From token-swapping platforms to next-generation social networks and play-to-earn games where you can breed digital cats, decentralized applications show a lot of promise for delivering new interactive web experiences to users.
The number of such projects is exploding. As the world moves toward Web 3.0, a decentralized, user-based vision for a consumer internet that delivers unprecedented levels of personalization, and an interoperable network of these dapps will make using cutting-edge products and services seamless.
Dapps have become increasingly familiar over the past three or four years, yet they are far from achieving mainstream adoption. This is mainly because of Ethereum — the blockchain that made this proliferating ecosystem possible in the first place.
Dapp development has been limited
Currently, Ethereum can only handle 15-30 transactions per second. Users pay pricy “gas” fees to process and execute this data, which can take anywhere from 15 seconds to 16 minutes to complete. These fees spike when the network is congested; when Mila Kunis sold her Stoner Cats NFTs on the network, the cost surged and users lost $790,000 worth of ETH in fees for failed mints.
Confronted with the triple threat of a bull market, bustling NFT marketplaces, and a thriving DeFi sector, the network simply can’t keep up with demand. Every day consumers are being priced out, and developers are being deterred from building dapps because they’ll be too expensive to use.
Layer two solutions — which sit on top of the Ethereum network — have been touted as a way of tackling this issue: bundling transactions together and sending them to the proper blockchain to be finalized. Ethereum 2.0 is said to be just around the corner, heralding the move from a consensus mechanism based on Proof-of-Work (which requires substantial computing power) to Proof-of-Stake (apportioning power according to the amount of a miner’s staked tokens) to confirm transactions and add new blocks to the chain. This should increase transaction throughput, but issues remain. One of them is known as the “nothing at stake” problem, referring to the fact that if Ethereum’s network forks, which it has done before, there’s nothing to stop validators from creating blocks on both chains.
Another issue undermines the decentralization of dapps and makes them largely susceptible to the sort of devastating outage that recently hit Facebook, Instagram, and WhatsApp: their interfaces generally run on centralized cloud services. Among some the leading dapps, for example, the front ends of the play-to-earn game Axie Infinity and the NFT marketplace OpenSea are hosted by Cloudflare, according to website hosting checkers, while Sushi, an evolution of the Uniswap exchange, is hosted by Amazon.
No matter how decentralized a dapp may be, the benefits diminish if a project’s front end lives in the cloud. Even if their smart contracts have been written to perfection, there’s a real risk that DeFi systems could be vulnerable to intervention or censorship if their websites are subject to takedown notices or the whims of a gatekeeper. The consequences here could be severe, not least because users would be unable to access their accounts and the funds they hold.
But it’s possible to rectify this and enable dapps to run on a blockchain from end to end.
Extending Ethereum via the Internet Computer
Across cryptocurrency media sites, endless column inches have been devoted to the rise of so-called Ethereum killers — projects that are seeking to eclipse this major blockchain by delivering cheaper transactions, faster confirmation times, and support for DeFi and NFT ecosystems.
The Internet Computer isn’t an Ethereum killer. DFINITY president and chief scientist Dominic Williams argues that both networks are different by design — “complementary, not competitive” — and that they can be stronger together.
Smart contracts on the Internet Computer are called “canisters,” bundles of code and state that are fast enough to serve web content. This allows developers to create scalable dapps that run on-chain, which isn’t possible on Ethereum today. The Internet Computer’s “reverse-gas” model means that end-users do not need to use crypto to interact with the network; canisters are pre-charged on the back end to pay for their computation.
Crucially, Williams says data can be stored for a “tiny fraction” of the cost on a traditional blockchain. While storing 1GB on the Ethereum network would cost approximately $280 million as of mid-October, doing the same on the Internet Computer would only cost about $5 a year.
The first step of the integration involves making sure that Ethereum smart contracts and Internet Computer smart contracts can call into one another. A powerful combination of both networks would allow Ethereum-based DeFi systems to provide users with secure, decentralized interfaces that eliminate the need for centralized cloud providers — making them more resilient. In this way, the Internet Computer can enhance Ethereum while enabling direct interoperability across the two blockchains.
“The Internet Computer will also benefit from this integration,” Williams wrote. “For example, a key purpose of the network is to enable the reimagination of social media running from blockchain in open and tokenized form. This will often involve integration with DeFi, and this will be greatly boosted by direct interoperability with DeFi smart contracts on Ethereum.”
The precise steps for the Internet Computer’s integration with Ethereum will be decided through the Network Nervous System (NNS), its autonomous, decentralized governance system. This allows protocol changes and upgrades to be voted on and adopted by the community.
The Internet Computer wouldn’t exist today without Ethereum, which originally inspired the vision of a “world computer” for smart contracts. Their mutually beneficial integration would make smart contracts even more powerful — efficiently processing large amounts of data and delivering tangible improvements to the experience of end-users. Despite all of the promise that blockchain technology provides, mass adoption can only be achieved when these networks can match or improve upon the speed, simplicity, and convenience that fiat-focused alternatives provide.
For years, the blockchain sector has been siloed and fragmented, with networks unable to talk to each other with value unable to flow from one to another. Interoperability at this level is a crucial step, not least because this will unlock the potential of dapps to revive the web — cultivating a vibrant, creative ecosystem where developers can build new products without needing to give technical limitations a second thought.