The Web3 technology stack can be seriously confusing to some people due to the incredible pace of innovation the industry has seen, but it’s slowly but surely coming into focus.
Web3 is a newer, decentralized internet built atop of blockchains, which are distributed, immutable and highly secure ledgers that keep a record of transactions. Blockchains use a complex architecture that consists of multiple “layers”, effectively breaking them down into more manageable parts responsible for specific functions and different interactions.
The Blockchain Council explains how blockchain is split into five separate layers – namely, the infrastructure layer, data layer, network layer, consensus layer and the application layer. Confusingly, there’s also an interoperability layer that comes before, widely known as “Layer-0”.
The infrastructure layer of blockchains is often referred to as “Layer-1”, and it can be thought of as the foundational platform for all decentralized applications (dApps) and protocols. The best known L1 is the Bitcoin blockchain, which underpins the world’s most recognizable cryptocurrency. However, Bitcoin itself doesn’t play a major role in the Web3 ecosystem. Bitcoin pioneered concepts such as public-private key cryptography and the ability for people to own scarce, digital assets, but it does not support smart contracts in its native form.
Instead, the grandfather of Web3 is the Ethereum blockchain. It was the first network to introduce the concept of smart contracts, which are agreements that execute automatically when specified conditions are met. Smart contracts are a crucial element of the Web3 ecosystem, as they’re what allows applications and protocols to operate in a decentralized way, without intermediaries.
These days, there are many different kinds of L1 blockchain, each offering a unique architecture that enables dApp builders and users to do different things. Solana, Avalanche and Algorand are just a few of the better known L1 chains.
Different Horses For Different Courses
Some blockchains have emerged with very specific use cases in mind. The Worldwide Asset eXchange, known as WAX, has staked a claim as the industry’s number one gaming chain thanks to its focus on clean, energy-friendly non-fungible tokens (NFTs) and rapid transactions. WAX was specifically designed with NFTs in mind. Its Proof-of-Stake consensus mechanism enables extremely fast and low-cost transactions with minimal energy usage. These clean NFTs have become popular with brands such as Topps, NASCAR and Hot Wheels, which have all launched collections on WAX. They’re also ideal for blockchain games, where digital assets frequently change hands, which explains why WAX is the home of leading Web3 play-to-earn games like Alien Worlds, Prospectors and Farmer’s World.
Namada meanwhile is a good example of an L1 security-focused blockchain. A relatively new entrant on the Web3 scene, it launched in 2022 as the first fractal instance built atop of the Anoma protocol. Anoma can be thought of as a “Layer-0” that facilitates the operation of networked fractal instances that can still interoperate with one another despite using different architectures and security models.
Namada places a lot of emphasis on transaction security through its implementation of shielded actions, which obscure transaction details using cryptography. The transaction itself is recorded onto the chain and verified, but the exact details of the token and the amount sent are hidden, increasing privacy for users. While other L1s use similar techniques, Namada has the ability to enable the shielded transfer of almost any kind of asset, including cryptocurrency tokens and NFTs, across Ethereum, EVM- and IBC-compatible networks. By using a trustless two-way Ethereum bridge, Namada enables secure and anonymous interchain transactions at rapid speeds and low costs.
EVM Chains
Ethereum is by far the biggest and most widely used Web3 blockchain, processing hundreds of thousands of transactions each day, with millions of unique addresses. It supports thousands of dApps on its network, and indeed, more than 90% of all crypto tokens are built on it.
However, Ethereum’s infamous scalability struggles have opened the door to so-called “EVM chains”, which are compatible with the Ethereum Virtual Machine engine that implements smart contracts. EVM compatibility refers to the ability to write and run smart contracts written in Solidity, which is Ethereum’s native programming language. Smart contracts and dApps developed for Ethereum can easily be migrated to any EVM chain.
There are many different kinds of EVM Chain. For instance, Flare Network is an EVM-based L1 that’s focused on blockchain communication, enabling cross-chain transactions and bringing smart contract functionality to chains that don’t support them, such as Ripple’s XRP. Flare makes blockchain interoperability simple through the use of two novel protocols – a State Connector that brings non-blockchain data such as sports results and weather forecasts to the Flare Network, and the Flare Time Series Oracle, which provides a source of off-chain data. Because Flare’s smart contracts are based on EVM, its capabilities are easily accessible to any developer with knowledge of Solidity.
Another unique EVM Chain is Astar Network, which has created a novel consensus mechanism that aims to reward developers who build out its ecosystem of dApps. Astar is pioneering the concept of “dApp staking”, which gives validators the option of supporting their favorite dApps. Whereas with Ethereum, transaction fees are only awarded to validators of the network, Astar splits these rewards 50/50 with the validators and the developer of their nominated dApp. It means developers have a much stronger incentive to build on the Astar Network than other blockchains.
Choose Carefully
When it comes to choosing which blockchain protocol to build on, developers need to consider many different factors, including the nature of the application they’re building. For instance, someone who’s creating a Web3 game would do well to consider a gaming-focused chain such as WAX, but there are other considerations too, such as the need for private transactions, interoperability with other blockchains, energy efficiency, transaction costs, incentives and the size of the networks’ community.
Of course, the developer may also be limited by their knowledge of Solidity and the very different functionality each protocol offers. Just like investors considering buying a new cryptocurrency token, developers must do their own research very carefully and learn about what each protocol has to offer.
Image by Willfried Wende from Pixabay
