This edition of the newsletter dives into Artela Network which is an EVM-compatible Layer 1 built on Cosmos that introduces two major innovations: Aspect Programming for extensibility (allowing developers to add custom programmable modules at the chain level) and a Parallel Execution Stack for scalability. We'll also share some interesting articles, portfolio updates and market highlights.
1. Research Articles
a) Decentralised Compute
• While decentralized computing won't compete with Big Tech in training superintelligent AI models (which require massive GPU clusters and proprietary data), it can serve valuable roles in training smaller specialized models and particularly in handling inference workloads.
• Crypto networks offer unique advantages through token incentives for bootstrapping GPU marketplaces, trustless contract enforcement, and censorship resistance, positioning them as essential infrastructure to ensure AI remains accessible as the technology matures and consolidates under major players.
Decentralised Compute
Explore how crypto networks could democratize AI compute access, from GPU marketplaces to distributed training. A deep dive into decentralized compute.
b) On Network Economies
• The article explores the evolution of blockchain-based network economies through three stages: from fixed mechanics (like Bitcoin) to governable parameters (like Aave) to theoretical autonomous systems, emphasizing how governance mechanisms are crucial for their success.
• Drawing from Elinor Ostrom's work on polycentric systems and commons management, it argues that the future of network economies requires sophisticated governance frameworks that balance security, adaptability, and equitable value distribution rather than just focusing on tokenomics.
On Network Economies
Some years from now, blockchain-based network economies will develop a rich operating tapestry radically different from the business models we know today.
c) The Case for Crypto AI: Decoding the Hype with the Synergy Matrix
• The article explores the intersection of AI and blockchain technologies through a "Synergy Matrix" framework that evaluates where these technologies effectively complement or conflict with each other based on key properties like privacy, verifiability, performance, security, scalability, and decentralization.
• The matrix helps identify high-impact areas where blockchain can meaningfully enhance AI systems (like federated learning and zkML) while acknowledging limitations in other areas, serving as a strategic tool for evaluating projects and investments in the space.
The Case for Crypto AI: Decoding the Hype with the Synergy Matrix
Reflects the AI-Blockchain Synergy Matrix's role as a guide for identifying impactful areas.
2. Portfolio Highlights
a) Infrared Finance
• For a recap, Proof of Liquidity (PoL) is Berachain's innovative consensus mechanism that rewards users not just for staking tokens but also for providing liquidity to the network's protocols, with users receiving BGT (Berachain Governance Token) that can be delegated to validators who direct future rewards.
• Infrared simplifies this system through their iBGT product, which offers a liquid, transferable version of the normally soulbound BGT token, enabling additional use cases and potentially higher rewards for users who stake in their vaults.
ELI5: Proof of Liquidity (PoL)
In PoL, liquidity is king. Users who contribute liquidity receive BGT (Berachain Governance Token), which they can use to influence where future BGT rewards are directed. Validators manage these emissions by allocating rewards to specific liquidity pools or protocols, amplifying yield opportunities in areas that matter most to Berachain.
b) Vanilla Finance
• Vanilla Finance, a leading exchange platform on Telegram with over $8 billion in USDT trading volume, has announced the successful closure of their pre-seed investment round.
• The platform plans to expand its offerings with spot market trading, meme pairs, and futures trading while focusing on the Southeast Asian and APAC markets, aiming to capture the next 100 million users through localized services and regional payment system integration.
Vanilla Finance Closes Pre Seed Investment Round led by UOB Ventures, Paper Ventures & ABCDE Labs - Press release Bitcoin News
PRESS RELEASE. Singapore, November 26th, 2024 - Vanilla Finance, the #1 exchange by trading volume on Telegram, today announced the successful closure of
3. Artela Network
1. Introduction
Artela Network is an Ethereum Virtual Machine (EVM) compatible Layer 1 blockchain that leverages on the Cosmos Tendermint and software development kit (SDK). The blockchain network’s unique feature is its extensibility which enables developers to build feature rich dApps due to the customization allowed at the chain level. Artela offers extensibility that goes beyond EVM-equivalence, inter-domain interoperability, and boundless scalability with its elastic block space design.
