Tech Stack Innovation: The Shift to Decentralisation and Why It Matters
Table of contents
- Introduction
- Why is centralisation an issue for the tech stack?
- What is the solution?
- Decentralised tech stack at Gro DAO
Introduction
The way users interact with digital content is undergoing a radical transformation. Across industries, there is a progressive movement away from the monopolising Web2 infrastructures controlled by big tech players to the decentralised and permissionless Web3 infrastructures, which give ownership and control over data back to its users. Underpinning this shift are decentralised tech stack solutions.
A tech stack refers to the set of technologies (specifically the software frameworks, programming languages, libraries, tools, and services) used to develop and operate an application. Decentralised tech stack tools such as Fleek, IPFS, the Graph, Dune, Gelato, and more, offer a fresh approach to security, scalability, and accessibility for data storage, retrieval, sharing, and interaction, while reducing centralised points of failure and authority.
This article will explore the importance and benefits of a decentralised tech stack, and what it means for Gro DAO. It will also examine some of the key players in the space and how they are driving the shift towards decentralisation.
Why is centralisation an issue for the tech stack?
In the early days of the internet (1980s to the early 2000s), there was a well-intentioned alignment of interests in the community to build open protocols. Fast forward to today, where a handful of large corporations dominate the digital landscape, they consequently reached a point where extracting data from users, competing over audiences and profits, and censorship takes precedence over a community governed approach. As the centralised tech stack grows higher, so does their grip clench ever more tightly over users’ sovereignty.
What is the solution?
By replacing traditional databases and centralised technologies with decentralised solutions, in which control is distributed across many parties — Web3 tech stacks provide a secure, resilient, and equitable infrastructure for the internet. Web3 does not represent a perfect solution to all problems, but rather the next evolution of online networks wherein open consensus mechanisms (via blockchain technology), economic incentives (via tokens), and community governance aligns the interests of participants towards a common goal in a way that centralised entities are disincentivised from. Hence, the term “Web3” represents a progression from the closed platforms of Web2.
The decentralised Web3 tech stack can be divided into several layers. For the purpose of this article, we will split them into the following layers: infrastructure, protocols, services, and applications.
Infrastructure Layer:
The infrastructure layer of the Web3 stack is the foundation on which everything else is built. It consists of a number of essential components, including the network, virtualisation, computing, and storage.
A prime example of the infrastructure layer in a tech stack is the InterPlanetary File System (IPFS), a distributed storage and retrieval system. It provides a decentralised and permanent way to store and share files on the internet, meaning that data is fractionalised and distributed across a number of independent nodes, making it an alternative to traditional cloud storage services, such as AWS and Google Cloud. IPFS uses a peer-to-peer network to connect users, enabling them to share data without relying on centralised servers. This makes IPFS more resilient to censorship and data loss, as data is distributed across many nodes instead of being stored in a single location. IPFS can also provide faster data transfer speeds, as in theory, files can be stored closer to the users who need them.
Fleek’s integration with IPFS brings an additional layer of security and redundancy to data storage. Fleek automates the archival and backup process of IPFS-hosted sites and apps, as well as IPFS-stored files, by storing them on the decentralised storage network Filecoin, which like IPFS, is a decentralised and peer-to-peer storage network that uses its own native token to incentivise storage providers. This ensures that even in the event of data loss or network censorship, users can access their information and files from a distributed network, making it a reliable and secure option for those who value data sovereignty. It is worth noting however, that like in most decentralised systems, the upkeep of the network is dependent on the incentives for storage providers to stay online, which is symbiotically driven by network demand and usage.
Protocol Layer:
Moving up the Web3 tech stack, we approach the protocol layer which includes base layer or layer 1 blockchains (e.g. Bitcoin, Ethereum, and Solana); and scaling solutions or layer 2 blockchains (e.g. Optimism, Polygon, and Arbitrum) that are built on top of layer 1 blockchains. The protocol layer is responsible for providing a standardised set of rules and guidelines for dApps to operate within the decentralised ecosystem. These protocols facilitate communication between different dApps and ensure interoperability.
Recently, the landscape of blockchains in the protocol layer has evolved, with projects like Cronos, Aptos, and Sui aiming to address the blockchain trilemma by claiming to improve in at least one of the three prongs of scalability, security, and decentralisation. Layer 2 solutions, which theoretically boost scalability while retaining security and decentralisation, have also gained significant traction and user interest. As an indication, the total value locked (TVL) in leading layer 2 platforms has been increasing rapidly, such as Arbitrum’s TVL which grew from $0.57 billion in July 2022 to a peak of $2.51 billion in May 2023.
