Forem: Julie Plavnik

State Channels Still Beat All Other Layer-2 Scalability Solutions

Julie Plavnik — Mon, 13 Jun 2022 06:08:22 +0000

We can’t help writing about what we work on in Yellow Network. Previously, we talked a lot about the issues of blockchain interoperability and crypto market fragmentation. In this article, we will cover another not less significant problem of the industry — the blockchain scalability and will focus on state channels as its most prominent solutions. Here we would like to explain these things simply but in-depth and showcase how we use state channels to make cross-chain transactions instant and low-cost. Let’s dive in!

Why is scalability so important for blockchain?

The more crypto adoption is gaining momentum, the more it becomes challenging for blockchain networks like Bitcoin and Ethereum to provide participants with the due user experience. The original designs of the networks get less and less suitable to process the growing transaction numbers without losing on speed and increasing transaction fees. It's good to remind here that the Ethereum network can handle ~15 TPS (transactions per second), and the Bitcoin network can handle ~5 TPS. That was great at the beginning but no longer feasible at the present moment.

Clumsy and semi-functional network design becomes a major turnoff for potential users considering joining a network, as well as for existing users to keep continuously exploring a network. From the marketing perspective, it's literally killing the user retention rate.

Herewith, the growing number of decentralized applications (dApps) creates an extra load on networks. As dApps are getting more complicated, they require more computational power to function, but at the same time, they seek faster transaction speed and lower fees. So as we see here, blockchain scalability and its mass adoption are pretty interdependent things. This is why solving the scalability problem is so vitally important for the whole crypto industry to keep progressing and widespread.

How do we solve scalability issues in blockchain?

Roughly saying, there are two main approaches to handling the scalability problem. These are "off-chain" and "on-chain" approaches - a few words on each.

On-chain

"On-chain" means that we make some improvements on the blockchain level (Layer 1). Here we can, at least, try to innovate the existing consensus algorithm, replace it with a better one (f.eg. Proof-of-Work with Proof-of-Stake), or create a groundbreaking new one from scratch. The end goal here would be to achieve better bandwidth and throughput and decrease the computational power required for transaction processing. As an example, Ethereum is currently undergoing on-chain scaling through sharding.
Briefly, sharding is the process of splitting a database horizontally to spread the load. In the Ethereum context, sharding will reduce network congestion and increase the number of transactions per second by creating new 60+ chains, known as "shards." This will also reduce the load for each validator, as they will no longer be required to process the entirety of all transactions across the network. The consensus mechanism will move from highly computational and clumsy Proof-of-Work (PoW) to Proof-of-Stake (PoS) with lower hardware requirements.

Off-chain

While on-chain scaling is a great way to go in the long term, however, this is an extremely complicated task. It requires massive efforts and enormous time (it can take years) to get accomplished. A way more flexible alternative to on-chains is "off-chain" solutions that do not modify the base blockchain. Off-chain or interchangeably, Layer 2 solutions, are built upon blockchains and exist in the form of their superstructures. The main job of off-chain solutions is to improve users' transaction experience by getting rid of existing blockchain networks bottlenecks, like slow speed and high fees. The core principle of the off-chain solutions' work is moving transaction sessions out of the blockchain and publicly recording only their final balance. The most applied off-chain solutions are:

state channels
sidechains, and
rollups. Below we will cover how they differ while focusing on state channels. Other examples to add here could be validiums and Plazma. However, they are less common and won't be addressed in this article.

What is a state channel?

A state channel is a mechanism enabling transacting parties to interact off-chain and further record with a blockchain only the final state between them. It's like two traders would make x-number of transactions between each other during a day, and by the evening, would officially post the final net balance between them. This trick allows to overcome all the challenges arising out of blockchains' clumsy nature, making transactions fast and cheap while still being the same secure as if they were conducted directly on-chain. Here is how to use them:

1. Opening

To initiate a state channel, counterparties shall deposit a required amount of collateral (i.e., funds) with a multisig contract. Then the collateral of both will be deducted and sent to a smart contract running the state channel. A deposit transaction will deduct money from the party's accounts and transfer it to a particular smart contract that cooperates with this state channel. This depositing mechanism is aimed to ensure that no double-spending will occur neither on the on-chain nor on the off-chain sides of interactions. And this is where the first fee payment happens.

2. Transacting

Since a state channel is open, parties are free to conduct the transactions as much as they prefer through cryptographically signed messages. Their "P&L" inside the channel will alter with each transaction that happens.

3. Settlement and channel closing

Finally, any party can initiate an on-chain transaction when all the transactions are done. For that, both parties should agree on the final state of the channel and submit it to the blockchain for the record. And now it's time for the second fee payment.

What if there is a dispute?

If a participant rejects confirming the final state or simply doesn't respond, the other party can register a dispute on-chain. Then this party will have to submit to a smart contract the latest state of their digitally signed transactions recorded off-chain to prove their claims are legitimate. Another party can disagree that the provided state is the latest and submit the more updated state in response. In the end, the parties would turn to the settlement or the force-execution phase (depending on the specifics of a channel design).