Extensions allow developers to extend the blockchain base layer by adding custom programmable modules at the user level, enabling them to tailor the base layer features to fit their specific use cases. Artela represents a significant advancement in blockchain technology, introducing two major innovations: Aspect Programming for extensibility and a Parallel Execution Stack for scalability. This report provides a detailed analysis of Artela's architecture, technical implementation, performance characteristics, and potential impact on the blockchain ecosystem.
2. Visionary team
One of the first factors that caught our attention was Artela Network’s founding team members where both co-founders were previously from Ant Group, owner of the world’s largest mobile payment platform Alipay. Artela is led by Jerry Li and HongLin Qiu, and the duo brings a wealth of experience, expertise, and a shared passion for their mission. Jerry has a Bachelor’s Degree in Electrical Engineering from Tsinghua University and spent 12 years as an R&D director for Apple before moving to AntChain (Ant Group’s blockchain technology arm) where he was the chief architect.
HongLin Qiu is a software engineer by trade who was also previously at Ant Group working on R&D at Alipay Global Payment And Settlement System. Their track record of success and dedication to pushing the boundaries in blockchain development and payment systems is evident, and we have full confidence in their ability to execute their vision.
3. Problems that Artela solves
Artela's architecture is built upon the recognition that current blockchain platforms face two critical limitations: restricted extensibility in smart contract platforms and inherent scalability constraints in transaction processing. The platform addresses these challenges through a sophisticated combination of innovative technologies, including a programmable extension framework, comprehensive parallel execution capabilities, and elastic block space allocation.
The platform's architecture differs fundamentally from traditional blockchain approaches by introducing dynamic runtime extension capabilities, native parallel processing, and customizable transaction lifecycles. These features are implemented while maintaining crucial blockchain characteristics such as deterministic execution and security.
At a high level, there are two perennial problems with the existing EVM architecture that have plagued researchers and developers. The first is the notoriously known scalability issue which refers to how many transactions a network can handle per second (TPS). This arises as there are many components that need to be solved to achieve scalability (throughput, finality, and confirmation time) and the trilemma (optimising for scalability may put either decentralisation or security at risk) cannot be ignored too. Projects are trying to solve the scalability issue by creating alternative VMs such as FuelVM (Fuel Network) and MoveVM (Aptos, Sui, Linera and OL Network). However, they run into problems such as user adoption due to onboarding friction and most crypto developers are already familiar with EVM-based smart contracts due to its maturity and popularity.
The second critical pain point in blockchain development and one that we aim to discuss more is functionality - demands of customization for specific use cases. Functionality of a blockchain refers to its capability to support various applications with specific needs. Smart Contracts are developed with specific programming languages that can be interpreted by the underlying virtual-machine. However, the problem lies when these programming languages are often immature and limited by the constraints of the VM itself. For example, the EVM does not allow developers to implement automatic execution of code which means that the current state of the EVM lacks functionality and flexibility. There have been several innovations undertaken to address different demands of customization for various use cases, both on the chain layer and by dApps.
On the chain layer, it is evident in the Cosmos ecosystem where their SDK allows developers to spin up application-specific blockchains customised to operate a single application such as a blockchain solely catered to trading (e.g. dYdX) or in the Avalanche ecosystem with the advent of subnets which are sovereign networks that allows developers to define their own rules regarding its membership and token economics (e.g. DeFi Kingdoms subnet). More recently, Rollup-as-a-Service (RaaS) has gained notable traction where it essentially allows projects to minimise or abstract away the technical complexities of deploying app-specific rollups. RaaS can come in the form of rollup SDKs (e.g. OP Stack, Arbitrum Orbit or ZK Stack) or no-code rollup deployment services (e.g. AltLayer, Radius or Saga). In both cases, instead of building a decentralised application on top of an underlying blockchain like Ethereum, developers build their own blockchain from the ground up to cater to their needs.
