Roundtable Discussion: Web3 Critical Infrastructure

In recent years, the concept of “Web3” has begun to sweep across various industries. It integrates everyone’s vision and exploration of the next-generation Internet. It is regarded as an emerging technological revolution that will eventually expand to various fields such as economy, society, and life. Initiate disruptive change.

Golden Finance and Tencent Technology have launched a series of interviews on “How far is Web3 from us?”. The topic to be discussed in this issue is: Web3 key infrastructure. So what infrastructure does Web3 need? What is the current situation of each? Will Web3 infrastructure be centralized in the future? How to balance performance and regulation? These issues will be discussed today.

In this issue, we have everFinance core development & arweave ecological developer sandy, and Footprint Analytics community and investment (Community & Investment) head Jimmy. The host is Maxwell, editor-in-chief of Golden Finance. The following is the summary version of the live record:

What is the history of Web How to see the position of Web in the Internet ?

sandy: The concept of Web3 was first proposed by Gavin Wood in 2014. At that time, Ethereum had not yet been developed. The reason why they proposed this concept was because they needed to make an on-chain virtual machine when developing Ethereum. Turing completeness is different from Bitcoin’s virtual machine. That’s when he thought of the question, can we build an application paradigm that runs on a decentralized virtual machine, is completely open and transparent, and does not belong to anyone or an organization. In fact, this is the original concept of Web3 based on technology. This is Gavin Wood ‘s definition of Web3 from a technical perspective , because he believed that only decentralized technology is the only hope for maintaining freedom and democracy. This may be the reason why he did Polkadot later, because he felt that Ethereum could not carry the larger applications in Web3 .

For Web3 believers, the concept we hear most often is that Web3 is the next generation of the Internet, the next stage of the Internet, and even the next stage of our social organization. We want Web3 to subvert Web2 , subvert oligopoly or government regulation. We will expand on whether it can be subverted later.

As far as technology development is concerned, our impression Web3 may be to break some of the previous architectural models of traditional service development, such as CS architecture. But now for developers in non-blockchain circles, we may have heard of serverless, which is a serverless architecture model. For developers, I don’t need to run back-end services, I don’t need to run servers, I just need to write the code and submit it to the serverless technology service tool provided by the cloud service provider, and then run its code. , like Alibaba Cloud has a feature called function computing. The architecture of Web3 is actually the same as that of serverless, except that its serverless provider is no longer a cloud service, but a blockchain. If it is on Ethereum, it is the computing and storage capabilities of the Ethereum blockchain.

Therefore , Web3 is a new application. The applications on Web3 are completely open and transparent, and the ownership does not belong to any person or organization. Its ownership is obtained by the joint development and maintenance of users and developers. For users, it involves the model of proxy distribution. developer’s word. It might involve some discussion in their community. So for Gavin Wood , Web3 is an application whose properties are: less trust and more truth. That is, I don’t need to trust your app. For example, Tencent maintains WeChat not to be evil, or Google maintains crime not to be evil. I don’t need to trust you, and trust may also lead to belief. He is more of a fact. The fact is that I see how the code on your chain works, and this chain gives me the facts. This is my summary of Web3 .

Jimmy: Sandy just spoke very professionally, so let me give some perspectives from a non-professional perspective. Maybe everyone is more aware of the difference between Web1.0 , 2.0 , and 3.0 . There is a more aggregated classification here. If it is Web1 , its content is created and controlled by the platform company, the user’s identity is controlled by the platform, and the revenue is distributed by the platform. In Web2, it is readable and writable, and the content is created by the user. However, the content and identity are controlled by the platform, and the revenue is also distributed by the platform. The biggest difference between Web3 and them is decentralization. Without the concept of centralization, users can obtain the value of the Internet. The content is created and controlled by the users themselves, and the identity is controlled by the users themselves. It is also up to the user to decide how the income is distributed. This is a widely circulated comparison of Web1 , Web2 , and Web3 .

When it comes to the history of Web3 development, the earliest is the Bitcoin white paper released by Satoshi Nakamoto in 2008. The original Web3 was a decentralized ledger, which brought a new thing like cryptocurrency. Then in 2014, Vitalik launched Ethereum, and realized smart contracts in addition to decentralization and only bookkeeping, so that many application-level products can use smart contracts. Therefore, from 2013 to 2018, a large number of applications, public chains and ICOs appeared, and the market was also chaotic and ups and downs. By 2020, DeFi, decentralized finance, appeared. It has brought great popularity, mobility and popularity to the entire Web3. In particular, it brought liquidity mining and introduced the financial concept of lending, which greatly promoted the prosperity of the market.