Killer features of state channels

Summing up, the key benefits of state channels are:

High throughput: moving transactions off of a chain allows to dramatically reduce the computational load of a Layer 1 network without losing on security
Strong privacy properties: transactions within a state channel are not publicly broadcasted. Only the opening and closing of a state channel goes into a blockchain.
Instant settlement: once both parties sign a state update, all the transactions between them are deemed to be completed. No miners' confirmations are required for that.
Low fees: transactions happening inside a channel do not require any computational power, and therefore they are cheap.

Limitations of state channels

Like with any technology, the application of state channels has its limitations. Basically, these limitations look as follows:

Pre-defined counterparties requirement: A channel cannot be used to send funds off-chain to users who are not the channel's participants.
Availability requirement: They have to be available in case their counterparty wishes to rigger settlement.
Insufficiency for some types of real-time interactive applications, when the parties get into a dispute and have to resolve it on a blockchain (i.e., adjust to slow blockchain speed).

State channels implementation (2015–2021)

Here is a quick historical data on how state channels have been implemented:

Examples of state channels implementation in 2022

Here I would just share some great examples of ongoing projects relying on state channels, including ours (why not?😊):

Yellow Network - a non-custodial multi-chain trading environment and automated clearinghouse, providing a user with aggregated crypto liquidity, price feed, and seamless high-speed cross-chain transactions at minimal fees.
Perun Network - a state channel application that supports payments, microservices, IoT, gaming, and other business use cases.
Raiden Network - an instant payment solution with low fees compatible with all ERC-20 tokens.
Graph Protocol - a blockchain indexing and querying service utilizing state channels for settling rewards for node operators (indexers).

State channels vs. Payment channels

Payment channels are a specific use case of state channels. They are only designed to support payments between two or more parties. The most well-known example of payment channels is Lightning Network. Comparing payment channels with state ones, the latter have much broader applications and are not limited only to payments. For example, state channels can also be used for scaling a dApp or a blockchain (like Celer Network), in real-time gaming, etc.

Essentially, state channels are an answer for any decentralized application which needs a high throughput, privacy at a transaction level, and the same level of security as a Layer 1 blockchain.

State channels vs. Sidechains vs. Rollups

Sidechains

Unlike a state channel, a side chain is a separate blockchain that is connected with its parent blockchain (the main chain) through a two-way peg. Sidechains run in parallel with their main chains and have their own consensus algorithms. Though side chains are similar to the main chain in terms of smart contract language and code deployment, they have different validator nodes and, unlike state channels, side chains do not inherit the main chain's security properties. A two-way peg enables the transfer of assets between the main net and side chain. The side chain's consensus mechanism (ex: PoS) allows it to process transactions at a higher throughput. The transactions are batched and brought on the main chain, which reduces the computational load on the main chain and thereby reduces the gas fees. Examples of sidechain projects:

Polygon - a proof-of-stake sidechain for scaling Ethereum.
Gnosis Chain - a stable coin payment network built on Ethereum.xDAI is a USD pegged stable coin on the Gnosis chain.
Liquid Network - a bitcoin sidechain for quick payments and settlements with applications for exchanges.
RootStock - a side chain with smart contract functionality on Bitcoin.

Rollups

Rollups are a group of solutions that use different techniques to 'bundle' transactions and submit them to the main net, thereby increasing the speed and reducing the fee per transaction. Like state channels, rollups perform transaction execution outside Layer 1, and then the data is posted to Layer 1, where consensus is reached. The main difference between state channels and rollups is that the latter involve an intermediary to process transactions - a rollup operator. Also, state channels are suitable for a wider variety of use cases than rollups at the present moment. Examples of rollups:

Optimistic rollups (as defined on Ethereum.org): assume transactions are valid by default and only run the computation, via a fraud proof, in the event of a challenge.
Zero-knowledge rollups: run computation off-chain and submits validity proof to the chain.

State channel implementation in Web3 multi-chain trading: Yellow Network

As we mentioned above, Yellow Network enables multi-chain high-speed trading and liquidity aggregation from multiple exchanges and DeFi protocols. At the core of Yellow's architecture is an **overlay mesh peer-to-peer (P2P) network **that uses state channels for two primary purposes:

to unify all blockchains and allow their interoperability, and
to enable reaching any token circulating on whatever isolated network and transfer it to other networks (no matter whether the networks are compatible) without bridging. Below is how it works.

(i) Channel opening

To open a trading state channel, the counterparties need to agree on the amount of YELLOW tokens to be provided as collateral and then deposit them with a smart contract called Adjudicator. Once this is done, the state channel is active, and the counterparties can start trading.

(ii) Remote order matching

The trades are facilitated by the matching engine 'Finex'. The engine allows the exchanges to place bulk orders and cancellations with a validation process that ensures trades are being executed within funding limits. The transactions are then maintained with a metadata index without processing them in the blockchain.

