Composability of Web3 Data Networks

A few months ago, at the 2021 Multicoin Summit, I gave a keynote that highlighted composability as the most important development in the cryptocurrency space for mid-2022. While that presentation focused on the composability of financial assets on the Solana chain, financial composability is not the only form of composability. There’s an even bigger opportunity for composability: data composability.

Layer 1 networks are the underlying architecture of the cryptocurrency ecosystem. These networks are loosely referred to as Layer 1 (L1) because they all have a set of independent nodes reaching consensus with some kind of response mechanism. However, they are functionally different depending on what type of state they track, how they reach consensus, and the types of applications they can support. L1’s ledger is mainly divided into the following categories:

  1. Asset Ledgers – Bitcoin, Ethereum, Solana, Polygon, Flow, Near, Avalanche, Terra, etc.
  2. Storage ledger – Filecoin, Arweave, Sia, etc.
  3. Data Ledger – Ceramic
  4. Application-specific ledgers – Osmosis, Helium, Thorchain, Sommelier, Auth Network, etc.

For years we have believed (see here, here and here) that the Solana blockchain will become the mainstream crypto-native asset ledger. At the same time, we also believe that Ceramic will become the mainstream data ledger, and today we would like to announce that we co-led a $30 million funding round in Ceramic with Union Square Ventures (USV). In addition to USV, the round includes Coinbase Ventures, CoinFund, Collabfund, Dapper Labs, DCG, Edge and Node, Figment, Hashed, Jump Crypto, Metacartel Ventures, Not Boring Capital, Northzone, P2P Capital, Placeholder, Protocol Labs, Reciprocal Ventures, Variant Fund, Venrock and more than 50 cryptocurrency angel investors and community members.

scarcity and abundance

Asset ledgers like Ethereum and Solana do one very simple thing: record the number of tokens (fungible and non-fungible) of users. The net output of these systems looks as simple as that.

From another perspective, asset ledgers manage scarcity. For any given asset, there must be a corresponding fixed amount of tokens at the corresponding point in time. In every transaction – payment, transaction, loan, etc. – someone decreases their token balance, while the other party increases their token balance.

However, in the trajectory of the Internet over the past 30 years, scarcity has not been so focused. Quite the contrary, it has always been about abundance. More of everything – more data, pictures, computers, servers, friends, followers, contacts, consumption, sharing, and more.

In scarcity-centric applications, when some users gain tokens, it means that other users must lose tokens. But in richness-centric apps, users can create unlimited data and content. You can write an unlimited number of tweets and follow an unlimited number of users. It is this clear distinction that makes it necessary to build a new type of L1 to handle these data-centric use cases and transaction volumes.

Solana will be a scarcity-centric web3 application (who owns how many tokens), while Ceramic will be an abundance-centric web3 application (who wrote which tweets). If there is a decentralized Twitter one day, then decentralized Twitter (dTweets) can be hosted on Ceramic.

The explosive growth of NFTs, web3 social applications, encrypted games, etc., has given developers enough interest to build a composable, decentralized database. Today, thousands of developers have built over 400 applications on Ceramic, making Ceramic the leading decentralized data network.

System Overview

All ledgers—asset ledgers, storage ledgers, data ledgers, etc.—must have three properties at the same time:

  1. Extensions – Without extensions, the software is just a toy.
  2. Composability — As more data, state, and functionality are added to decentralized ledgers, they increase the breadth and depth of the underlying architecture upon which new applications can be built. Composability is the ultimate network effect.
  3. Logical Centralization – As systems are logically fragmented (usually to support scale), they become increasingly complex and difficult to build. While the core benefit of composability is compounding network effects, supporting scale by disrupting the centralization of logic prevents developers from truly benefiting. Over the years, we have emphasized the importance of logical centralization.

     

expand

One of the reasons for Solana’s success is that it enables tens of thousands of transactions per second in financial applications (and is expected to scale to millions over the next few years). If Ceramic is to simultaneously host decentralized versions of apps like Twitter, Facebook, Reddit, Snapchat, TikTok, and more, Ceramic must scale to hundreds of millions of transactions per second. This is an order of magnitude scale level. 