On the dApp layer, we see recent innovations from Uniswap for example when they released their “Hooks” feature which are essentially programmable buttons that developers can customise to add new features to their liquidity pools such as actions before or after swaps, pool customization and the implementation of dynamic swap fees and trading limits. Rather than creating a whole new VM or providing developers tools to spin up their own app-specific chain, Artela Network aims to enhance the EVM with an extension-like feature called Aspect Programming. The goal is to push the boundaries of the EVM’s capabilities beyond its original specification, while still maintaining EVM-equivalence. Aspect Programming provides a universal stack for all chains, including Layer 2 solutions, to develop native extensions at the base layers, enabling modular dApp building and customised functionality.
4. Aspect programming
The cornerstone of Artela's innovation is its Aspect Programming framework, which introduces a novel approach to blockchain extensibility. This framework enables native extensions that can be dynamically integrated into the blockchain at runtime, fundamentally changing how blockchain applications can be developed and deployed.
In today's competitive L1 landscape, having a clear competitive advantage is crucial in order to attract developers and users onto the chain. We think that Artela Network has built a formidable moat through its Aspect Programming functionality. Aspect Programming offers an SDK and a Web Assembly (WASM) runtime environment for building native extensions on Artela blockchain.
a) What is Aspect programming
The cornerstone of Artela's innovation is its Aspect Programming framework, which introduces a novel approach to blockchain extensibility. This framework enables native extensions that can be dynamically integrated into the blockchain at runtime, fundamentally changing how blockchain applications can be developed and deployed.
i) Join Point Model
At the heart of Aspect Programming lies the Join Point Model (JPM), which defines specific points in transaction and block processing where custom logic can be injected. These join points span the entire transaction lifecycle, from block initialization through transaction verification and execution, to block finalization. This comprehensive coverage ensures that developers can extend functionality at any critical point in the blockchain's operation. The join point implementation is particularly sophisticated in its handling of execution context. During transaction processing, join points provide access to relevant state information while maintaining strict security boundaries. This allows for powerful extensions without compromising the blockchain's fundamental security model.
ii) Aspect Implementation
Aspects themselves are implemented as WebAssembly modules, executing in a carefully controlled runtime environment that ensures deterministic behavior while providing access to system-level functionality. This implementation choice balances the need for powerful extension capabilities with the requirements for security and predictability in blockchain operations.
Each Aspect maintains its own state, separate from but interoperable with the blockchain's main state. This separation is crucial for maintaining proper isolation while allowing for complex interactions when needed. The state management system includes sophisticated versioning capabilities, allowing for smooth upgrades and transitions without disrupting ongoing operations.
This can also be visualised as a layer that provides a set of APIs for developers to build on-chain extensions. Extensions can be easily understood using the Google Chrome extension example. Installing extensions on Google Chrome enhances the experience of using the web browser by blocking ads (e.g. AdBlock) or changing the view of certain websites (e.g. Dark Reader). Similarly, developers can flexibly combine Aspect with smart contracts to augment their functionalities for users. By utilising the extension APIs provided by the blockchain base layer, Aspect can manage the entire lifecycle of a transaction or block, just like how a Chrome extension manages the lifecycle of a web page, such as changing the way web pages are rendered or blocking certain elements.
Aspects can perform a variety of tasks, including, but not limited to, the following:
• Customising verification methods of transactions
• Adding additional processes to transactions according to different dApps, such as customised gas payment
• Building block proposals according to application rules and supporting adding on-chain automated transactions
• Introducing heterogeneous computing modules before and after smart contract execution
• Writing extensions for smart contracts and performing post-processing tasks that are irrelevant to the main business logic.