(iii) Settlement

The settlement process may be initiated by any party at any time and should be validated by all the parties involved. After that, the trading channel closes.
Essentially, Yellow Network is a Layer 3 that operates independently of blockchains but facilitates their interconnection and cross-functionality, massively relying on state channel technology. As a result, Yellow's architecture enables a matching throughput of around billions of messages per day, which is significantly faster than any paired Layer 1 and Layer 2 solutions available today. At the end, it would even enable high-frequency crypto trading in the same manner as it's done in traditional finance.

Yellow Network's Features

Key takeaway

Compared with other scalability solutions, state channels still maintain their winner position. They are easier for implementation, cheap and fast in terms of their functionality, absolutely disintermediated, and secure ̶a̶s̶ ̶h̶e̶l̶l̶ the same as a blockchain they operate with. Moreover, state channels are feasible for more use cases than their alternatives. When it comes to Web3 multi-chain trading, state channels are the best bet, as they help overcome blockchains' interoperability challenges and provide speed, enabling even crypto HFT. Yellow Network is the perfect example to prove that.

Want to learn more about Yellow Network and cross-chain trading technology?

Check out OpenDAX v4 stack GitHub: github.com/openware/opendax
Visit the OpenDAX product page: https://www.openware.com/product/opendax
Follow Yellow Twitter: twitter.com/Yellow
Join the public Yellow Network Telegram: t.me/yellow_org
Read Yellow Network Medium blog: medium.com/yellow-blog

Stay tuned as Yellow Network unveils the developer tools, brokerage nodes stack, and community liquidity mining software!

A Comprehensive Guide on Web3 Programming Languages and Tools

Julie Plavnik — Mon, 06 Jun 2022 14:37:28 +0000

40+ Valuable Links To Help You Understand Web3 Stack In 2022

Web3 stands for a new decentralized dimension of the Internet. So far, it’s still in its infancy, and no one has seen it fully deployed and functioning yet. However, we already have many prospective projects and solutions that call themselves Web3 related, and we also have some basic understanding of the Web3 stack.

Some time ago, we discussed how to become a Web3 developer.

In this guide, I will walk through some Web3 stack elements in more detail and focus on the programming languages and tools used in the current Web3 development.

Grab your coffee and enjoy the reading. ☕️

Start of Web3 programming: Bitcoin and C++

The first public blockchain Bitcoin was written in C++.

The choice of this language was not random: C++ served perfectly for Bitcoin’s multithreading model.

Essentially, multithreading refers to the capability of a system to divide its tasks into multiple individual threads and run them simultaneously in parallel. In the end, it helps achieve multitasking — higher performance and productivity for a short time.

Examples of multithreaded parallel operations in Bitcoin are verification of addresses, checking digital signatures, etc.

In contrast, a single threading system implies the execution of only a single task at a time without interruption, which is time-consuming and less productive.

Other merits of C++ as a blockchain programming language were

its maturity in terms of upgrades and debugging, and
the dynamic memory management model via move semantics and forwarding, which allows developers to fetch objects without creating copies of temporary objects — this improves the runtime execution speed. Although C++ matched well with the functionality of the Bitcoin network, it was not sufficient for other types of blockchains, whose stacks included the elements that were not present or well-developed in Bitcoin — for example, smart contracts.

Generally, the proper programming language for the blockchain stack is the one that at least provides for:

a compact code size — as we know, blockchain storage is expensive, and code size has to be space-saving.
an increased level of security
proper auditing and debugging capabilities, and
deterministic way of doing things, which implies that every event or action that takes place is purely due to a set of previously happened events or actions. Given this, let’s look at particular programming languages primarily used in Web3 development.

Smart contracts programming languages

With the popularity of Bitcoin, the concept of “programmable money” and peer-to-peer payments very soon got onto the next level of development. It was proposed that blockchain transactions run through smart contracts — self-executing pieces of code that provide complete transparency and eliminate human interference.

For accuracy, the idea of smart contracts was introduced more than a decade earlier than the rise of crypto. In 1994 Nick Szabo, an American computer scientist and cryptographer, proposed “smart contracts” as computerized transaction protocols wired to guarantee tamper-proof execution of agreements. According to Szabo, the general objectives of smart contract design are to satisfy common contractual conditions (such as payment terms, liens, confidentiality, and even enforcement), minimize exceptions, both malicious and accidental, and minimize the need for trusted intermediaries.

However, the way we know them now, smart contracts gained their popularity later on with the introduction of Ethereum. For the purpose of smart contracts coding, Ethereum’s team developed a completely new programming language — Solidity.

Solidity

It is a high-level object-oriented programming language created by the Ethereum Network team for building and deploying smart contracts. Solidity was designed to target the Ethereum Virtual Machine (EVM) — a software platform that constitutes the core of the Ethereum blockchain and enables developers to create various types of programs and applications (dApps) using smart contracts.