In order to achieve such a high transaction frequency, Ceramic made some very assertive decisions about the data structure of its ledger. Most importantly, in Ceramic, there is no concept of state that can be shared between people (eg, transferable tokens or AMM pools). Each piece of state belongs only to the person who created it, and no one can modify anyone else’s state (although any user can see states owned by another user).

A useful design strategy for Ceramic is that each user has a series of JSON documents, called Streams, that only the owners of these documents can modify. Additionally, the content stored in each document is arbitrary, and content in anyone else’s documents can be referenced. It should be noted that this strategy does not exclude program judgment, developers can write streamcode functions to define how these documents are updated, and what action to perform on each new update. For example, for a Twitter-like application, a developer could define a userTotalTweetCount function and increment it each time a user posts a tweet to their Ceramic stream.

The beauty of this unique architecture is that because the user state is open, horizontal scaling can be done very cleanly under this architecture. Imagine a world where users 1-1,000,000 are replicated on one set of Ceramic nodes, while users 1,000,001-2,000,000 are replicated on another set of nodes, and so on. In theory, the network could be sharded to each user without breaking composability, if desired. To ensure state verifiability and composability between user shards, Ceramic relies on a Merkle tree data structure that aggregates all users’ transactions together, allowing any user to verify anyone else’s JSON document at any time completeness.

composability

Ceramic primarily enables data composability across applications through a new abstraction called a data model, which unifies how similar applications are stored and can retrieve the state of each user on the network. For example, you can imagine that each decentralized Twitter runs on several shared data models: one for each user’s tweets, one for their social graph, one for their private messages, and so on. By using the same underlying data model, applications can natively interoperate on the same data.

In a way, you can compare Ceramic’s use of data model standards to its use of token standards for asset ledgers. For example, on Ethereum, the introduction of the ERC-20 homogenous token and ERC-721 non-fungible token standards has spawned an entire ecosystem of tokens and financial applications and made them natively interoperable. However, Ceramic brings this concept to the data.

Ceramic takes a community-driven approach to creating these data models, allowing any developer to easily define, share and recycle their models with other developers in the ecosystem. As the community creates more and more data models, we will see an expanding number and variety of applications built with composable data.

In the aforementioned way, composability also leads to a better developer experience. Building an application on Ceramic looks like browsing a marketplace of data models, plugging them into your application, and automatically gaining access to all the data stored in those models on the network. With Ceramic, developers don’t need to worry about developing applications with their own users and data. The overall composite innovation rate for developers will be greatly accelerated.

L.F.G.

The Ceramic network has been launched, and the SDK can also be obtained on the official website. Also, we have invested in several companies that are developing applications on the Ceramic network.

The Ceramic network has been in beta since June 2021 and is being run by a handful of early backers. In the coming months, the network will be distributed to more and more hosts and become a completely permissionless network, allowing anyone to publish content on the Ceramic network. In order for the network to transition to permissionless operation, Ceramic will issue a token that will act as an economic layer to incentivize people to run the Ceramic network around the world, similar to IPFS and Filecoin in a way.

One of my favorite things about Ceramic: It unlocks new capabilities for developers building on asset ledgers. Developers can leverage Ceramic’s data-centric capabilities to optimize their applications on any of the major asset ledgers such as Ethereum, Solana, Polygon, Avalanche, Near, Luna, Flow, and more. Based on the flexible DID system, all users can use their private keys of any mainstream asset ledger to seamlessly connect with Ceramic. Because of this, I would like to see developers building on all major asset ledgers adopt Ceramic in some of their applications.

This year, with thousands of developers launching applications on Ceramic, the number of composable forms in the Ceramic network will explode, providing a vibrant data layer for continued development of advanced applications.

If this article sparks your passion, Ceramic is hiring, you know.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/composability-of-web3-data-networks/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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