In terms of the architecture:
• The base layer exists to provide basic functions including the consensus engine. Every Artela node runs two VMs simultaneously which is the EVM as a main processor to update smart contract states and WASM which is the coprocessor and updates the Aspect states
• Extension layer is where the Aspect SDK sits on
• Application layer allows project developers to build smart contracts as they would normally do
b) How can Aspect Programming benefit developers
To date, there have been several narratives which lead us to believe that developers desire higher levels of customization and optimization for their dApps and that is the appchain thesis and rollups as a service (RaaS). These solutions offer developers the chance to enjoy more control over consensus, security, validator set and uptime without having to rely solely on the layer 1 network which will disrupt operations if it breaks down. Most layer 2s have also introduced their own modular framework to build sovereign L2s and L3s (Optimism with OP Stack, Arbitrum with Orbit and zkSync with ZK Stack).
However, there are several bearish scenarios to an appchain future where project developers would have to either hire extra manpower/ shift focus to building out the chain which will take resources away from developing and improving the main product. Appchains could also see a significant reduction in user experience (hundreds of chains for a wallet), security, and composability (bridging, less interoperability).
Aspect programming thus serves as an on-chain toolkit for customised functionality for developers which will seamlessly integrate with smart contracts allowing dApps to have a plug-and-play feature. Aspect removes the need for developers to focus on building out their own chain and this provides a myriad of benefits including:
• dApps now can customise their own Aspect programming in order to reach a level of customization found in appchains but in a light weight manner
• Extensibility & customised functionality: The extensibility of Native Extension allows for the realisation of built-in customised functionality at an atomic level. The combination of smart contracts and Native Extensions gives dApps flexible extensibility
• Independent dApp: Adding global functionality to the underlying blockchain requires a long development and verification cycle. With Native Extension, dApps can extend functionalities in a modular manner without requiring global upgrades of network nodes
• Easy maintenance: Native Extension doesn’t require changes to the smart contract code. dApps would no longer be a collection of tightly coupled codebases
c) Example use case of Aspect Programming
Since Aspect is a programmable module, logics can be implemented into dApps and support the construction of complex protocols in a modular fashion. This can be applied to an on-chain risk management protocol for example. Without Aspect Programming, current solutions like auditing are all peripheral off-chain risk management. Using Aspect, enterprise-level risk control logic can be deployed on-chain through security Aspects which will be automatically implemented when a transaction triggers a risk control policy.
For example, a parameter can be set such that if 10% of a liquidity pool is withdrawn in an hour then the smart contract is able to stop it and trigger a safety mechanism and suspend the risky transaction.
The use cases that can be realised through Aspect is abundant:
• Complex features involving autonomous worlds (AW) and on-chain gaming
• DeFi strategies such as just-in-time (JIT) liquidity and transaction reversion
• Programmable NFTs with utility
• Building an order book that is fully on-chain
In a nutshell, Artela addresses limited extensibility of smart contract platforms through a novel programmable extension framework (Aspect Programming) together with an elastic block space for predictable performance and integration of heterogenous computing capabilities.
5. Parallel Execution Stack
Artela's parallel execution stack represents a comprehensive approach to blockchain scalability, implementing four key components that work in concert to achieve significant performance improvements while maintaining blockchain security and consistency.
a) Predictive Optimistic Execution
The platform's predictive optimistic execution system uses sophisticated hint tables to optimize transaction processing. These hint tables are generated through AI-driven analysis of historical transaction patterns, allowing the system to predict likely transaction dependencies and optimize execution grouping accordingly. This approach significantly reduces execution conflicts while maintaining high throughput.
b) Async Preloading
Artela implements an innovative async preloading system that significantly reduces I/O bottlenecks in transaction processing. The system uses both optimistic and pessimistic preloading strategies, intelligently predicting which state data will be needed and ensuring it is available in memory before execution begins. This approach has demonstrated significant performance improvements, particularly in complex transaction scenarios.