Then the pace is faster, like layer 1 and layer 2 in 2021, which is a first-layer public chain and a second-layer public chain. Why does this thing appear? With the extension of these application scenarios of DeFi, the increase of users, the increase of transaction volume or the increase of on-chain activity has brought a problem. Although Ethereum is relatively secure, its speed is relatively low and the cost is high. For an application product, these are two major pain points. As a result, multi-chain prosperity has been brought about, and many one-layer public chains have emerged, such as Avalanche Chain, TERA, Fantom, Cosmos, etc. Ethereum itself is also looking for solutions. For example, it puts a lot of computing and many other things into layer 2 to solve, and there are problems like using sharding to solve its speed and cost. This is the year 2021 that the public chain will bring new problems and new solutions with the development of the industry.

There will be another new change in the second half of 2021, which is DeFi. A typical representative is the game infinity, which brings a mode of play to earn. In terms of model or content, it does not appear to be of high quality, but it brings a big difference to everyone, that is, it connects the offline game market with Web3, which is a big application industry. .

This year, NFT came out of the circle, which is a non-fungible token. The difference between it and the homogenized token is that the homogenized token is like issuing currency, such as how many coins are issued, and the price and exchange rate of each currency rise and fall. But for offline assets, each NFT is unique. What does it do? There are countless kinds of assets offline, can these assets be mapped to online one by one? It opens up the connection between Web3 and the real world, promotes the prosperity of Web3, and brings everyone’s unlimited imagination of digital assets. But as NFTs came out, everyone found another problem. There are indeed many things that can be digitized, but how to price them? How to solve the liquidity problem? So NFTFi appeared to solve its pricing and liquidity problems. For example, we recently saw a Chinese team put forward an improvement proposal EIP-3525 in Ethereum, which is used to solve this problem.

Therefore, we see that the development speed of the entire industry is getting faster and faster, and the iteration speed is getting faster and faster. We are now in a bear market, but I think that in the entire Web3 world, we don’t talk about finance or investment, but only about the applications it produces. It has become a world that is gradually entering the lives of more and more people. I think this It’s a good thing.

Web3 has a very important core, which is decentralization and immutability, which will play two major roles. Decentralization does not require trust. I wrote it in the contract, and there is no need for newcomers. The code written in the contract is just like that, and you cannot tamper with it. What role does it play in our traditional Internet? The role of information aggregation, the role of improving efficiency, improves people’s production efficiency, thereby improving productivity. Then, when your trust cost is reduced, Web3 also improves production efficiency and productivity, thereby changing the production relationship. Just like smart contracts, many things that were previously offline on Web2 will be moved to Web3 because it may be more efficient. As the infrastructure gets better and better in the future, my migration cost is getting lower and lower, and the reputation cost here is so low, so I am more efficient here, can I change some production relations? For example, what kind of production relations should be changed? Now the platform has a lot of control over the user, so the next step is not user-driven, not project-driven, this is the change in production relations.

Next is the smart contract, which plays a very important role, and many projects are composable. There will be no traditional barriers between Web2 unicorn giants, such as I am not compatible with your application, you are not compatible with my application. The contracts themselves are compatible and can be superimposed. It is possible that the two traditional Internet giants can combine to provide users with better services, but they are not combined for various reasons. In the Web3 world, through the docking between smart contracts, they can increase efficiency and provide users with better services. Good stuff, this is the core value I see with Web3.

What infrastructure is required for Web3? What is the current situation of each?

sandy: We all know that Web3 is based on blockchain, which is equivalent to a decentralized application or online system. First of all, the infrastructure we need is the blockchain. We have built so many high-performance chains in the past few years to solve the efficiency problem of the blockchain, and then allow more blockchain applications to run on their chains. So the blockchain is the most important piece of infrastructure. Then there is the wallet, which is very important as a user’s entrance and as an infrastructure. Another thing that may not be familiar to everyone is that many Web3 application data exists in distributed file systems such as IPFS, so IPFS is also considered the current Web3 infrastructure.

I personally feel that the current Web3 infrastructure must not be able to bear more frequent and larger numbers of users. We can also see that during the previous bull market, the transaction fee on Ethereum was so high that it blocked a large number of people who wanted to come in and experience it. Therefore, the blockchain is currently unable to undertake all the Web3 that we are imagining now. For example, GameFi, there is currently no chain that can undertake such high-frequency transactions on GameFi, or the data to be uploaded. So my conclusion is that in the future, the infrastructure of Web3 may need some changes in the way to take on the applications of DeFi that we are imagining now.

If we build a blockchain based on the current paradigm of decentralized ledgers and UM virtual machines, we can only see its storage and calculation, and the storage and calculation of an application are executed on the chain. Even if we see Ethereum 2.0 in the future, it may be divided into 64 slices, Polkadot’s 100 parallel slots, which are all to expand a computer into 100 or 64 computers to process transactions in its entire network. But for the huge GameFi application, it may not be possible for 100 computers to process all the transactions in it. For example, if you need to buy and sell equipment when playing games, and the number of users increases again, if all such transactions are uploaded on the chain, there is definitely no way to deal with them. So we may think more about building Web3 through a paradigm shift to separate storage and computing.