EVM has all features of a Turing-complete virtual machine, which means it can execute any type of code exactly as intended. In other words, Ethereum’s Turing Completeness implies that it can use its codebase to perform virtually any task, as long as it has the correct instructions, enough time, and processing power.

Solidity is syntactically similar to JavaScript, C++, and Python, which makes it easy for coders to master.

Solidity is statically typed and supports inheritance, libraries, and complex user-defined types, among other features.

With Solidity, one can create contracts for voting, crowdfunding, blind auctions, multi-signature wallets, etc. The scope of its application is unprecedented.

Solidity is used almost in all EVM-compatible networks (Polygon, BSC, Avalanche, RSK, Fantom, Telos, etc.) and in most Layer 2 scaling solutions, like Arbitrum, Optimism, Zk sync, Parastat, and others.

Solidity is the most widely used language for smart contracts and has the largest dev community compared with other smart contract languages.

Rust

Rust is a low-level programming language used for smart contract coding in such prominent blockchains as Solana, Polkadot, Near, and others.

Rust is memory efficient and statically typed. Unlike Solidity, Rust is a general-purpose language, and smart contracts are just one of the use cases of its application. One of Rust’s biggest advantages as a blockchain programming language is that it allows the creation of a code that doesn’t have memory bugs and consumes less storage on the blockchain.

Among other valuable features that Rust offers are type safety, small runtime, no undefined behaviors, and the like. Rust’s compiler is ergonomic and provides color-coded outputs and detailed error reports.

Rust is the second most used language for smart contracts.

Vyper

According to its documentation, Vyper is a contract-oriented, pythonic programming language that targets the Ethereum Virtual Machine (EVM). The main goal behind Vyper is to simplify smart contracts, provide their superior auditability and make them less vulnerable to attacks. So Vyper is contemplated as an upgraded, more user-friendly, and secure version of Solidity. Vyper aims to make it virtually impossible for developers to write misleading code.

Yul

Yul (previously also called JULIA or IULIA) is a simple, low-level intermediate language for the Ethereum Virtual Machine. The Solidity Developers wrote Yul as a compilation target for further optimizations. It features simplistic and functional low-level grammar. It allows developers to get much closer to raw EVM than Solidity, and with that comes the promise of drastically improved gas usage.

Yul was recently upgraded to Yul+ extension.

Yul is a language that hasn’t seen much popularity yet, however it has tons of potential for future use.

Plutus

Plutus (Haskell) is a statically typed programming language wired for writing reliable smart contracts on the Cardano blockchain. It is also a functional programming language, which means programs are composed as sets of mathematical functions for execution.

Python

Python is a general-purpose programming language with a readable code design philosophy. It is especially gaining popularity for data analysis and neural network programming.

Python is also used for smart contract programming. A notable example here is Algorand, a public blockchain in which smart contracts are written in Python using PyTeal library.

Others

Languages like GoLang, Rholang, and Javascript are also often used as blockchain programming languages. However, unlike Solidity and Rust, they do not apply as languages for writing smart contracts. Instead, these languages can be used for creating environments to interact with blockchains (like a JavaScript environment) through smart contract call functions.

So here is a summary of the smart contract programming languages covered above and the blockchain networks where they apply:

Web3 Tools

First, let’s look at the main building blocks of the Web3 stack, which are represented in the table below (taken from Edge&Node).

Now, let’s look at some of these blocks closer.

Web3 IDEs/SDKs

Both SDKs (Software Development Kits) and IDEs (Integrated Development Environment) are collections of various tools in one installable package used by developers to create applications for specific platforms or purposes. They are designed to simplify and automate the process of development. With these tools, there is no need to code everything from scratch.

The main difference between SDKs and IDEs is that IDEs are purposed to provide an interface for writing and debugging codes, while SDKs are used to add functionality to the codes written.

The actual contents of IDEs and SDKs vary from one to the other. They can include libraries, frameworks, documentation, preprogrammed code pieces, API, testing/debugging tools, etc. Some SDKs have a dedicated IDE that one can use right out of the box.

Here are some popular Web3 IDE/SDK examples:

IDEs

Hardhat and Truffle — terminal-based IDEs that allow developing, testing, and deploying smart contracts on the Ethereum blockchain. Though they have some slight differences, the functionality of these two IDEs is pretty similar. Both provide JavaScript and Solidity-based development frameworks.
Remix — a browser-based IDE serving similar purposes as Hardhat and Truffle. Remix IDE allows developers to write smart contracts in Solidity from web browsers and desktop apps. It has modules for testing, debugging, and deployment, and a diverse set of plugins with intuitive GUIs.
Ganache — allows you to set up your personal blockchain to test smart contracts and dApps. It’s a kind of a simulator of Ethereum blockchain that makes developing Ethereum applications faster, easier, and safer.

