Block chain Layer 3 service how to capture value?

Editor’s note: This article from the smell of ChainNews chain, the translator James Juan; from the original author Gregory Rocco (ConsenSys medium, head of strategy), authorized reprint by Odaily daily planet.

 Block chain Layer 3 service how to capture value?

Earlier this month, Multicoin Capital co-founder Kyle Samani published an article describing the blockchain Layer 1 and Layer 2 agreement on how to capture the value, and puts forward the analysis of the two layer protocol framework to capture the value of the.

In a nutshell:

In the Layer 1 block chain, and protect the underlying protocol from attack capture and the value of the assets (51% attacks) is related to the. Multicoin provides a framework to estimate the share in the cost of attack, known as the “security budget” (security budget), namely the network current value multiplied by the inflation rate, plus the transaction fees, can be used as a means to quantify the protection of the block chain network. All of these are based on the block chain of the underlying protocol assets as a form of currency.

In the block chain Layer 2, is a measure of whether the assets have the ability to pass the “external storage and valuable state” to capture any meaningful value. This basically boils down to this: if you can put the cost of community as the only binder, it separated, it will not capture any state value.

Governance as a value capture method is a problem, payment tokens can capture the value of little or no work but can capture the valuable tokens and cash flow. For example, Augur kept locked in the Augur contract in the capital value of the state, while Livepeer can be based on the positions of interest (free cash flow) to measure.

What is the Layer 3 service?

I would like to use the above concept, talk about the block chain Layer 3 service how to capture value. First of all, we need to give a definition of Layer 3 services: This refers to the construction of public chain and some at the bottom of the middle layer protocol on the service, they can be selected for consumer use.

In order to give specific examples of these services, we will use a Layer 3 application example. These two examples are Veil and Radar Relay.

Veil is essentially a service that can create and participate in market prediction of Augur support, but also through the 0x protocol in these markets derivatives. Obviously, the two provides support for the middle layer is located above the square block chain Ethernet protocol.

 Block chain Layer 3 service how to capture value?

Augur market forecast user interface

 Block chain Layer 3 service how to capture value?

Augur market forecast user interface for many people, the Veil user interface is more simple and friendly Veil by simplifying the common user experience to create value, it will be on all orders charged a fee of 1%, and allows the user to predict the market before the final, with 1% of the cost of the cost to redeem their positions.

Radar Relay is a 0x protocol on the unmanaged exchange, of course, its bottom or etheric square block chain. Radar Relay was originally to the seller and the buyer respectively in the form of ZRX for 0.45% and 0.70% costs, but in order to attract the user’s interest, so no longer charges. But to sustainable development, they may still have to go the road of future charges.

What is the value analysis of Layer 3 capture frames?

The evaluation of these Layer 3 platform value, usually through the analysis of their current to start charging interest. It seems simple, similar to our existing business valuation methods and measure.

However, when they consider also need to incorporate other factors, for example, build these services risk in multilayer above, because the services below each layer has its own risk characteristics.

For example, Radar Relay and Ethernet protocol (the need to consider the square measured by the Layer 1 Framework) and the risk factors associated with 0x risk management. If governance decisions affect or undermine the built on top of 0x business, you need to consider and vote related costs – this could be agreement on more than 51% of the vote, but not only in order to meet their own needs and the cost of protocol bifurcation (think Hydro protocol 0x protocol to diverge from the lesson).

Similarly, if the 0x Ethernet Fang governance decisions such intermediate layer protocol, but also have a corresponding cost. However, such as the Kyle Samani Multicoin framework previously proposed in his article said, looking at the basic protocol, the main consideration is the risk cost to attack block chain network. If the underlying public chain attack weakened, it is difficult to simply move to another agreement, because the latter may not be able to provide all the contents of your business. Not only do you need a new public chain, but also need to rebuild the middle layer protocol to build business.

In the case of Veil, they not only have to worry about the basis of the agreement of the decision and compromise, but also to worry associated with Augur and 0x of the two intermediate layer decision and risk. The more you integrated with Layer 3 services, it will lead to more risk.

For Veil, the risk may be like this, stack:

  • Veil – dependent risk;

  • 0x and Augur: Protocol failure, risk management;

  • Ethernet workshop: network governance, risk of harm.

We must pay attention to the risk of Layer 3 protocol related

Note that, for example the Layer 3 services in the majority is not necessary, even if there is no Veil or Radar, with the help of Relay, some of the services they offer may also be achieved by other ways, but they provide the user experience is to create value for the East west. Think about it, as a user, I want to use the Augur client, simple experience or want to use Veil, trading in the current market derivatives?

However, for the interest of these business people, it is important to note that the risks associated with the base layer and these services, these risks and how the future will affect the upper protocol based services. It is also important, with the passage of time, many Layer 3 services will lose its unique advantages.

A low turnout governance decisions might ruin a business. All of a damaged bottom block chain can destroy it. This field is still in its infancy. Remember, in the next time, anything could happen.

Leave a Reply

Your email address will not be published. Required fields are marked *