The cornerstone of Web 3.0: decentralized infrastructure promotes Web 3.0 into public view

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Original title: the cornerstone of Web 3.0: decentralized infrastructure(Decentralized Infrastructure: Bedrock of Web 3.0

Author: sharanya Sahai

Sue Tang 

This paper deeply expounds the decentralized infrastructure stack as the cornerstone of Web 3.0. This paper compares its advantages with centralized products in detail, analyzes its specific use cases, points out the challenges it faces, and looks forward to its exciting future development. Decentralized infrastructure constitutes and will continue to be the cornerstone of Web 3.0. Although it currently faces some challenges in large-scale applications and may not completely replace the centralized infrastructure, it is promoting new dialogue and gaining the interest of a large number of investors. Its future has unlimited potential.

The world continues to turn to Web 3.0, while currently only 0.71% of the world ² People are using blockchain technology, and a decentralized infrastructure stack will help ensure that the mainstream public is not just blockchain "innovators" ¹ Join the world of Web 3.0. Whether it is supply chain management (scantrust), climate change (Klima), content publishing (mirror), income generation (axie infinity) or overseas assistance (Ukraine Dao), new use cases of decentralized technology continue to appear. Despite the debate surrounding personal frustration and low trust in centralized authorities such as governments or large Web 2.0 defenders, most people choose to invest in Web 3.0 for utilitarian purposes rather than ideological changes. This further illustrates the importance of building a decentralized infrastructure stack, which provides impetus for Web 3.0 to become a reliable alternative and gain the trust of developers and users.

This paper attempts to elaborate the following contents with you:

  1. What is decentralization?
  2. Web 3.0 and underlying infrastructure stack
  3. Advantages of decentralized infrastructure over centralized products
  4. Deconstruct infrastructure stack
  5. In depth analysis of privacy and security infrastructure
  6. Challenges of decentralized products
  7. Exciting future themes


01. Decentralization in the context of blockchain


The concept of decentralization realized by blockchain was first known with the advent of bitcoin. The bitcoin network is open, so anyone can connect. It also exhibits other key features, such as transparency, where anyone can verify transactions when needed. In such a network, the machines connected to the network are called "nodes". Ultimately, there is a network of thousands of nodes that can send and receive funds from each other.

Let's imagine a real-world example to understand the power of decentralized infrastructure. A decentralized payment network enables people to connect with each other and make payments without paying high fees to intermediaries. This distributed payment network will rely on blockchain technology. There is no designated central organization. The nodes that generate transactions can share with the network and receive compensation directly. The fees involved will be a small part of traditional payment solutions, and settlement may occur in a few seconds. Compared with today's payment products, especially cross-border payment, there will be long delays.


02. Web 3.0 and underlying infrastructure stack


The following figure depicts the various layers that make up Web 3.0, driven by blockchain including infrastructure stack

Decentralized infrastructure stack supported by Web 3.0


03. Advantages of decentralized infrastructure over centralized products


Compared with centralized system, decentralized infrastructure stack has four main advantages:

Controllable:Users of decentralized infrastructure stacks can fully control their interactions on the blockchain because they do not need to seek permission from centralized entities, which often create barriers to use, such as using their data for their own benefit or blocking access to their applications (such as twitter).

Composability: A highly composable system, such as a system driven by a decentralized infrastructure, provides a choice and assembly of various composite components to meet specific user needs. For example, depending on the level of security or scalability required, users can choose to build an application on Solana (high throughput) or Ethereum (high security).

Non tamperability:The data structure of blockchain technology is only applicable to increase. This means that once the data is stored, no one has the opportunity to modify or change the data. The pros and cons of this point depend on the needs of users. In case of hacker attack or accidental transaction, the data on the underlying blockchain cannot be reversed, so it is impossible to retrieve the state before the transaction. On the other hand, the data on the blockchain is anti censorship, which may be very important for storing important information in the event of a disaster.

Security:Decentralized infrastructure has no single point of failure, which makes it difficult for hackers to invade, so it is not as prone to data leakage as centralized products. for instance. If someone wants to hack the bitcoin network, they must hack more than 50% of the nodes of the network at the same time, which makes this "big project" almost impossible.


04. Deconstructing the infrastructure stack


The following tabular framework is used to further understand the various use cases in the decentralized infrastructure stack

In depth study on decentralized infrastructure stack

The infrastructure stack provides LEGO like pillars in networking, computing, storage, security, analysis, governance and transactions, which are composable enough to enable applications to be built across multiple use cases, often beyond the possibilities of the Web 2.0 world.