SDKs

SDKs contain libraries, documentation, and sample codes to make developers’ lives easy. For instance, directly plugging into an RPC (Remote Procedure Call) node (i.e., a remote node facilitating communication between blockchain and dApps) can be complicated and time-consuming. This is where SDKs might come in handy.

web3.js, web3.py, and ethers.js are the most popular Web3 SDKs (libraries’ collections). They allow connecting smart contracts with the front end of an application. In other words, these tools would help turn your web application into a Web3 one.

Niche Web3 SDKs

By that sort of SDKs, I mean those specifically wired for building certain types of applications.

Here is an example. Let’s say you want to launch a crypto exchange or a brokerage platform. For that, you can use the OpenDAX WEB SDK — a part of comprehensive OpenDAX software wired for establishing crypto exchanges and brokerage apps.

OpedDax WEB SDK provides the developers with all necessary react components and tools, allowing them to launch a Web3 exchange within days without spending hundreds of thousands of dollars and months of work on the software and web development.

Blockchain APIs

Blockchain APIs (application programming interfaces) allow dApps to communicate with blockchain networks.

APIs are used in many crypto-related areas: payments, trading, clearing, analytics, data management, account management, and the like.

Many blockchain APIs are available open-source and come as IDE/SDK package components. For example, the web3.js mentioned above enables interaction with a local or remote Ethereum node using HTTP, IPC, or WebSocket.

Another example is ethers.js — a JavaScript API for interacting with the Ethereum blockchain. While web3.js assumes that there is a local node connected to the application that stores keys, signs transactions, and interacts with the blockchain, Ethers.js separates these functions between a wallet that holds the key and a provider that serves as a connection to the network, checks the state and sends transactions. This approach gives more flexibility to developers.

Here are a couple of more blockchain API examples:

Graph — a decentralized querying and indexing protocol from Ethereum and IPFS. It allows developers to build on open APIs called sub-graphs.
Alchemy Web3 API. According to its documentation, Alchemy Web3 is a wrapper around Web3.js, providing enhanced API methods and other crucial benefits listed below. It is designed to require minimal configuration so you can start using it in your app right away.

Distributed data storage solutions

As we know, one of the key things that Web3 aims to procure is the decentralized, secure, and immutable storage of data.

What does this mean?

The vision is to ensure that users’ information is stored sliced to multiple independent network nodes instead of one server that is not under users’ control. This distributed approach will procure high-quality data protection, as well as enable users to manage their data, encrypt and keep it private, authorize access to data, and backup the storage.

The most notable projects that work in this direction are:

Block explorers

A block explorer is an online blockchain browser that tracks transactions on a particular blockchain. It publicly shows such transaction details as TXID, amount, timestamp, etc.

Also, block explorers provide APIs to access their data by dApps.

Examples:

Oracles

A blockchain oracle is software that facilitates communication between blockchains and any off-chain system, including data providers, web APIs, enterprise backends, cloud providers, IoT devices, e-signatures, payment systems, and other blockchains, etc.

Oracles work both on and off the blockchain simultaneously. On-chain oracles establish a blockchain connection (handle requests), broadcast data, send proofs, extract blockchain data, and perform computation. Off-chain oracles process requests, retrieve and format external data, send blockchain data to external systems, and perform off-chain computation for greater scalability, privacy, security, and other smart contract enhancements.

Examples here:

Chainlink and
SupraOracles.

Automation tools

Here, we mean the tools to create and automate Web3 applications. An example here is Open Zeppelin which has a library of reusable audited smart contracts for multiple use cases such as DeFi, NFTs, and DAOs. It also has automation tools for smart contract operations and scripts to call smart contract functions.

Smart contract audit tools

One of the biggest challenges with Web3 applications and driving them smart contracts is that they are such irresistible magnets for hackers and attackers. This is why auditing is a non-negotiable part of any dApp/smart contract development and deployment. Auditing helps identify potential vulnerabilities of smart contracts, their backdoors, bugs (if any), and other security flaws that must be eliminated at all costs before a dApp starts widely applying. Auditing also allows finding out some gas optimization opportunities for a contract, making it more cost-effective.

The audit is usually done by third-party companies specializing in it. Here are some examples of tools these guys apply in their activity:

Certik — offers tools for security audit, transaction monitoring and insights, wallet tracing and visualization, and attack simulation.
Consensys Diligence — provides automated testing and verification tools.
Sliter is a static smart contract security analytic tool built on Python to detect vulnerabilities, enhance code comprehension, and prototype custom analyses.
MythX, Mythril, Manticore, and Echidna are other tools for security audits.

Data analytics tools

Anyone can access public chain data and run analytics. Web3 is currently in the early stages, wherein decentralized applications are still being developed. As these applications scale and mature, analytics will play a crucial role in keeping the ecosystem up, running, and safe.

Dune analytics provides tools to query, extract and visualize data from public blockchains. Querying is done with SQL. Dune currently supports Ethereum, Binance Smart Chain, Polygon, Gnosis chain, and Optimism.

TRM Labs and Chainalysis have a suite of paid analytics products for forensics and transaction analytics.

No-code tools

Today no-code development in the blockchain is gradually gaining traction. No-code is poised to enable the creation dApps and other solutions easily and effortlessly, without having special knowledge or hard skills.