c) Storage Architecture
The platform's storage architecture introduces a novel separation between State Commitment (SC) and State Storage (SS), optimizing both for their specific requirements. This separation, combined with the implementation of K-Persist state commitment database, significantly reduces write amplification and improves overall storage efficiency. The architecture has demonstrated particular effectiveness in handling high-throughput scenarios while maintaining strong consistency guarantees.
d) Elastic Block Space
Artela's Elastic Block Space (EBS) implementation provides a sophisticated solution to the challenge of providing predictable performance for high-throughput applications. The system dynamically allocates resources based on demand, ensuring that applications receive the resources they need while maintaining efficient overall resource utilization.
6. Future Developments and ecosystem growth
Artela's roadmap includes several significant developments that will further enhance the platform's capabilities. These include expanded support for heterogeneous computing, enhanced programming models, and continued optimization of the core infrastructure.
The platform's future success will largely depend on its ability to foster a vibrant developer ecosystem. Current initiatives focusing on developer tools, documentation, and community support are crucial elements in this strategy. The platform's ability to maintain backward compatibility while enabling forward-looking innovations will be key to its adoption and growth.
7. Considerations
Building a new layer 1 is not an easy feat. We outline several challenges that could hinder the adoption of Artela Network:
• The current layer 1 vertical is very saturated which causes developer and user mindshare to be constrained to only a few blockchains. Hence, it will be a challenge for Artela to incentivise existing crypto participants to its ecosystem. Recent L1 launches that either have extremely low total value locked (TVL) or an initial increase then rapid decrease in TVL reflect how users do not care too much about the uniqueness of a blockchain’s technology. Adoption comes when there are fun and exciting projects to use on the chain, seamless onboarding/bridging and good incentives to ensure sticky TVL
• Planning out an efficient Go-to-market (GTM) strategy to solve the cold start problem is tough. Effort must be put into incubators and accelerators, building out a healthy developer and initial user community, grants program for developers, raising awareness through campaigns or at conference events, partnership with existing projects (centralised exchanges, wallets, blue chip protocols, 3rd party bridges) and hackathons
• Current marketing team may not yet have the experience to launch a successful crypto marketing campaign. Crypto marketing is very different from tradtional marketing since it involves finding product market fit with crypto natives (leveraging Crypto Twitter and on-chain incentives), creation of a strong community (developer support and strong Discord community), memes and culture and finding a right balance between speculation and user retention
• Hiring a crypto native ecosystem/ business development person to oversee the development of the Artela ecosystem to ensure it manages to onboard integral stakeholders like developers and users while simultaneously entering the mindshare of crypto native users
8. Conclusion
Artela represents a significant advancement in blockchain technology, offering innovative solutions to current limitations while maintaining compatibility with existing systems. The platform's dual focus on extensibility through Aspect Programming and scalability through parallel execution positions it as a potentially transformative force in the blockchain ecosystem.
Investing in Artela Network is not just a financial decision for us; it's a strategic partnership based on a compelling vision, and a belief in their potential to create lasting impact. We are excited to join Jerry, HongLi, and the entire Artela Network team on this journey. Together, we aim to redefine blockchain extensibility which will hopefully create long lasting value for both users and project developers.
We identify several factors that will contribute to the success of the platform and in our view will ultimately depend on:
• The ability to maintain performance and security as the ecosystem grows
• Successful adoption by developers and integration into existing blockchain ecosystems
• Continued development of the technology in response to emerging needs and challenges
• Building and maintaining a strong community of developers and users
The platform's current implementation and roadmap suggest strong potential for success in these areas, though continued attention to ecosystem development and technical refinement will be crucial. Stay tuned for updates as we work directly with Artela Network to achieve their ambitious goals and watch them flourish.
*Disclosure: Artela Network is Signum Capital’s portfolio company and the information provided on this newsletter is for general informational purposes only and does not constitute professional nor investment advice.