We can classify infrastructure development into two categories:

  1. Alternatives to Web 2.0 products: This includes the infrastructure / services already provided by companies in the Web 2.0 field. For example, filecoin, a temporary storage provider, competes directly with central cloud storage providers such as Amazon and Google. The success of decentralized suppliers depends on their ability to provide users with excellent alternatives on the basis of cost / efficiency, but both are difficult to achieve on a large scale, especially when competing with giants with a large amount of disposable capital.
  2. Web 3.0 native products: adhere to decentralized storage space, and arweave provides permanent storage, which is not available in existing Web 2.0 products. Although the price of this service product is obviously high, it is particularly important for specific use cases that cannot be met by non permanent storage, such as legal contracts, cultural relics, censorship free publishing, etc. As the world moves towards traceable visibility on the chain, the utility of this service product will only increase.

Some applications based on decentralized infrastructure will replace their predecessors, but the advantages of Web 3.0 features are reflected in decentralized, self sovereign identity, open, public and composable back ends. The types of Web 3.0 applications that need these features will be better than Web 2.0.

To simplify the comparison, here are some examples of infrastructure providers in multiple pillars of the Web 2.0 and Web 3.0 worlds.

Infrastructure providers across web 2.0 and Web 3.0


05. In depth analysis of privacy and security infrastructure


In the infrastructure stack, privacy and security providers look particularly interesting given that they are important to both supporters (cryptocurrency native users, generation z) and opponents (regulators, conservatives / traditions) in the existence of blockchain. Everything has two sides, so there is a certain debate about the application or elimination of cryptocurrency movement. Proponents advocate the complete privacy of user data and the need to ensure the security of their savings / wealth, and there is no unnecessary intermediary or central institution (using cryptocurrency); Opponents believe that the anonymity and vulnerability of new technologies are a serious reason for illegal activities.

But the main corollary is that decentralized applications can meet the needs of these two stakeholders, in which the underlying stack can be interchanged to meet customized use cases. This happens in compliance with national laws, which must change with technological and social development. for instance. Indian / US governments can use blockchain to vote in elections. The system will be tamper proof, providing traceability, anonymity and security for voting records, while ensuring the integrity of the final results; Although it may be difficult to imagine such a scenario, the Australian government has developed such a plan, starting with small local elections.

The following table frame can be used to explain the details provided by privacy in detail

Privacy and security solutions for DAPP and users

An interesting example of the unique capabilities provided by the decentralized stack is nym, which uses a hybrid network to create untraceable communication between sender and receiver. Sensitive information (such as patient's health records or confidential information between internal teams of the company) can use this technology to ensure that the information conveyed can only be accessed by the demander. On the other hand, aleo uses zero knowledge cryptography to meet the needs of enterprises for privacy and programmability. Zero knowledge cryptography allows a third party to verify the authenticity of a transaction without disclosing all the details of the transaction. In short, it allows users to transfer value between each other in a predefined manner without disclosing the inputs that lead to the transfer of value.

While the above provisions establish a customizable foundation for the development of DAPP (decentralized application), other innovations also occur on the client side to ensure maximum control over identity disclosure and the security of personal data and wealth.

More and more dapps gain user trust through the audit of trusted institutions such as certik and open Zeppelin or through the use of threat detection infrastructure by Forta. Because it is very important to find out the vulnerabilities caused by the irrevocable characteristics of Web 3.0, vulnerability discovery platforms such as immunefi and hackerone have received great attention.

Security solutions are not limited to software. As individuals begin to transition to investing and using blockchain in a meaningful way, in order to ensure the high security of user transactions, more and more people begin to use hardware wallets (also known as cold wallets) provided by ledger and trezor. Civic and self key's authentication products enable individuals to participate in the licensing market, while also enabling institutional participants to manage the risk of a decentralized financial ecosystem by maintaining a true identity record completely controlled by users.

About 18.5 million bitcoins worth about $150 billion seem to be lost or cannot be retrieved in the wallet. Key management solutions such as torus and silence laboratories are providing unique solutions to ensure that the private key will never be exposed to malicious entities (browser malware or phishing fraud). Although torus supports multiple signatures for social login, silence laboratories has been building threshold signature schemes that support multimodal proof to achieve true decentralized signature.