With no-code tools, one can create and launch tokens, Decentralized Autonomous Organizations (DAOs), NFT marketplaces, NFT minting platforms, Generative Art, etc.

Examples:

Third Web — a platform for launching NFT marketplaces and tokens,
Mirror.xyz — a platform for tokens minting, governance, and NFT marketplaces. Mirror positions itself as the essential web3 toolkit for sharing and funding anything, and
Aragon — an open-source infrastructure with governance plugins for creating DAOs.

Multisig wallets

A multisig wallet is a digital wallet that requires more than one private key to sign and authorize a crypto transaction. In some cases, it assumes that several different keys must be used to generate a single required signature.

A multisig wallet can be of the m -of- n type where any m private keys out of a possible n are required to sign and approve a transaction. The main purpose of multisig wallets is to protect funds from being misused or stolen.

Multisig wallets are popular among all types of crypto market players: retail investors, crypto exchanges, investment funds, brokers, OTCs, DAOs, etc.

Advantages of multisig wallets:

Increased security: a hacker needs to crack at least m-keys instead of just one to access an account and move funds from it.
Assets recovery: if some of n-keys are lost, the funds can still be accessed through the remaining keys.
Collective control over funds: Funds can not be withdrawn without the unanimous consent of all authorized team members who are in charge of funds management.

Multisig wallets examples:

Web3 starter kits

For example, Scaffold ETH helps quickly start building and prototyping on the Ethereum blockchain. It provides tutorials and libraries to make DeXs, NFTs, multisig wallets, smart contracts, etc.

Support forums

Forums could be a great additional help on the Web3 development journey if you get stuck and need help. The most popular ones are Stack overflow, Ethereum stack exchange, as well as different thematic Discord and Reddit threads.

Final word

Web3 stack has been developing sporadically and is quite fragmented so far. Apparently, it’s still in its baby stage, and so is its knowledge base. However, the speed at which the Web3 development moves is pretty comparable to lighting.

Already today Web3 is no longer the exclusive territory of a bunch of dedicated techies. It provides an impressive toolkit that does not require us to be PhDs in computer science but instead leaves room for quick learning and active participation in the new Internet ecosystem development. It also allows us to harness the accumulated knowledge of Web2, so we can avoid reinventing the wheel each time trying to make things differently.

Sooner or later, even amateurs would be able to find their place under the Web3 sun. The entry barriers are becoming lower, so the more people passionate about this space will be able to join without being dismantled by its complexity.

Learn Web3 with Yellow Network. We can’t wait to see you driving this movement!

Check out OpenDAX v4 cryptocurrency exchange software stack on GitHub: https://github.com/openware/opendax

Visit the OpenDAX product page: https://www.openware.com/product/opendax

Follow Yellow Twitter: https://twitter.com/Yellow

Join the public Yellow Network Telegram: https://t.me/yellow_org

Read Yellow Network HackerNoon blog: https://hackernoon.com/u/yellownetwork

Stay tuned as Yellow Network unveils the developer tools, brokerage nodes stack, and community liquidity mining software!

How to Become a Web3 Developer, Even If You’ve Never Written a Single Line of Code.

Julie Plavnik — Thu, 02 Jun 2022 12:04:56 +0000

Web3 is booming and expanding to more areas of life. Its adoption happens faster than the Internet in its time. You might be probably ignited by the idea “to join the movement and shape the future.” And you might have already heard that the Web3 industry offers juicy rewards.

Yes, it does. There is a profound imbalance between talent supply and industry demand. Web3 developers are a rare breed. Scarcity always makes something even more valuable. So how do you bring yourself to Web3 development?

Some productivity gurus would first advise you to define your goals, who you want to be, pick up a niche, etc. But how are you supposed to figure it out while you’ve never touched the Web3 things and have no practical experience to understand what resonates with you the most?!!

This article will cover how to jump into Web3 development right without getting lost in the overabundance of the information.

Let’s get started.

What areas does Web3 cover?

There is no one full-proved academic definition of Web3. Some attribute to Web3 every next big thing that implementing crypto. Including even those projects that are ̶s̶h̶a̶m̶e̶l̶e̶s̶s̶l̶y̶ apparently centralized (like Metaverse by Meta).

Others define Web3 as a decentralized Internet of value, enabling users to interact peer-2-peer without relying on a tech-giant intermediary (like Facebook and Google) and stay in complete control over their data. This is closer to the truth.

At least, that's how Web3 is described by Gavin Wood, one of the pioneers and leaders of the Web 3.0 movement, who actually coined this term.

Regardless of how many different definitions Web3 has, it is clear that it is multidisciplinary.

The key areas that Web3 covers are:

Artificial Intelligence (AI),
Internet of Things (IoT),
Blockchain Technology,
Metaverse Augmented Reality.

No way you want to start mastering them all simultaneously.

Regardless of your expertise, IQ, and persistence, you will likely end up overwhelmed on day one. And will give up on the second.

