Starting from 'First Principles': Unraveling the Web3 Mass Adoption Narrative, Decrypting the Disruptor SCP and Game-Changer everPay
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Author: Kyle @ Contributor of PermaDAO
Translator: Kyle @ Contributor of PermaDAO
Reviewer: Bananaa @ Contributor of PermaDAO
As the spotlight fades, a new star is rising. NASA's retreat from the forefront of rocket launches began with SpaceX's ascent, officially ushering in the era of commercial aviation with its reusable rocket technology. SpaceX, from 'disruptor' to 'game-changer,' consistently adheres to its philosophy of 'First Principles.'
First Principles demand that we see the essence through the surface of things, dissect and analyze specific elements to find optimal solutions. SpaceX, guided by First Principles, strategically invested energy in the 80% cost-consuming rocket propeller, successfully tackling the high cost challenge through a reusable rocket propulsion scheme.
In the emerging realm of Web3, this powerful methodology can also wield significant influence. The discussion at the 2023 Paris ETHCC conference on how to drive Crypto Mass Adoption comes to mind. From space exploration to the blockchain world, the commonality lies in pursuing innovation and breaking with tradition. Faced with the chaos of Web3, we need deductive thinking based on First Principles to solve complex problems.
Clearing the fog: Using First Principles to Deconstruct Infrastructure Challenges
According to IOBC Capital, a Web3 venture capital firm, there are five main reasons why Crypto Mass Adoption has not yet been achieved:
Traditional institutions lack compliant entry channels.
Ordinary users face barriers to entry.
Developers encounter high entry thresholds.
Lack of mass-market investment targets.
Infrastructure cannot support large-scale applications.
Image Source: 3 barriers preventing Web3 mass adoption — Trust Wallet CEO
The realization of Mass Adoption is undoubtedly a challenging journey. This article aims to delve into the existing challenges of infrastructure in the midst of the Mass Adoption discussion. So, when we talk about 'infrastructure cannot support large-scale applications,' what are we really discussing?
On the surface, we intuitively perceive it as inadequate infrastructure performance, exemplified by Ethereum's terrible transaction experience. However, analyzing from First Principles, the inability of Ethereum to support large-scale applications can be attributed to slow transaction speeds and high transaction costs. Further exploration reveals that the core issue lies in transaction throughput. The limitation of transaction throughput is due to factors such as the blockchain's consensus mechanism, block size, and block time.
Therefore, from a macro perspective of achieving Crypto Mass Adoption, solving the problem of transaction throughput, besides optimizing performance based on the blockchain, can also involve ways to circumvent the limitations in transaction throughput. The underlying principle is that any solution must pursue scalability while ensuring decentralization and security.
Under the premise of adhering to the basic principles of blockchain, the paths to solving transaction throughput can be divided into three:
Scaling around Ethereum: Using techniques such as sharding, side chains, and Layer2 solutions.
Migration to other high-performance blockchains: Such as Solana, Polkadot, and Avalanche, among others.
Utilizing traditional internet servers: Directly bypassing blockchain restrictions, using servers with unlimited performance to process transactions, as in the SCP solution.
The second path is not the focus of discussion and will not be elaborated. The following will use the first path as a starting point, outline mainstream Ethereum scaling solutions, and focus on the third path—processing transactions outside the blockchain through the SCP (Storage Consensus Paradigm), introducing its working principles, application examples, and potential.
Thinking, Ethereum's 'Expensive and Slow'
Ethereum introduced smart contracts, attracting a plethora of developers and users, thereby initiating a thriving Web3 financial ecosystem. However, with the continuous growth in network demand, on-chain transactions became costly and sluggish, paving Ethereum's path as the 'world computer' with difficulties.
Ethereum remains the 'king of public chains.' Faced with its challenging scalability issue, the ecosystem presents a situation of 'many hands make light work.' Concerning scalability, Ethereum roughly divides into two paths:
Self-optimization, namely on-chain scaling solutions for Ethereum, involving technical upgrades to the Ethereum network.
Outsourcing, namely off-chain scaling solutions for Ethereum, requiring no alteration to the existing Ethereum protocol, handling transactions outside Ethereum.
The main Ethereum scaling solutions are summarized below, along with a brief analysis of their pros and cons.
On-chain Scaling
Changing Consensus Mechanism: Ethereum transitions from PoW to PoS, reducing energy consumption by 99.95% and simultaneously enhancing network confirmation efficiency and block generation speed.
Sharding Technology: By dividing network nodes into different partitions to distribute the workload of processing transactions, Ethereum's network transaction speed is improved.
Off-chain Scaling
Plasma: Plasma is an independent blockchain, acting as Ethereum's sub-chain. Transactions are aggregated on the Plasma chain, and the state is submitted to Ethereum, optimizing Ethereum's throughput and transaction costs. However, Plasma does not support smart contracts, and the significant issue is that transaction data is stored by operators, leading to data unavailability.
Side Chains: Independent blockchains outside Ethereum, with their own consensus mechanisms, such as Polygon. Side chains can be compatible with EVM and support smart contracts, possessing characteristics like high TPS and low fees. However, the drawback is sacrificing some decentralization or security.
Layer2: Mainly utilizing Optimistic Rollup and ZK-Rollup technologies. They inherit Ethereum network security, process and compute transactions through Rollup chains, then submit them to the main chain, thereby increasing main chain transaction throughput and lowering transaction costs. However, Optimistic Rollup may still face issues like slow withdrawals, and ZK-Rollup, due to its higher complexity, results in slower development and less widespread application, also incapable of directly executing smart contracts.
Validaum: An improvement on ZK-Rollup, storing transaction data off-chain and submitting the state to Ethereum. The downside is Validaum's limited support for smart contracts and the presence of centralization risks when generating validity proofs.
Brief Summary
Ethereum's on-chain scaling solutions balance performance upgrades while ensuring scalability, decentralization, and security. However, this solution is a considerable undertaking. Among off-chain scaling solutions, Validaum, Plasma, and side chain solutions offer better scalability. Despite Validaum and Plasma submitting state updates to Ethereum, none of the three publish transaction data back to Ethereum, lacking Ethereum's security inheritance. Layer2's Optimistic Rollup and ZK-Rollup execute transactions outside Ethereum and submit both state and data back to Ethereum. However, they slightly lag in scalability and face slow development.
Disruptor SCP: Breaking Free from Path Dependence
SCP is not an application or a public chain; it's an entirely new development paradigm. SCP, short for Storage-based Consensus Paradigm, pioneers a new path with a similar concept to Ethereum's off-chain scaling solutions—moving transaction processing outside the main chain. However, the significant difference is that SCP's 'chain' is the blockchain.
SCP avoids falling into the 'path dependence of scalability.' It breaks free from conventional thinking in building applications on traditional blockchains. To address the scalability issue, SCP directly moves transactions outside the blockchain. In essence, the core idea of the SCP paradigm is to separate computation and storage—conducting calculations below the blockchain and storing data on the blockchain. Therefore, applications built on the SCP paradigm possess both the transparency and trustworthiness of blockchain and the high performance and availability of traditional internet applications.
SCP's Three Elements and Working Principles
When transaction computation is handled by high-performance traditional servers outside the blockchain, transaction throughput is no longer a problem. How then is decentralization and security ensured? This leads us to the three elements that enable the establishment of the SCP paradigm: lazy evaluation, tamper-proof DA layer, and verifiable computation.
Lazy Evaluation: SCP employs a lazy evaluation strategy for data processing—'process first, then on-chain, and verify afterward.' Any Dapp based on SCP can deploy smart contracts on servers outside the blockchain to process transactions, verify them after they are on-chain, providing the possibility for efficient transaction processing.
Arweave as the Data Availability Layer: SCP utilizes Arweave as the Data Availability (DA) layer, storing the source code, input, and output data of applications. Arweave ensures that data is traceable and tamper-proof, ensuring the integrity and availability of data.
Verifiable Computation: By storing the results of data computation on Arweave, SCP ensures the credibility of data. Importantly, anyone can verify the data to ensure final consistency.
The SCP paradigm adopts lazy evaluation, deploying smart contracts on traditional servers outside the chain to process transactions and store contract states. After data is uploaded to the blockchain, it is then evaluated for malicious activities. Arweave, as the DA layer, stores the source code, input, and output data of applications, ensuring the data's immutability and traceability. Additionally, standardized protocol codes should be fully open source, allowing anyone to download data from Arweave for verification, ensuring final consistency between on-chain and off-chain contract states.
Advantages of SCP
The inspiration for the SCP paradigm comes from Arweave's SmartWeave smart contract and Ethereum's Rollup scaling solution. It borrows SmartWeave's lazy evaluation strategy and efficiently processes transactions using a Bundle technique similar to Layer2's Rollup.
Image Description: SCP Paradigm Advantages Image Source: Storage-based Consensus Paradigm
In summary, SCP has several advantages:
No Performance Limits: Applications under the SCP paradigm use traditional internet servers to process transactions, theoretically having no upper limit on TPS, depending entirely on server performance and application architecture.
Low Development Threshold: Code writing and smart contract deployment occur outside the blockchain, eliminating the need for developers to delve into blockchain knowledge. Developers can use their familiar programming languages, easily entering Web3.
Low Cost: SCP adopts bundle technology, supporting the bundling of multiple transactions into one transaction uploaded to Arweave. Approximately 1 USD in storage fees covers about 1 million transactions, translating to a cost of only 0.000001 USD per transaction, significantly lower than traditional blockchain transaction costs.
Composability: SCP paradigm design allows any pure Web2 application built following this paradigm to seamlessly transition into a Web3 application, providing a feasible and convenient solution for rapid application migration and integration.
everPay: Best Financial Application in the SCP Paradigm
everPay is a cross-chain financial protocol on Arweave, serving as one of the products under the everVision company. It offers functions such as transactions, transfers, and withdrawals. As one of the representative applications in the SCP paradigm, everPay matches the performance of traditional internet applications. It serves as the Alipay or PayPal of Web3, providing users with real-time, millisecond-level transaction speeds without the need for gas fees.
everPay Protocol Working Mechanism
everPay is an open-source protocol operating in the form of a DAO. Structurally, everPay can be seen as a second-layer application on the Arweave network, responsible for processing transaction data outside the blockchain, then submitting it to the Arweave network for consensus and ultimately verifying state consistency.
In the specific working mechanism of the protocol, three roles are involved, including Coordinators, Detectors, and Watchmen.
Coordinators: Responsible for verifying transactions and packaging them for on-chain submission, acting as carriers.
Watchmen: Responsible for the security and scheduling of funds, acting as financial managers.
Detectors: Responsible for verifying the final consistency of data, acting as supervisors.
Image Description: everPay Working Mechanism Image Source: everPay Whitepaper
All three roles in the everPay protocol integrate the same smart contracts on-chain, executing the same rules. Coordinators collect user-submitted transactions for calculation and verification, then store transaction data bundled into Arweave, updating smart contract states in real-time. Watchmen, composed of multiple members, generate withdrawal proposals in Arweave when withdrawal data is detected, and the funds are disbursed after signatures from over two-thirds of Watchmen. Anyone can become a Detector by downloading and running the detection program, verifying the final consistency of the state.
everPay's Disruption: Driving Web3 Mass Adoption
Breaking the Entry Barriers for Ordinary Users
Entering Web3 from Web2 involves a high learning cost and threshold. everPay introduces the EverID smart account, allowing users to bypass complex encryption knowledge. Users can create an encrypted account using an email address or biometrics (such as fingerprint or facial recognition), significantly lowering the entry barrier to Web3.
Extremely Low Developer Entry Barrier
Under the SCP paradigm, smart contracts are deployed on off-chain servers. Developers can enter development without a deep understanding of cryptocurrency knowledge and can use their familiar programming languages for coding. Additionally, everPay supports API interfaces and a JavaScript SDK, enabling developers to easily call the everPay protocol.
High-Frequency Low-Fee Use Cases
Built on SCP, everPay's TPS can be upgraded according to actual business needs. Moreover, everPay transactions do not require block confirmation, offering millisecond-level transaction speed. The everPay protocol uses Bundle technology to process transaction data, resulting in extremely low transaction costs. The everPay project has decided not to charge transaction fees.
everPay's high TPS, real-time transactions, and zero gas fees are particularly suitable for specific scenarios of 'high-frequency, low-fee,' such as tipping, airdrop distribution, and quantitative trading. From a competitive perspective, 'high-frequency, low-fee' naturally adapts to GameFi and SocialFi projects, showing significant potential.
Offer Compliant Fiat Services
everPay collaborates with Legend Trading to provide users with compliant fiat-to-crypto services. Legend Trading supports mainstream payment methods in 150+ countries and regions (such as bank cards, Visa, and MasterCard), allowing users to directly exchange cryptocurrencies using over 40 fiat currencies, including USD, GBP, EUR, and JPY.
Supporting RWA Asset Integration
everPay supports the ACNH stablecoin issued by the Asian Digital Bank, anchoring real-world assets such as cash, cash equivalents, and short-term government bonds denominated in RMB. ACNH is the native asset of everPay, and the Asian Digital Bank is responsible for the settlement and minting of ACNH assets, with Arweave ensuring security. This provides an opportunity for the practical issuance and operation of RWA assets on everPay, and any project can learn from this model.
Summary
Under the topic of Web3 Mass Adoption, Ethereum has been exploring superior scalability solutions. This article, starting from first principles, deconstructs the scalability challenges of Web3 infrastructure. In addition to mainstream scalability solutions around Ethereum, new public chains emerge constantly, claiming to be competitors to Ethereum. In fact, as long as genuine basic needs are identified, it is possible to break free from inherent path dependence and become an innovative approach that attracts mainstream attention. Despite different solutions, the goal is to optimize the execution environment of smart contracts.
The birth of SCP provides a new perspective. Smart contracts are no longer deployed on the blockchain but executed on high-performance servers, addressing the challenge of low TPS. The core of the SCP paradigm lies in using Arweave as the data availability layer, recording all data of applications or protocols on the chain. Such data is not only tamper-proof, traceable, and verifiable but also allows anyone to participate in the verification.
As a financial protocol in the SCP paradigm, everPay inherits all the features of SCP and continuously explores and practices in the wave of Web3 mass adoption. everPay not only possesses high performance that traditional blockchain applications cannot match but also adapts to all 'high-frequency, low-fee' scenarios. Users can experience smooth and free transaction experiences similar to the traditional internet, and developers can easily integrate it to build their applications. In addition, everPay has successfully opened up compliant fiat channels, supports cross-border payments, and integrates RWA assets in practice to drive the development of Web3.
Embarking on the road to success, there are myriad paths, especially in the ever-changing field. SCP is a development paradigm full of potential, and its concept has not yet gained widespread recognition in the market. Currently, with mature and usable SCP applications emerging, such as everPay, we may be witnessing the gradual emergence of the SCP paradigm in the blockchain world, bringing richer possibilities for the future.
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