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Comparing Smart Contract Blockchain Designs

By bengy | Idle Musings | 13 Nov 2021






So, this past year and coming year has been a big one for smart contract platforms. First the DeFi craze... Followed by the NFT craze... And finally the Play to Earn one that we are in the middle of.

All of these use cases requires a robust smart contract blockchain to provide the backend that powers the dapps. However, they all stress the infrastructure due their high demand on bandwidth and resources. This demand is then prioritised by economic incentives (gas fees) and design choices (centralisation or otherwise).

It is beginning to be more likely that we will not see a clear winner in the next year or so... But all the different solutions are essentially committing to several broad design choices that will influence their strengths and weaknesses, and chart their general trajectory in the coming showdown. Of course, there is an increasing likelihood that there will be no clear winner and there will be many smart contract blockchains interacting in a sort of equilibrium.

In fact, I'm more likely to believe that this will be the car in the short term, although if change happens and a clear winner prevails... It could happen pretty fast. So, given that possibility, I have made sure that I am not concentrating my bets too much! Which is generally a less exciting but prudent strategy in such a new and risky space.

Ethereum 1.5







Ahhh... The original grandfather of smart contract blockchains. Despite the fact that high gas fees have made it pretty much unusable for many, there is no doubt that Ethereum retains a clear lead and it is way too soon to write it off. However, the original design choices are starting creak under the demand for block space, leading to a very nasty taste for those who don't have the Ethereum in reserve to burn for transaction fees. If I'm using Ethereum, I always make it a habit immediately replace the used gas fees (the free withdrawals from FTX for FTT stakers really is handy for that!).

So, the long term plan is to transition Ethereum to a Proof of Stake model. However, it is not the proof of stake that will help reduce transaction fees (but it does help) but the sharding that is due to arrive afterwards.

The biggest design change is the arrival of better technology (zk-snarks and rollups) that enable true Layer 2s like Arbitrum, Immutable X and Optimistic Ethereum that anchor to the Ethereum mainnet for security. These are vast improvements over previous scaling solutions (like Polygon, OmiseGo and xDAI) that are better known as sidechains that refer back to Ethereum through trusted nodes. It is notable that these older sidechains are moving to the newer technology, Polygon through the purchase of Hermeaz and OmiseGo through their recent Bobo airdrop and launch.

The current design has Ethereum at the 1.5 stage. A slower, decentralised and secure L1 (mainnet) surrounded by a number of faster Layer 2s that use the mainnet as a security anchor. An evolved solution, but one that sort of works... But like most evolution, a bit messy!

Fast Blockchains







Some of the newer smart contract blockchains that launched this year have opted to prioritise speed over decentralisation. So they have their mainnet operating at blazing fast speeds and low fees in comparison to the Ethereum turtle (although, in practice, I don't find Ethereum that slow for my use cases!).

Notable examples of this design are Binance Smart Chain (BSC) and Solana, and what is interesting about both of these chains is their backing by Binance and FTX respectively. And it definitely can't hurt to have the clout of a giant exchange behind you! On the other hand, it can lead to some skewed incentives that may or may not be true.

However, the true tradeoff is that these chains adopt consensus protocols that result in smaller validator sets. Which invariably leads to a level of centralisation... Time will tell whether anyone actually cares about this idea or if people only pay lip service to the concept.

One other interesting thing is that I've learnt recently is that Solana is mostly closed source for its dapps (in comparison to the mostly open source nature of BSC and Ethereum), which is giving it the sheen of security (via obscurity)... Something that might only be a veneer until it can be truly tested.

Modular Blockchains







Finally, we have the modular type of blockchains. I have been following the development of Cosmos, Polkadot and Fantom for quite some time. To me, these are very elegant solutions, with a base L0 connector chain that is surrounded by a constellation of interoperable L1 chains that can be fully customisable for their particular use case. So, instead of needing to be a jack of all trades and master of none, there is the chance for each L1 blockchain (parachain in Polkadot) to be its own thing.

I really like this solution, as it allows each chain to function relatively independently and issue its own token... and instead of acting like a giant catch-all... you go to a specific chain to do a specific task. This means that each chain can be optimised for what they want to do, and no need to worry about breaking something else (much).

Cosmos has had a steady drip of projects launching in its constellation, and Polkadot has recently started with its parachain auctions will determine the opening line-up of parachains. This week, if you are interested... and public funding through crowdloans will be rewarded generally with airdrops of the associated tokens.

Wrapping Up

So, to wrap it all up... there is so much to choose from. Different design choices, all of which are eminently appealing! The old evolving grandfather, Ethereum... there is so much value already invested into this blockchain, and it is by far and away the most trusted and battle-hardened of all the smart contract platforms... however, will it be able to evolve fast enough?

The new fast L1 blockchains that aim to be quick, cheap and less centralised... is this the future that we want? They are backed by some serious money, so there is also that to consider! We'll see if these win out due to sheer ease of use... although, we have seen BSC creak a little bit and Solana run into other problems. Faster might not mean fast enough, the scaling of blockchains might require a more elegant approach rather than raw metrics.

Lastly, the elegant Layer 0 solutions... a constellation of specialised blockchains held together by a relay chain. Very very interesting and from a purely intellectual point of view, I find this to be quite attractive.

However, as I mentioned earlier... it is way to early to tell what will win out, and as such, I back the all... It is also possible that there is no clear winner, and that a choice of different platforms will end up being the best solution! That said, I've sort of moved on from the smart-contract platform tokens/coins to pursue what I think might be the next most important piece of infrstructure... privacy and secrecy. In part, this could be offered by some of the parachains and L1s in the modular blockchain designs as a specialist service... it is one of the things that I'm curious about at the moment! Lets see in the future whether or not that is an idea that other people are also interested in!



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StakeDAO: Decentralised pooled staking of PoS assets.
Poloniex: One of the older regulated exchanges that has come into new ownership. I used to use it quite a lot, but have since stopped.


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I am a Musician (Violinist/Violist) specialising in Early Music living in The Netherlands. I have a background in Mathematics and Physics due to an earlier tertiary level study... and so, I'm still quite interested in Science and Technology related stuff!

Idle Musings
Idle Musings

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