issues |
| Layer 1 | Ethereum, Move, Solana | The consensus layer ensures that all nodes on the network agree on the current state of the blockchain |
| Layer 1 | Ethereum, Move, Solana | The network layer facilitates communication between nodes on the blockchain |
| Layer 1 | Celestia, Ethereum, Move, Solana | The data layer is responsible for storing and retrieving information |
| Layer 0 | doublezero, avalanche | The hardware infrastructure foundation, comprising the physical devices that power the network |
tip
Zero Knowledge Proofs are the endgame
Modular vs Integrated
Pros and Cons of Modular vs Integrated Blockchain Architecture.
Modular Components
Pros:
- Scalability: Modular blockchains can handle higher transaction volumes by separating functions like execution, consensus, and data availability into distinct layers, allowing each to be optimized independently.
- Specialization: Different layers can specialize in specific tasks, leading to greater efficiency and performance. For example, Celestia focuses on data availability, while Dymension provides a settlement layer.
- Flexibility: Developers can choose the best components for each layer, tailoring the blockchain to specific needs and use cases.
- Interoperability: Modular blockchains can integrate with various networks, enhancing the ecosystem's overall functionality and connectivity.
Cons:
- Complexity: The separation of layers introduces technical and social complexity, making development and coordination more challenging.
- Centralization Risks: Relying on specific layers or entities for certain functions can create central points of failure, potentially compromising decentralization and security.
- Fragmentation: The proliferation of different layers and standards can lead to fragmented liquidity and social coordination issues.
- Security Dependencies: The security of the entire system depends on the security of each individual layer, which can be a vulnerability if one layer is compromised.
Integrated Components
Pros:
- Simplicity: Integrated blockchains consolidate all functionalities within a single layer, simplifying development and user experience.
- Composability: Maintaining all functions within one layer ensures seamless interaction between different components, which is beneficial for developing complex smart contracts and applications.
- Lower Latency: Integrated blockchains can achieve lower transaction latency due to the unified processing of all functions.
- Stability: With fewer moving parts and dependencies, integrated blockchains can be more stable and easier to manage.
Cons:
- Scalability Limitations: Integrated blockchains often face scalability issues as all nodes must perform all tasks, leading to bottlenecks.
- Resource Intensive: The need for all nodes to handle all functions increases the resource requirements, potentially centralizing the network around those with more resources.
- Trade-offs: Integrated blockchains must balance security, decentralization, and speed, often sacrificing one to improve the others.
- Less Flexibility: The monolithic nature limits the ability to optimize or upgrade individual components without affecting the entire system.
Innovation Frontier
Interop, offchain data services and autonomous AI Agents managing capital flows.
- Zero-Knowledge Proofs: Allow for privacy-preserving transactions and computations.
- Trusted Execution Environments (TEEs): Enhance security for sensitive operations.
- Decentralized Sequencers: Distribute transaction ordering power in Layer 2 solutions.
Off-chain data is crucial for enabling smart contracts to interact with real-world events.
- Chainlink serves as a prominent decentralized trust network for bridging offchain and onchain workflows.
- Other middleware solutions may be developed by specific projects to connect physical infrastructure with blockchain networks.
- Interoperability Solutions: Enable communication between different blockchains (e.g., cross-chain bridges).
Blockchain Components
The aim is to provide trust-less transactions in a flow data with verifiable truth.
- Consensus Mechanism: Ensures agreement on the blockchain state
- Cryptography: Provides security through digital signatures, hash functions, and encryption.
- Network Layer: Facilitates peer-to-peer communication and transaction propagation.
- Data Layer: Manages block and transaction formats and data structures like Merkle trees.
- Data Availability
- Execution Layer
- Settlement
- Solvers:
- Programming Layer: Enables programmable functionality on the blockchain.
See blockchain architecture layers and technologies
Scalability Solutions
- Sharding: Partitions the blockchain for parallel processing to increase throughput
- Layer 2 Solutions: Off-chain scaling solutions such as state channels, side-chains, and rollups.
L2 Scaling Solutions
Scaling solutions for blockchains, primarily Ethereum.
Based Sequencer Rollups are key to Ethereum's potential providing human alignment problem can be resolved.
Sequencers order and batch transactions in Layer 2 solutions, Based Rollups: Integrate closely with Layer 1 for enhanced security and simplicity.
Security and Governance
- Governance Mechanisms: Facilitate protocol upgrades and dispute resolution.
- Security Measures: Include formal verification, bug bounties, and audits to ensure system integrity.
Economic Considerations
- MEV (Maximal Extractable Value): Influences transaction ordering, fairness, and economic incentives within the ecosystem.
- Fee Markets: Determine transaction prioritization and validator rewards.
DePIN Networks
DePIN (Decentralized Physical Infrastructure Networks) rely on accurate real-world data for their operation, making oracles essential. Although engineering reliable oracles is complex due to challenges of data integrity, security, and consensus, many DePIN projects opt for custom solutions tailored to their unique requirements.
Custom Oracle Solutions:
- Many DePIN projects roll their own oracles due to specific needs that existing solutions may not fully address.
- These custom solutions often include middleware that collects data from physical devices and validates it before transmitting it to the blockchain.
Decentralized Validation:
- Multiple nodes validate incoming data to ensure integrity.
- Incentive structures encourage honest reporting of data from participants in the network.