Coinweb: The Three Layer Solution to Real World Problems

Technological revolutions typically play out in two distinct ways. In the first, the technology gives rise to entirely new business models and constructs; in the second, the technological innovations are integrated into existing business models and infrastructure. 

While new business models and constructs mature along with the technology, more risk-averse and slower existing businesses and institutions don’t see the same broad uptake happen until after the technology has reached a certain level of maturity. This process is unfolding with blockchain technology today, though it’s still early days. 

Increased capacity—and the concept of interoperability between blockchains—promises more advanced applications. Many new business models and ecosystems are emerging, and some existing businesses and institutions are exploring use cases and opportunities. There are, however, still some hurdles to overcome. As more functions of society are disrupted by this technology, affected parties and opportunists are likely to resist with increasing severity. Large businesses and institutions are mostly aware of this, as well as other factors limiting widespread adoption. Before adopting any new technology, benefits and risks are thoroughly assessed. For blockchain applications, risk could be evaluated as follows: 

– Capacity to process necessary transaction volumes and meet computation requirements over time

– Flexibility to adopt future technical innovations

– Support of common development toolchains, maximising access to developer resources and lowering costs

– Dependence on specific miner/validator community support to assure secure operation

– Sufficient decentralisation to effectively provide censorship resistance, availability and security

Many of these concerns can be overcome by combining the properties and functionalities of multiple blockchains. Distributing the transaction load over multiple blockchains can resolve capacity issues, innovations can be absorbed by adding novel blockchains, blockchain failure risk can be reduced by transitioning to a different chain, and many more examples. Blockchain interoperability is therefore a crucial component to enable a transition to decentralised infrastructure. However, it is essential that interoperability does not compromise the usefulness of blockchain technology.

From the perspective of a DApp, DApp platforms can be seen as three-layer systems. We will look at Coinweb’s approach to optimise the usefulness and properties of each layer and also the ways Coinweb combines these three layers to unlock additional dimensions of value for blockchain applications and blockchains.

The Availability and Consensus Layer

This layer provides blockchain technology with distinctive properties that are the foundation of DLT systems. Distributed consensus mechanisms are the core of this layer. From the distributed consensus algorithms, blockchains derive the trustless properties that allow them to generate value, in principle by automating and decentralizing trust-based functions. Different blockchains may have different implementations of this layer, each with various advantages and tradeoffs.  For all blockchains, this layer provides immutability, availability, and trustlessness. Coinweb allows for the unification of this layer across multiple blockchains. This means that information, properties and functionality from the underlying chains can be combined without adding additional consensus mechanisms between each chain. This is important, as it eliminates the risks associated with weaker interchain consensus mechanisms, while also increasing the availability of information between chains. This unification also increases the exposure of innovations in Layer 1 protocols, as Coinweb allows for these to be dynamically adapted by existing applications.

The Computational Layer

The computational layer interprets and gives meaning to the information in the availability and consensus layer. This layer is composed of a set of rules that can vary in complexity. Computations are deterministically performed on data from the availability and consensus layer according to the rules defined by the protocol. The Ethereum virtual machine and the Bitcoin script interpreter are examples of computational layers. Currently, these layers can become bottlenecks for blockchain applications, mainly due to two factors:

1) Computational logic is coupled with components of the availability and consensus layer. Validators of the protocol will have to perform all of the computations from the network, resulting in high gas prices and limited performance.

2) Sequential execution models. All computations are executed sequentially on each node. This limits the throughput of the system, as only one instruction can be executed at a time.

For interoperability platforms in particular, where the amount of information to be processed will not be constrained by the capacity of a single blockchain, it is important to provide solutions to these limiting factors. Coinweb’s computational layer eliminates both of these bottlenecks by providing a parallel execution environment where computational logic is decoupled from the consensus of the underlying blockchains. All computations are executed strictly deterministically. The decoupling is achieved by using a computational proof technique specifically for deterministic computations, where only a single honest node is required to secure the whole Coinweb network. Coinweb’s computational layer also includes two important concepts that enable more advanced applications, as well as a unifying level of interoperability:

– Reactive smart contracts. Smart contracts can hold gas balance and react to native events in underlying blockchains. 

– Smart contracts can emit transactions. This allows smart contracts to execute over multiple blocks and blockchains.

Combining the above features within a strictly deterministic execution environment contributes to blockchain usability, and will accelerate uptake.

The Application Layer

The application layer consists of the applications (DApps) that can be implemented on top of the two previous layers. Its properties are determined by the two underlying layers. DApps that work on single chains execute on information in the underlying blockchain, thus inheriting the trustless properties from that chain. This gives them strong security properties, but the range of applications that can be built is limited to what is allowed by the two underlying layers of the blockchain. Interoperable DApps can be more advanced, as these can combine components from different blockchains.  Ideally, interoperable DApps should also inherit the trustless properties from the underlying chains in the same way as single-chain DApps.  However, current interoperability solutions often introduce additional consensus mechanisms—and centralised components between chains—that reduce the level of decentralisation. This can invalidate or weaken the trustless properties of the DApp. Coinweb’s application layer allows interoperable DApps to maintain the trust and security properties from the underlying chains.

Coinweb provides a unique combination of unifying interoperability and a high-performance computation framework that facilitates a significantly increased solution space, which opens for more advanced, more dynamic and scalable, and more secure DApps. By removing the major bottlenecks preventing the transition to decentralised infrastructure, Coinweb is becoming a catalyst for accelerated mainstream adoption.