06. Challenges of decentralized products


Recently, the Web 3.0 revolution driven by its infrastructure stack has attracted a lot of resources in terms of capital flow and high-quality talents, and some large blockchain special funds have promoted the further development of this field. However, the challenges detailed below remain the key to unlocking mainstream applications and acceptance.

maintain⁵ – DAPP may be more difficult to maintain because the code and data published to the blockchain are more difficult to modify. Once deployed, it is difficult for developers to update their DAPP (or the underlying data stored in DAPP) - even if errors or security risks are found in older versions.

Performance overhead⁵ – there is huge performance overhead and it is difficult to scale. For example, in order to achieve the level of security, integrity, transparency and reliability pursued by Ethereum, each node runs and stores each transaction. In addition, proof of workload also takes time. The cost of rough calculation is 1000000 times that of current standard calculation. However, several solutions have emerged to solve this problem, including optimal capacity expansion (OP) and zero knowledge capacity expansion (zk), as well as scalable layer 1 solutions such as Solana.

User experience——The current user experience of decentralized products is very poor. Not only is it difficult for laymen to interact with decentralized applications; Moreover, the features of limited computer use, multiple checks and unattractive visual effects make users not interested in trying to decentralize applications, let alone apply them.

Network congestion and cost——At present, most dapps are built on Ethereum. When an application uses too many computing resources, Ethereum will be congested, resulting in a long time for the transaction to be verified. In addition, complex transactions involve high costs, which makes the cost of conventional interaction on the chain very high. In order to solve this problem, solutions like polygon have sprung up. It is a layer 2 extension solution on Ethereum, which enables developers to build applications and achieve greater transaction volume at a lower cost by putting only the most important data on the Ethereum network. Capacity expansion technology improves scalability by integrating a large number of transaction processing into a single transaction.


07. Exciting future themes


Benefiting from the excellent product supply and adoption of these products, today's blockchain has the same position as the Internet in the mid-1990s, and there is huge room for development. As we go deeper into Web 3.0, the following are some of the most investment worthy topics that I am particularly excited about:

Institutional participation:Bitcoin is largely the reason why institutions are interested in Web 3.0. Although this trend may continue, it is crucial to expand the overall appeal of the blockchain movement. Institutional application of blockchain is a gradual process, and those infrastructure suppliers who help institutions understand and obtain the benefits of decentralized stack will be successful. For example, conduct is "enabling mainstream fintech companies to provide defi products to their end customers without having to build everything from scratch". ⁶

Multi Chain compatibility:The future of blockchain will include a multi chain world. Different blockchains serve customized use cases, so smooth cross chain transfer is required. At present, the availability of cross chain decentralized infrastructure providers is far from the best, and solutions to this pain point can create huge results.

Improve user experience:Attracting the next wave of people into Web 3.0 requires smooth and intuitive tools to help non encrypted native users use the decentralized infrastructure stack. Simplifying the user experience and providing products combined with the Web 2.0 platform is the key to the long-term success of the underlying technology. For example, Western Union and coin PH cooperates with its blockchain platform to provide its customers with convenient cross-border remittance.

Decentralized infrastructure constitutes and will continue to be the cornerstone of Web 3.0. Although it may face some changes that hinder large-scale applications or may not completely replace centralized infrastructure, it is promoting new dialogue and gaining the interest of a large number of investors. Organizations are beginning to realize the importance of adding some form of decentralization to their products and are allocating a lot of resources and space to this dynamic field. Although the long-term prospect of decentralized infrastructure is bright, it will fluctuate greatly in the medium and short term due to government restrictions, competition from Web 2.0, excessive speculation by investors and use cases limited to games, trading and entertainment. However, this in turn will stimulate opportunities for innovation and provide impetus for a more convenient scientific and technological future!

Some references:

1. Diffusion of Innovation Theory, Rogers 1971

2. 45 Blockchain Statistics & Facts That Will Make You Think: The Dawn of Hypercapitalism, I. Mitic 2022

3. [Tens of billions worth of Bitcoin have been locked by people who forgot their key.] ( https://www.nytimes.com/2021/01/13/business/tens-of-billions-worth-of-bitcoin-have-been-locked-by-people-who-forgot-their-key.html#: ~:text=the main story-,Tens of billions worth of Bitcoin have been,people who forgot their key.& amp; text=Of the existing 18.5 million,the cryptocurrency data firm Chainalysis.)

4. Charted: Blockchain use in governments, Charlene Chin

5. Stage of Evolution vs Internet: Where are cryptocurrencies at?, Ledger Blog 2021

6. The Next Wave of Crypto/Fintech Convergence, Mike Giampapa 2022

7. A simple guide to the Web3 stack, Coinbase Blog 2022


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