(10th August) Build and share ownership of your asset, project, or cause
Also: What makes a strong Layer 1
Welcome to the 37th edition of the Geeks Of The Valley (GOTV) Newsletter, where we curate exciting ideas/insights on web3 + interesting early-stage/pre-funded companies every 1-2 times per week. If you enjoy and want to keep abreast with insights and interesting early-stage startups before they go big, subscribe to this newsletter ✌️.
Geeks of the week
Startup name: NATION
One-liner: Build and share ownership of your asset, project, or cause.
Founder(s) background: Ex-Solana Labs, Waybridge, and Collins.
Raised $$ / backed by: NA
Startup name: Bello
One-liner: No-code blockchain analytics tool that helps you learn more about your collectors through a simple search.
Raised $$ / backed by: NA
Into the 🐰🕳️
(This article was initially written by Aizuddin Adli)
What makes a strong Layer 1
Crypto markets are not only being negatively impacted by poor investor mood. The perception of specific blockchains, significantly Layer 1 (L1), has been harmed by fundamental faults or technical issues. The majority of popular digital assets of this layer have fallen like a row of dominoes amid a drop in the cryptocurrency market. Solana is an excellent example of this.
Despite being known for its super-fast, low-cost transactions, Solana, with over $21B market cap, has suffered its second outage in the last month and the 12th this year. This results from the fact that, up until this point, blockchain developers could only address up to two of the three issues at once, which is known as “The Scalability Trilemma”.
In a nutshell, “The Scalability Trilemma” refers to the generally held idea that decentralized networks can only offer two out of the three benefits of decentralization, security, and scalability at any given moment. The L1 protocols ecosystem is growing, and there is stiff competition among them. So, what could make one stand out against another?
Security
L1 blockchains serve as value for settlement layers. Their job is to create an environment that is safe and immutable. In this situation, a blockchain's consensus mechanism, which uses advanced cryptographic models such as Proof-of-Stake and Proof-of-Work, is what makes it secure.
Depending on the underlying consensus mechanism, there are several approaches to evaluate security, but the end goal is clear: L1 networks need tight settlement assurances.
Decentralization
The core element of blockchain technology is decentralization, which stimulates initiatives throughout the ecosystem. A critical aspect of having a great decentralization process is high composability. Generally, every L1 application should be able to communicate with other L1 applications.
Users should be able to send atomic transactions, for instance, which integrate features from any two applications. Without leaving users "stuck" in a fragmented state, the system's state should function as a single, cohesive object.
Scalability
Scalability in the context of a blockchain protocol entails the ability of the blockchain to accommodate future growth and high transactional throughput. In a nutshell, an excellent L1 blockchain should be able to continue to operate at peak performance even as use cases and usage grow.
An optimum way of calculating scalability is by measuring the overhead cost consumed. In comparison to the cost of processing each transaction, the additional computing effort required to achieve consensus, security, and all the other qualities should be minimal.
Bottom line
Evaluating any L1 is hard. If there is an effective way to check the "decentralized" box without worrying about security or the inconvenience of a lack of scalability, we are looking at a scalable blockchain future in which individuals from various industries (from commerce to logistics) can profit.
Fundamentally, the L1 blockchain provides a more level playing field for people to prosper rather than relying on a conventional, centralized, and controlled system.