We at everPay have proposed an SCP storage calculation method to solve such a problem, which is also more suitable for the scenario of GameFi. It is to store data on a dedicated decentralized blockchain, and then perform calculations under the chain, which is equivalent to solving this expansion problem through data sharding. In the case of IPFS, the reason why I did not define it as a decentralized file storage system is because there is still a certain gap between distributed and decentralized, and it may still be a distributed file system.

If Gavin Wood ‘s definition of Web3 technology is strictly followed , most applications other than DeFi may not meet the definition of openness, transparency and open source code. For example, if you are an NFT project party, your NFT pictures are definitely not stored on the chain. You may exist on IPFS, or on your own server. For a user, I purchased your NFT, but I actually saved the image myself, or I didn’t save the image and relied on OpenC or the project website to download the image, which is also a violation of the “less trust more” many facts” as defined by Web3. To solve such problems, more blockchain components may still be needed, such as those based on blockchain storage protocols.

Jimmy: I also checked some materials, including my own understanding, and I agree with some categories. The Web3 infrastructure is divided into three categories. The first category is the participants of the data. The blockchain itself is the core of the data and algorithms. How can the most basic core architecture and tools be provided around the team to build and operate the Web3 project? For example, there are core infrastructures, such as operating nodes, storing data, providing these data through APIs, etc. These core data infrastructures are highly concentrated with the development of the industry, and some giants have come out . In addition, there are some other infrastructures, such as developer tools, which will lower the development threshold of the project side. In this industry, it will be more fragmented, including many categories corresponding to different applications.

The second category is the support service of blockchain, which is based on data. For example, the maintenance of the network requires miners, and the staking service provider allows ordinary users to staking, especially after the Ethereum 2.0 upgrade, which is responsible for making the network more stable and generating blocks. Then comes the on-chain analysis, what happened to the data in the end? Can you indicate what is the current state and what is the future state? Every project party needs data analysis tools.

There are two categories, the typical first category is centralized data analysis tools. In a centralized way, users are told what they need to know, or the information users need to know will continue to increase. Another is decentralization. Many people participating in the blockchain have the ability to code. The platform organizes the basic data clearly, and users do not define what they want, but are only responsible for producing data. If you want a lower level, you can also combine it yourself.

The third category is applications that directly create value to solve liquidity problems and pricing problems. The core is the wallet. The wallet is equivalent to the gateway of Web3. Everyone who enters Web3 needs a wallet to store some Tokens for payment. There is also a custodian like an institution, which can connect real-world currencies and the entire blockchain. currency, which is equivalent to the role of currency exchange, foreign exchange provider. There are other exchanges like exchanges that provide liquidity and pricing for all on-chain assets, including decentralized exchanges and centralized exchanges. Many users need an asset management service. This industry is already mature offline. .

There are also decentralized vault wallets to manage it, and through smart contracts, investment strategies are used to automatically help users use the user’s coins to invest without changing the attributes of the coins. These are the three important aspects of what I consider blockchain to include the Web3 infrastructure, and their current state.

Which Web 3 directions are optimistic about in the infrastructure ?

Sandy : There are all kinds of innovations in DeFi . There will be innovations every once in a while. DeFi innovations may bring us into the next bull market, so I am very optimistic about this track. DeFi is a true Web3 application because all its contracts and data states are on the chain, and it is an absolutely decentralized application.

The second is GameFi. GameFi is the only hope that I think can bring the blockchain out of the circle. The software application S2E has also been well certified before, allowing many people to enter the blockchain by playing S2E. We still need games that are really playable and give users positive feedback in real time to come out of the circle. If such a product appears in the future, it is likely to bring the blockchain to a higher level. Web3 needs to use DAO, a Web3 application, its owners are not only developers but also users. A DAO is an organization that can operate a Web3 application, or a series of Web3 applications. So DAO is also very important in the field of Web3. I am more optimistic about DAO.

Jimmy: The promising directions of the entire Web3 are logically organized into two categories. The first category is the industry that benefits from the reshaping of production relations and the improvement of production efficiency. For example, games, artworks, finance, etc. are all available in traditional industries. They can achieve greater development by improving their efficiency on Web3. The second is the transformation of productivity. For example, there is innovation in ecology. For example, DAO is a new organizational form. There is no example of such innovation in the traditional market of NFT financialization.

Personally, I am optimistic about several directions. The first is DeFi derivatives trading. Wall Street is very mature about what can be built on top of finance. There are quantitative, technical transactions, primary issuance, secondary issuance, and There are many marketers and so on, and Web3 will have them. Web3 is not yet because the infrastructure is not perfect, the cost is high and the speed is very slow, and many transactions cannot be supported. After these problems are solved in the future, the market must be very large.