So how to approach Web3 development?

As Web3 stands for a decentralized internet, therefore the primary technology it relies on is Blockchain. It is the base of Web3. Other areas - AI and IoT - constitute its superstructure.

Therefore the starting point of our Web3 development journey is blockchain technology.

Further, we will talk about how to get on it. But first, let's look briefly at what a Web3 developer actually does.

What does a Web3 Developer do?

Each time, the particular set of tasks a Web3 developer depends on the niche he is working in (DeFi, NFT, Metaverse, GameFi, etc.) and what an employer or a client pointed out in the role description. In that sense, the role of a Web3 developer is similar to the role of a Business developer. The latter can be a salesperson, a manager who does fundraising, or someone in charge of establishing partnerships and PR collaborations. Therefore, from case to case, the set of tasks is unique.

I will broadly group Web3 development into two main categories: core development and application development.

Web3 Core Developers

A Web3 Core Developer is generally involved in the design, architecture, and security of blockchain systems. Basically, their roles include the following:

Designing and building Layer 1 blockchains from scratch;
Design of consensus protocols and security patterns for the network;
Design of the network architecture and nodes operating; and
Supervision of the entire network.

Essentially, a Core Blockchain Developer sets up the foundation for future decentralized applications (dApps).

Web3 Application Developers

An application developer (dApps developer) has a different set of tasks. They utilize the architecture built by core developers to design and deploy dApps.

The dApps development is basically broken into back-end and front-end parts.

Back-end Web3 App Development

Regular (i.e., Web2) back-end programming refers to the server side of an application and everything that communicates between a database and a browser. The back-end is a part of an application that users do not see.

Web3 back-end development is entirely different. We don't need a server to build a dApp. Instead, we want to choose a proper Layer 1 network (ETH, Solana, Polygon, etc.) fitting our dApp's goals and build upon it smart contracts that would define the dApp's logic and automate its work. Roughly said, smart contracts replace a server-side component in dApps.

Web3 back-end tasks mainly include working with distributed databases, smart-contracts design and deployment, and blockchain APIs, SDKs, and EDIs (see below). Unlike Web2 back-end, Web3 one is always open for users. Blockchain databases and smart contracts are inherently transparent and can be viewed by everyone.

Front-end Web3 App Development

Front-end stands for the client-side part of an application. This is what users see and interact with (i.e., website and mobile app).

The specificity of dApps front-end is that the front-end architecture is focused on communication with smart contracts. Instead of making network requests to a centralized API server somewhere, you will be reading data from the blockchain directly, usually from smart contracts.

Another specific thing here is users’ authentication. As Web3 stands for decentralized ownership and data storage, users access blockchain networks through a dApp directly using their private keys. So another thing you are going to handle as a web3 front-end developer is wallet connections. To identify a user and procure their access to the blockchain, you will usually ask them to connect their wallets, like Metamask, to the dApps website (or mobile app). A wallet acts like a transaction signer in a blockchain network and stores users’ private keys in the browser.

Full-stack Web3 App Development

A Web3 full-stack developer works with both the back and front ends of a dApp. In this sense, they provide end-to-end service and can be involved in projects that include databases and building user-facing websites.

How to start Web3 development?

There are multiple different ways of approaching Web3. The defining factors here are your current skillset and experience.

If you are entirely new to programming and development, the path can be a little trickier than having a related background. However, with intense curiosity, commitment, and dedication, nothing is impossible, right?

Here I would offer a general practical scheme that can fit both the experienced and fresheners. It is based on the assumption that regardless of how new you are to Web3, at least you get along with maths and computer science fundamentals. You are also excited about Web3, consistently educate yourself on it, and follow the trends.

So even if you don’t code yet, your theoretical understanding of blockchain technologies is already solid. That is why I would avoid advising here on things like learning what blockchain is, its goals, and other introductory stuff. If you are at the stage of thinking about becoming a Web3 developer, you are supposed to be already clear on that sort of basics.

So here are the steps:

1. Focus on one blockchain

I would recommend starting coding with Ethereum. At the moment, Ethereum is the most mature development environment in the blockchain space. At the core of the Ethereum network is its EVM (Ethereum Virtual Machine) - a software platform that developers can use to create programs using smart contracts for various purposes, including dApps.

EVM has all features of a Turing-complete virtual machine, which means it can execute any type of code exactly as intended. In other words, Ethereum's Turing Completeness implies that it can use its codebase to perform virtually any task, as long as it has the correct instructions, enough time, and processing power.

Another reason for starting with Ethereum is that there are a lot of other blockchains out there that are compatible with EVM. Among those are Polygon, Avalanche, Polkadot, etc.

So once you master Ethereum, it would be easier for you to expand into other blockchain networks compatible with its EVM.

Also, if you build on Ethereum, you are a part of the largest blockchain developers community. So can always learn from professionals and ask for guidance when needed.

Why not start with Bitcoin?

