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Today, I’d like to discuss a pressing issue in the web3 domain — what I’ve coined as “the middle smart contract problem.” While the name might be of my own creation, it refers to smart contracts that act as intermediaries, bridging other smart contracts or forming a component — big or small — of a Dapp.
It’s undeniable that economics propels our world forward. But what transpires when we invest time and resources into creating something and don’t derive any economic benefit in return? Some might argue that many developers work altruistically for the greater good. However, there’s a downside: the potential stagnation in development, which impacts the entire system. Sometimes, these intermediary smart contracts could even evolve into standalone companies specializing in this niche function.
There exists a silent consensus surrounding the inception of smart contracts. Certain functions don’t levy fees, possibly because on-chain actions inherently involve gas costs, covering essential operations like transfers, voting, and signatures. However, as time has progressed, actions like swapping, lending, borrowing, minting, buying, and selling have evolved, they are one of the ways to take fees of using the protocol.
While this model might make sense in the web2 universe, where products often have a subscription-based or one-time purchase pricing structure, it seems misaligned with the web3 paradigm. Several reasons could account for this disconnect, one being the legal intricacies differentiating securities from assets, or equating governance power with actual monetary value. But I’ll delve deeper into that in a potential future article.
These contracts can manifest in various forms, such as governance contracts. For instance, Uniswap’s governance doesn’t charge fees for voting but uses it to give utility to their tokens, with revenue primarily from app-associated fees. However, the real discussion is about “Controller” or “Router” contracts. These don’t handle fees but connect different smart contracts within DApps, working in the project’s best interest. Their lack of direct economic incentive makes development challenging, akin to a missing puzzle piece.
Multisig wallets are another example. They don’t generate revenue but safeguard assets by requiring multiple approvals for transactions, indirectly saving potential financial losses. The decentralized world’s evolving economic models necessitate sustainable incentives for these middle contracts. Solutions include protocol funding, community grants, token incentives, and open-source collaboration.
In essence, while middle contracts face economic challenges in Web3, the community seeks innovative solutions, emphasizing their value for a secure decentralized ecosystem
We’ve identified challenges in the Web3 space, particularly concerning middle contracts. By delving deeper, we aim to understand the nature of these challenges and their implications. To address these issues, I present several solutions that could shape a brighter future for decentralized applications:
Archway Blockchain: Archway, an integral part of the Cosmos ecosystem, is a Layer 1 blockchain crafted using the Cosmos SDK. It leverages the Inter Blockchain Communication Protocol (IBC) to ensure smooth interactions with other applications within the Cosmos Ecosystem. Archway streamlines development by integrating technologies like CosmWasm, Wasm, and Rust, accommodating a range of high-level programming languages. What sets Archway apart are its rewards and tracking modules, which empower developers to monetize their dapps from inception. This strategy fosters rapid innovation and paves the way for novel business models. With robust security features in place, Archway strikes a balance between scalability and risk management. Archway presents a revolutionary solution poised to reduce fees and provide the much-needed “fuel” to address the middle contract challenges.
L2 for Governance: This concept, inspired by Rafa, had been lingering in my thoughts, awaiting articulation. The idea revolves around implementing a Layer 2 (L2) rollup on top of Ethereum, which could be either ZK or optimistic. Gas fees would be shared between the smart contract creator and the validators. By leveraging platforms like Eigenlayer, all governance tools and mechanisms could reside on this layer. This would catalyze the development of advanced governance systems, encompassing features like CRM, treasury management, voting mechanisms, proposal drafting, and stakeholder communication. Furthermore, this solution could potentially address the dual governance challenge and other related issues. The protocol would interface with a messaging bridge, linking the coin balance in your wallet to decisions made in the L2. These decisions would then be relayed to the governance protocol in Layer 1 (L1). However, a notable challenge is the inherent complexity of bridges, especially messaging ones. Additionally, Dapps would need to modify their existing governance code to accommodate this new structure.
Microtransaction Fees on Basic Functions: Introducing microtransaction fees for fundamental operations could be another avenue to explore. Actions like transfers, deposits, voting, and others could incur minimal charges. This approach could generate a steady revenue stream, ensuring the sustainability of the platform while keeping costs low for users.
Looking Ahead:
The middle smart contract dilemma is just one of the many challenges the Web3 space will face. However, it serves as a testament to the community’s resilience and innovative spirit. As we forge ahead, solutions like the ones proposed will not only address current challenges but also lay the foundation for a more robust, sustainable, and decentralized future.
In conclusion, while the road ahead is filled with challenges, it’s also brimming with opportunities. It’s up to us, the pioneers of the Web3 domain, to seize these opportunities, address challenges head-on, and shape a future where decentralization isn’t just a buzzword, but a tangible reality.