The second is that NFTFi combines the reshaping of production relations and the transformation of production. The reshaping of production relations means that we all have a digital identity, and correspondingly we will have digital assets, and these digital assets are all unique.

The third is GameFi. The entire traditional game industry is a very large market. In the past, the ownership of game assets was strictly owned by the game developer, but after it is on-chain, no one will take away your ownership. Even the same assets can be transferred between different games.

The fourth is the DAO organization. The core point I am optimistic about is that it can participate in decision-making and own a project by itself. You are the user and the owner and developer of this project. Judging from my experience, there are opportunities in these four directions.

What preparations should be made for the future infrastructure of Web 3, including the applications on it?

Sandy : If it reaches one billion users in the future, it will definitely not be developed based on the current blockchain architecture. Based on the current blockchain architecture, it is equivalent to running all Web3 applications on one server. At present, we are also exploring the ability to carry more Web3 applications in the future. Serving various transactions in it, the process of computing transactions is stored on the chain, and a chain dedicated to storage will be found for storage.

At present, the Web3 infrastructure is the blockchain, and there is no way to carry billions of users to use it. In the future, I hope that people with technology can come up with a better way to solve it. Carry more Web3 users into the blockchain world.

Jimmy: Two problems. The first one is the node supplier. The cost of building a node yourself is high, the stability will be poor, and storage and computing are also very resource-intensive. The cloud service of Web2 will be called. The cloud service is very expensive, and its profit is your cost, so the very important thing is the characteristics of Web3. What is the difference between Web3 and Web2? What Web3 brings is an increase in efficiency. The improvement of efficiency is based on decentralization, the underlying framework is done well, and users provide storage. Everyone who provides storage power and computing power can be rewarded from it. It is a good direction for the future for those who use data to pay back, to open up the chain, to use smart contracts to constrain this matter, and to form an organic cycle in the end. We must focus on the decentralized nature of Web3 in order to conform to the development trend of this industry.

The second is the issue of vision. How many users are offline in the whole world, and what value can Web3 provide to Web2? What preparations users need to do after they come in, they must have this vision. To do this for a long time.

Could Web 3 be as centralized as Ethereum’s staking operators in the future? How to balance this tension between performance and regulation.

Sandy: First of all, the most fundamental reason for the US government to start regulation is that many blockchain infrastructures are in the hands of centralized service providers. In fact, the regulation of this application layer can be avoided. We can build a more complete IPFS-based access, deploy the front end on IPFS, and allow more browsers to support direct access with IPFS, so as to avoid DNS and domain name server attacks. In front of the government, it is very simple to get a certain blockchain. The main problem is that the influence of the blockchain is not enough, or the number of people participating is not enough.

The US government or the Chinese government have different regulatory strategies and have their own rules. It is possible that an infrastructure is provided in a neutral way, and the regulator is more likely to supervise the application layer above the protocol layer. For a regulator, a more friendly direction to blockchain policy is to guide, and the regulator supervises the application layer, rather than directly supervising the protocol layer.

Jimmy: There will always be competition and games in human society. Any social change is caused by the distribution of interests. With the development of society, resources will flow to the top, and something is needed to break it. This is the law of the essence of human society. When it comes to supervision, there are two levels of supervision. One is called supervision in a narrow sense. For example, if disorderly competition hurts many users, then supervision is a good original intention. There is also a kind of regulation. For example, the United States is sanctioning China. This is a conflict between the original order and the new order.

Regulation is just a means, but the point behind it is not the issue. Therefore, for the blockchain supervision, it is the same two problems. The first is that there are many chaos that need to be planned and supervised, but there are still many problems in what way. Blockchains based on the spirit of decentralization may be more suitable for autonomy. Government regulation is more of a conflict between order and order. It is a long process. We believe that there will be a decentralization process for infrastructure in the future. We have a clear vision for the future, but there is still a long way to go for technological perfection. With the development of the industry, its disadvantages will become more and more obvious. Then I have the same problem with the decentralization of this infrastructure. It has an alternative process. Starting from efficiency, first solve the problems of users, and then slowly decentralize.

Web3 has national and geographical attributes behind it, and it cannot bypass national supervision. So it is a process of game and change. The United States has ignored China’s development for more than ten years, and when it is now enough to confront him, it will limit its development, and there will be some changes in the middle. Much of the regulation is beneficial, it protects vulnerable users. As the industry grows, regulation can become a conflict of interest. These things are unstoppable, we can only accept him, embrace him, we cannot predict him and control him.

Maxwell: Thank you very much for the wonderful sharing of the two guests. I hope that through the interpretation of the guests, everyone can better understand Web3. Thanks for the support of Tencent Technology, I hope Tencent Technology netizens will not forget to download our Golden Finance APP to learn more about Web3.

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