The goal has always been to enable a new web paradigm. Web3 promises a new internet that shifts the power back to the user, who has complete control and ownership of their digital footprint. The leading technology that promises such a future is blockchain.
Blockchain has allowed us to envision such a web and even get a glimpse of what it will look like. But how much have we progressed in realizing it? Some will argue significantly, perhaps pointing to developing countries utilizing cryptocurrencies to battle inflation among other examples. However, I think the vast majority would argue we are nowhere near this web utopia.
A primary reason is that the current infrastructure doesn't cut it. No system has achieved proficiency in scalability, security and decentralization. What's required is a foundational change in the underlying infrastructure that will catapult the next wave of applications toward a level of usability that will enable adoption.
That change is the modular stack.
This series aims to write about just that; what is the modular stack, its components and some projects within each. Following this post, I’ll dive into each layer and explain them in laymen's terms. Let's get into it.
The Monolithicc Stack
If you have ever used a DApp or sent a cryptocurrency, the likelihood is almost certain that you have encountered the monolithic stack. In fact, even if you’re working on an OS such as Mac or Windows, you are interacting with a monolithic architecture.
To put it simply, it's a system where all of the components are coupled and bundled together in a single unit. There is no separation between the components. You cannot simply modify or remove a component without the whole system losing functionality.
In a monolithic blockchain, the node performs all of the core tasks. That includes:
Execution: The node executes all transactions, whether they are from externally owned accounts or contract accounts. This means validating their integrity and then executing the logic or code of the associated transaction.
Consensus: This involves achieving consensus among all nodes on the current state of the blockchain. This process involves collaborating with other nodes to validate and agree on the order and validity of transactions. This often involves using a consensus algorithm, such as Proof of Work (PoW) or Proof of Stake (PoS), to achieve agreement and reach a shared, immutable history of transactions.
Settlement: Finally, settlement involves finalizing the new transactions broadcasted to the network in a new block, and updating the state of the blockchain. A node must download new blocks and re-execute the transactions contained in each to validate them. If validated, the block is added to the blockchain the state is updated.
This is a lot to comprehend. It's also a lot to perform by a single node.
A monolithic stack is simple by nature making it suitable for small applications. However, as the system or application scales, the system becomes inefficient. This is what happened with Ethereum. Demand for the applications built on top has led to high gas fees, slow transaction times and limited block space. If you have encountered any of these, you have witnessed the drawbacks of this architecture.
Moving to Modular
Imagine you have a Lego structure. It starts small. If you wish to modify it, it's relatively easy. Over time, you add to it. The structure becomes larger and larger. But one day you realize you no longer like the colour of a certain element. You would need to disassemble and rebuild the entire structure, which can be time-consuming and prone to errors.
Fortunately, you have the foresight to know that this will likely happen again even after this change. So, you decide to embrace a new approach - a modular stack - and assemble a new Lego structure that will eventually replace the old one.
Your Lego structure is transformed into a modular building system. Instead of one massive structure, it consists of individual modules that can be assembled and disassembled independently. Each module serves a specific purpose, whether it's a section of the building or a unique feature.
This is what’s currently happening with Ethereum. Nodes are decoupling, meaning that they will no longer have to perform every task above. Instead, they can specialize and focus on specific tasks according to their capabilities, expertise and preferences.
So, some nodes may focus on executing smart contracts, while others may specialize in consensus or settlements. This specialization improves efficiency because nodes can allocate their resources and computing power more effectively, optimizing performance in their specialized domain.
What Blockchain Trilemma?
The blockchain trilemma has long posed a challenge for blockchain networks, forcing difficult trade-offs between security, scalability, and decentralization. However, as blockchain technology evolves and embraces a modular architecture, we can bid farewell to this dilemma. By allowing nodes to specialize and leverage modular components, blockchain networks can achieve a high degree of security, scalability, and decentralization simultaneously.
And by examining other industries that have adopted modularity, we can get an idea of what's to come for Web3. Consider the evolution of smartphones. The industry experienced a transformative change as it shifted toward modular architecture. While mobile technology capabilities increased, third-party developers were able to develop a vast array of applications across a variety of use cases. This expanded the capabilities of the device and brought in a wave of new users beyond the early adopters.
I believe the same will happen in Web3. The shift toward modularity will ultimately make blockchain networks and the applications built on top more usable. This is what is currently missing and why we have not seen the technology adopted beyond the early adopters.
Through modularity, we are laying the foundation for a new era of Web3, where the power of decentralized technologies can be harnessed by individuals and organizations alike.
Part 2 will focus on the execution layer. Stay tuned.