Meanwhile for more information you can find it on our:
If you are interested in collaborating with us, please reach out at → hello@chelo.fi
Today, I’d like to discuss a pressing issue in the web3 domain — what I’ve coined as “the middle smart contract problem.” While the name might be of my own creation, it refers to smart contracts that act as intermediaries, bridging other smart contracts or forming a component — big or small — of a Dapp.
It’s undeniable that economics propels our world forward. But what transpires when we invest time and resources into creating something and don’t derive any economic benefit in return? Some might argue that many developers work altruistically for the greater good. However, there’s a downside: the potential stagnation in development, which impacts the entire system. Sometimes, these intermediary smart contracts could even evolve into standalone companies specializing in this niche function.
There exists a silent consensus surrounding the inception of smart contracts. Certain functions don’t levy fees, possibly because on-chain actions inherently involve gas costs, covering essential operations like transfers, voting, and signatures. However, as time has progressed, actions like swapping, lending, borrowing, minting, buying, and selling have evolved, they are one of the ways to take fees of using the protocol.
While this model might make sense in the web2 universe, where products often have a subscription-based or one-time purchase pricing structure, it seems misaligned with the web3 paradigm. Several reasons could account for this disconnect, one being the legal intricacies differentiating securities from assets, or equating governance power with actual monetary value. But I’ll delve deeper into that in a potential future article.
These contracts can manifest in various forms, such as governance contracts. For instance, Uniswap’s governance doesn’t charge fees for voting but uses it to give utility to their tokens, with revenue primarily from app-associated fees. However, the real discussion is about “Controller” or “Router” contracts. These don’t handle fees but connect different smart contracts within DApps, working in the project’s best interest. Their lack of direct economic incentive makes development challenging, akin to a missing puzzle piece.
Multisig wallets are another example. They don’t generate revenue but safeguard assets by requiring multiple approvals for transactions, indirectly saving potential financial losses. The decentralized world’s evolving economic models necessitate sustainable incentives for these middle contracts. Solutions include protocol funding, community grants, token incentives, and open-source collaboration.
In essence, while middle contracts face economic challenges in Web3, the community seeks innovative solutions, emphasizing their value for a secure decentralized ecosystem
We’ve identified challenges in the Web3 space, particularly concerning middle contracts. By delving deeper, we aim to understand the nature of these challenges and their implications. To address these issues, I present several solutions that could shape a brighter future for decentralized applications:
Archway Blockchain: Archway, an integral part of the Cosmos ecosystem, is a Layer 1 blockchain crafted using the Cosmos SDK. It leverages the Inter Blockchain Communication Protocol (IBC) to ensure smooth interactions with other applications within the Cosmos Ecosystem. Archway streamlines development by integrating technologies like CosmWasm, Wasm, and Rust, accommodating a range of high-level programming languages. What sets Archway apart are its rewards and tracking modules, which empower developers to monetize their dapps from inception. This strategy fosters rapid innovation and paves the way for novel business models. With robust security features in place, Archway strikes a balance between scalability and risk management. Archway presents a revolutionary solution poised to reduce fees and provide the much-needed “fuel” to address the middle contract challenges.
L2 for Governance: This concept, inspired by Rafa, had been lingering in my thoughts, awaiting articulation. The idea revolves around implementing a Layer 2 (L2) rollup on top of Ethereum, which could be either ZK or optimistic. Gas fees would be shared between the smart contract creator and the validators. By leveraging platforms like Eigenlayer, all governance tools and mechanisms could reside on this layer. This would catalyze the development of advanced governance systems, encompassing features like CRM, treasury management, voting mechanisms, proposal drafting, and stakeholder communication. Furthermore, this solution could potentially address the dual governance challenge and other related issues. The protocol would interface with a messaging bridge, linking the coin balance in your wallet to decisions made in the L2. These decisions would then be relayed to the governance protocol in Layer 1 (L1). However, a notable challenge is the inherent complexity of bridges, especially messaging ones. Additionally, Dapps would need to modify their existing governance code to accommodate this new structure.
Microtransaction Fees on Basic Functions: Introducing microtransaction fees for fundamental operations could be another avenue to explore. Actions like transfers, deposits, voting, and others could incur minimal charges. This approach could generate a steady revenue stream, ensuring the sustainability of the platform while keeping costs low for users.
Looking Ahead:
The middle smart contract dilemma is just one of the many challenges the Web3 space will face. However, it serves as a testament to the community’s resilience and innovative spirit. As we forge ahead, solutions like the ones proposed will not only address current challenges but also lay the foundation for a more robust, sustainable, and decentralized future.
In conclusion, while the road ahead is filled with challenges, it’s also brimming with opportunities. It’s up to us, the pioneers of the Web3 domain, to seize these opportunities, address challenges head-on, and shape a future where decentralization isn’t just a buzzword, but a tangible reality.
Meanwhile for more information you can find it on our:
If you are interested in collaborating with us, please reach out at → hello@chelo.fi
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