Open Worlds on Flow
Cryptonetworks will enable a new generation of open applications
Ali Yahya, partner at Andreessen Horowitz’ crypto fund, posted an awesome thread on some of his thinking supporting @withflow_ this morning:
Business of Crypto Apps
We describe Flow as a decentralized, permissionless network built to support a new generation of games, apps, and the digital assets that power them.
This new generation of applications can have successful, community-driven business models by using crypto-assets, whether fungible cryptocurrencies or utility tokens or non-fungible collectibles:
Crypto incentives unlock new business models that the industry has only started to explore.
Within games and entertainment, non-fungible tokens (NFTs) are the most interesting building block to date in terms of business models.
Just like any token or cryptocurrency, NFTs can have their scarcity, ownership, and provenance secured on the blockchain. They can be traded globally using decentralized exchanges, and any developer can build functionality for them without taking platform risk.
However unlike any cryptocurrency, NFTs can be individually unique, each a special, indivisible, snowflake.
Starting with CryptoKitties and the ERC-721 standard conceived by our CTO Dieter Shirley, millions of NFTs have already been bought and sold within the small but active dapp community, resulting in tens of millions of dollars in market volume, mostly on peer-to-peer, decentralized networks.
New types of content and business models are being developed and tested as we speak. Within Dapper Labs’ small but mighty distributed team alone:
- Cheeze Wizards tests new concepts including a business model around NFTs with consumable value — in this case magic that can be passed on from vanquished to victor, Highlander-style. Cheeze Wizards is also a demonstration of what composability could look like, with amazing projects from its recent hackathon.
- Earlier this summer we partnered with the Fabricant and Johanna Jaskowska, one of the biggest designers on Instagram, to design and auction off iridescence, the world’s first digital clothing as an NFT on the Ethereum blockchain. Iridescence sold for $9,500 at the Ethereal Summit in New York.
- Our biggest project yet is NBA Top Shot. We’re working directly with the NBA and NBPA to represent the greatest moments in basketball history as limited edition collectibles that fans can use for games and real-world benefits. Fans: sign up for updates and follow the action on Twitter:
Future of Open Source
Because this new generation of crypto-enabled applications is always openly accessible, they can be leveraged by other developers with very little friction. We call this composability or open ecosystems; others have written about this recently as open gardens as well.
Once the smart contract within a crypto-enabled application is deployed, it’s an open service, accessible to anyone, anywhere: no APIs to maintain, no platform risk for third parties to worry about.
Denis Nazarov, partner at Andreessen Horowitz and previously cofounder of mediachain has written previously about open services here:
Open services compound just like open source, but the compounding is likely to be exponential for two reasons:
- Open services share data and state as well as code and
- The value flowing through the system in the form of crypto-assets makes building a business model much easier.
Open services add value to businesses and everyday consumers because “anyone can build on anything” leads inexorably to more opportunity for innovation and consumer choice. In open worlds, platforms have less power because anyone can tap into the shared state of the network. The end result will be content creators and consumers capture more value.
Designing for Open Worlds
Flow is designed for a world where composability can be the norm for every application, at massive consumer scale:
This insight is at the core of what makes Flow tick. As we wrote in our FAQ:
Flow doesn’t “break” or disprove the Trilemma, it dodges around it. The trick is noting that, if we let different nodes participate in different roles, we can choose the right trade-offs for each part of the system.
Flow maximizes security and decentralization for the Consensus Nodes, the part of the system most vulnerable to Byzantine attacks. This limits their scalability, of course, but that isn’t actually a problem because we don’t ask the Consensus Nodes to do anything computationally expensive.
On the other hand, we crank up the scalability for Execution Nodes to dramatically increase computation throughput. This compromises the security and decentralization of those nodes, which we address by ensuring that every step of every transaction is confirmed by the high security and decentralization Verification Nodes.
For each node type, the Trilemma holds as expected, but the overall effect is a system where the weaknesses of one part of the system are more than offset by the strengths of the other parts.
The upshot: Because of the way Flow distributes the work of securing a blockchain between different node types, it can support massive scale without compromising decentralization or sharding the network.
Problems with sharding and app ecosystems
Sharding, app-chains, sidechains, and other “layer two” solutions effectively saddle the hardest part of scaling the blockchain onto application developers rather than solving it at the protocol level.
The fragmented state of these blockchains removes Atomicity, Consistency, Isolation, Durability (ACID) properties from transactions in the network. Loss of ACID guarantees makes building an app that needs to access data across fragments far more difficult and error-prone.
Sharding isn’t typically a problem for simple token transfers, but even simple interactions between smart contracts become very complicated in a sharded environment. This dramatically limits the composability and therefore network effects of smart contracts.
Getting Involved with Flow
As a team that has been building on cryptonetworks for the better part of a decade, first on bitcoin and most recently on Ethereum with CryptoKitties, Dapper wallet, and Cheeze Wizards — we have a long wish list of technical improvements we’re excited to enable for developers on Flow.
That said, as a team that has delivered products and platforms at scale to hundreds of millions of consumers, we also understand that none of the above matters if we don’t capture peoples’ imaginations by solving real problems and creating lasting delight.
That’s why the story of Flow and Dapper Labs goes beyond our technical infrastructure. We’re also proud to work with some of the best content publishers, storytellers, and cultural movers in the world.
We will publish more details about our partnership programs in a future post. For now, please:
- Review our technical primer on withflow.org
- Apply to work with us on Flow
- Join the Flow discord to follow the conversation
- Sign up for Dieter’s webinar with DCG on Oct-17
- If you’re at DevCon5 in Osaka, look out for Dete on the main stage:
