The modular blockchain stack and the missing piece of infrastructure
Crypto protocols by their very nature were designed as perpetual, permissionless and transparent networks. Arguably, Bitcoin and Ethereum are the archetypes of this model and were both designed with these very principles in mind. Bitcoin was the original 'hyperstructure'; a protocol that can run for free and forever, without maintenance, interruption, or intermediaries. Apart from built-in network fees, it is free to use, permissionless, permanently available, and equally open for all.
Ethereum expanded the hyperstructure concept by offering open and standardized ways to build on the blockchain and develop applications that used it as public infrastructure. Uniswap, the decentralized exchange built on Ethereum, is one of the notable early examples of an application that leverages the Ethereum public infrastructure, and expanded functionality with the same nature of a hyperstructure. With Ethereum as a basis, decentralized apps based on the same principles, started to evolve.
Specialization and the modular blockchain stack
Specialized infrastructure has gradually started to play a more important role in the web3 landscape, and the open and permissionless nature of the ecosystem has opened the door to a variety of innovative solutions. Some examples of specialized infrastructure include:
- Layer 2 solutions like Optimism and Arbitrum, focusing on efficiency of execution, increasing transaction throughput and reducing fees on Ethereum
- Decentralized storage platforms like Filecoin and Arweave, which allow users to store and retrieve data in a decentralized and trustless manner
- Decentralized identity solutions like Iden3 and Ceramic, which enable users to manage and control their online identities without relying on centralized authorities
These are just some examples of ‘vertical’ specialization, where specific functions within a blockchain are served by protocols that choose to specialize on just a single part of the blockchain stack. Besides vertical specialization, we have also started to see horizontal specialization, where protocols are focusing on specific domains or application types. Some examples of so called ‘AppChains’ with horizontal specialization are:
- Immutable X, which specializes in the efficient handling of NFTs mostly for games
- Nubank building their own application specific blockchain using Polygon’s Supernet platform
- Momoka, a layer 3 scaling solution created by and for Lens Protocol, to enable social media content to be stored off-chain
- DeFi Kingdoms, a GameFi project, developing Crystalvale, building its own Avalanche subnet powering their game
The combination of both vertical and horizontal specialization is shaping up to define the future of blockchains. Instead of a limited number of monolithic blockchains, we are starting to see a matrix of protocols that work together to offer end-to-end blockchain functionality, in varying combinations across a growing number of verticals and application types.
End-user application infrastructure is missing
In the current state of the modular blockchain stack there are various generic and specialized blocks of infrastructure to choose from across every layer. What is still missing though, is an open, universally accessible infrastructure for user-facing applications. Onboarding, wallet creation, NFT minting, fiat onramps, and swaps are all examples of functionalities in end-user applications that will benefit massively from the availability of universal infrastructure. An open platform that is freely accessible for developers to integrate and build on as any other piece of web3 infrastructure.
While solutions in this space do exist, they have so far been developed either as siloed solutions, or closed systems, or both. For example, there are SDK solutions available to onboard users, create MPC wallets and mint NFTs from within an application. However, none of them are built on the same principles as the other parts of the modular blockchain stack, as open infrastructure.
In innovation cycles, closed solutions are sometimes quicker to create, and tend to be built to fit the initial phases of new developments. However, when verticals get past the initial storming phase, applications start to diverge, and user needs become more differentiated. Infrastructure type platforms respond much better to quickly evolving spaces, where user needs and functionality iterate rapidly.
The open and permissionless approach of infrastructure solutions allows developers to create their own imprint on top of the infrastructure, expanding the ecosystem rapidly according to incremental insights and needs. What does this mean?
- Permissionless composable innovation - developers create their own modules / logic which other developers can benefit from, creating a network effect. This also avoids projects having to wait / pay SDK vendors to build specific functionality
- Open (source) access - any new chain can enable itself and start using the functionality needed to bring users onboard immediately, no lobbying SDK vendors or wallets to enable you
The Liquality SDK
The Liquality platform is designed with open infrastructure in its DNA, starting with the open-source wallet extension that was launched in 2021. As a multi-chain builder, Liquality has a strong foundation in web3 values, believing in open and permissionless development. The Liquality wallet extension has a great track record as an open platform, counting over 10 integrations done by external developer teams, including liquidity providers, chains, RPCs and data providers.
The Liquality SDK inherits the same open infrastructure DNA, aimed at end-user app developers. It is composed of key web3 functionalities, such as onboarding/authentication, wallet creation, NFT minting, fiat onramps, and swaps. It is open-source and free to expand, with early examples as Shardereum and Spheron already having been integrated by developer teams.
For these reasons, the Liquality SDK is well-positioned to become the default web3 end-user application infrastructure. By providing a comprehensive and flexible toolkit for developers, the SDK helps bridge the gap between the rapidly evolving modular blockchain stack, and the needs of end-users in a decentralized ecosystem.
The evolution of crypto and web3 from monolithic blockchains to modular blockchain stacks has led to a more specialized and versatile ecosystem, with specific infrastructure layers and sub-stacks catering to a growing range of verticals and applications. The future state is that there will be thousands of blockchain stacks, composed of different combinations of protocols and modules, aimed at a multitude of application types.
The missing piece in this landscape is a universal infrastructure layer for user-facing applications, which the Liquality SDK is addressing. By embracing open infrastructure and empowering developers to build with and expand on, the Liquality SDK will help propel the web3 ecosystem forward and pave the way for the future generation of web3 apps and next 1 billion web3 users.
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