While Bitcoin has the most extensive adoption, its technology doesn't have the feature of Turing completeness. Therefore, Bitcoin is way less friendly for development than Ethereum.
It's just not fundamentally wired for this. However, a few projects somehow enable building dApps on BTC. For example, Stacks.

2. Learn the most applicable programming language

In the world of building decentralized apps, a must-have coding language is Solidity. Solidity is a high-level object-oriented programming language created by the Ethereum Network team for building and deploying smart contracts. It is designed to target the Ethereum Virtual Machine (EVM).

Solidity is statically typed and supports inheritance, libraries, and complex user-defined types, among other features. With Solidity, one can create contracts for voting, crowdfunding, blind auctions, multi-signature wallets, and other purposes. A significant benefit of Solidity is that it is easier to learn than many other programming languages (like rust or C++, for example). The scope of its application is unprecedented. Solidity is used almost in all EVM-compatible networks (Polygon, BSC, Avalanche, RSK, Fantom, Telos) and in most Layer 2 scaling solutions, like Arbitrum, Optimism, Zk sync, Parastat, and others.

The next suggestion is to learn JavaScript. It is a client-side (i.e., frontend) programming language that allows to implement various complex features on web pages, like interactive maps, animated 2D/3D graphics, scrolling video jukeboxes, and the like Knowledge of JavaScript would be a great addition to Solidity. As mentioned earlier, in dApps development, even its backend part is open for users. Therefore, no matter which development aspect you decide to focus on - backend or frontend - it’s essential to understand the basics of both and how they interact with each other.

Other top programming languages in Web3 development are C++, Java, C#, Go, Python, Ruby, and Rust. However, Solidity + JavaScript would be enough to cover all the necessary basics if you are just starting.

3. Use Web3 IDEs/SDKs

The main difference between SDKs and IDEs is that IDEs are purposed to provide an interface for writing and debugging codes, while SDKs are used to add functionality to the codes written.

Let’s look at some most popular Web3 SDK/IDE examples:

Hardhat and Truffle - terminal-based IDEs that allow developing, testing, and deploying smart contracts on the Ethereum blockchain. Though they have some slight differences, the functionality of these two IDEs is pretty similar. Both provide JavaScript and Solidity-based development frameworks.
Remix - a browser-based IDE serving similar purposes as Hardhat and Truffle.
Ganache - allows you to set up your personal blockchain to test smart contracts and dapps. It’s a kind of a simulator of Ethereum blockchain that makes developing Ethereum applications faster, easier, and safer.
web3.js, web3.py, and ethers.js are the most popular Web3 SDKs (libraries' collections). They allow to connect smart contracts with the front end of an application. In other words, these tools would help turn your web application into a web3 one.
Niche Web3 SDKs. By that sort of SDKs, I mean those specifically wired for building certain types of applications. Here is an example. Let’s say you want to launch a crypto exchange or a brokerage platform. For that, you can use the OpenDAX WEB SDK created by Openware, a Yellow’s company. OpenDAX WEB SDK combines the privacy and security of decentralized finance with the usability and simplicity of centralized exchanges. This SDK offers reusable UI components and widgets for common web interfaces used in creating exchange platform applications. They come with a simple and modern design developed to satisfy any needs and according to the latest UI/UX practices. Users can customize the interface based on their corporate style, design guidelines, or other preferences.

In addition to UI components, the library leverages React state management tools such as Providers, Hooks, and Utils. It allows for an easy connection to the OpenDAX WEB SDK for JavaScript and passing data to the UI layer.

4. Join Web3 Communities

Web3 development is amazing and joyous but could be pretty challenging at times. Especially for newbies. If you go a sole wolf way, you can lose days, months, and even years trying to overcome obstacles on your development journey. It makes no sense, given that there is always someone already ahead of you and willing to share their knowledge. You can easily find those people in Web3 communities.

Such communities exist almost around every Web3 network, protocol, or a stand-alone project. They hang out on Reddit, Discord, Github, Telegram, and other social platforms. Engage with those that are the most suitable for your current professional level and goals. The beauty of the Web3 development world is that it is tremendously supportive and collaborative.

Final thoughts

Web3 development is absolutely a brilliant career path. Not only will it reward you financially, but the time spent working in this field will give you paramount personal growth and high-quality social capital.

Don’t be discouraged by its seeming at first sight complexity. Learn as you go. The clarity will follow.

Want to learn more about Web3 and FinTech?

Check out the most ambitious decentralized project Yellow Network powered by the latest state channel technology: yellow.org
Take a look at the open-source OpenDAX v4 white-label cryptocurrency exchange software stack on GitHub: github.com/openware/opendax
Visit the OpenDAX product page: https://www.openware.com/product/opendax
Follow Yellow on Twitter: twitter.com/Yellow
Join the Yellow Network Telegram: t.me/yellow_org
Read more exciting articles on Yellow Network Medium blog: medium.com/yellow-blog
Find us on Hacker Noon:hackernoon.com/u/yellownetwork