Service Layer:
Another crucial component of the tech stack is the service layer which provides the necessary tools to create and manage dApps. The service layer includes data feeds, off-chain computing and governance tooling.
Snapshot is an off-chain governance platform that uses IPFS to enable decentralised autonomous organisations (DAOs) to make collective decisions by opening up the governance process of creating and voting on proposals to its community, without having to pay gas fees. By reducing the cost and complexity of DAO voting, Snapshot makes governance more accessible and efficient.
Furthermore, Dune and The Graph are two notable examples of blockchain data and analytics tools in the service layer. Although neither are fully decentralised, both tools query data from decentralised networks and are ubiquitous in the decentralised finance (DeFi) ecosystem. Dune is a platform that provides powerful analytics tools for a range of blockchains. It allows users to explore and visualise blockchain data through custom dashboards and queries (for example, here is a useful dashboard created by a Gro DAO contributor).
On the other hand, The Graph is a progressively decentralised indexing protocol that provides a means to access and query blockchain data, making it easier for developers to build dApps with complex data requirements.
Together, these tools enable developers and users to gain data-driven insights and create innovative applications on top of decentralised infrastructure, such as blockchains like Ethereum and storage systems like IPFS.
Application (dApp) Layer:
The application layer is the uppermost layer of the Web3 tech stack and is where dApps are built and run. This layer includes everything necessary to create and deploy dApps, such as development frameworks, programming languages, libraries, and toolkits. This layer is where developers can leverage the power of the infrastructure, protocol, and service layers to build their own dApps. These dApps can range from decentralised financial applications — such as yield aggregators, decentralised exchanges and wallets, to social media platforms, online marketplaces, and more.
Decentralised tech stack at Gro DAO
Gro DAO’s Gro Protocol is a stablecoin yield aggregator that tranches risk and yield. The first two products built on Gro Protocol are the PWRD stablecoin with deposit protection and fixed-yield, and Vault with leveraged stablecoin yields.
Gro DAO showcases how to leverage the potential of the Web3 technology stack — here is the current list (as of August 2023) of decentralised tools that Gro DAO uses and Gro Protocol is built upon:
Infrastructure Layer: IPFS, Fleek
Protocol Layer: Ethereum
Service Layer: The Graph, Snapshot, Chainlink, Sentio
Application Layer: Curve, Convex, other stablecoin product strategies, Gelato (for yield harvests)
At the infrastructure layer, Gro Protocol utilises IPFS and Fleek for data storage tasks, such as web frontend hosting.
At the protocol layer, Gro Protocol and Gro DAO’s ERC-20 governance token ($GRO) are deployed on the Ethereum blockchain — which given its network history, ensures a high level of security and reliability for the platform. Gro DAO’s Panda Pod are also currently exploring opportunities across other chains.
Moving to the service layer, Gro DAO uses a number of tools. The Graph (partly decentralised, soon to be more-so) for blockchain data queries, Snapshot’s off-chain governance tooling, Chainlink’s oracle network for a price accuracy safety check, and Sentio for alerts. Additionally, Gro DAO is in the process of further decentralising, and expects to use Tally as a front-end for on-chain governance in the future. For those who would like a preview, here is a link to Gro DAO’s Twitter spaces with Tally.
Finally, at the application layer, Gro Protocol employs a combination of applications to ensure smooth operations of its novel DAO-administered stablecoin yield farming product. These applications include Curve pools for stablecoin yield strategies, Convex for boosted Curve yields, other DAO-approved stablecoin products in yield strategies (see the Gro Protocol dashboard for the latest updates), and Gelato for automated harvesting of yields. Gro DAO’s Panda Pod has been developing a cross-chain bridging tool that makes use of Connext to allow users to deposit and withdraw from cheaper layer 2s to Gro Protocol, significantly reducing gas costs.
Getting Involved
“In cryptonetworks, important governance decisions are made by the community, using open and transparent mechanisms. 3rd parties can build businesses on top of others without worrying about the rules of the game changing later on. As we know from the offline world, democratic systems aren’t perfect, but they are a lot better than the alternatives.” — Chris Dixon
Gro Protocol is a culmination of what the different levels of a decentralised tech stack can be assembled to achieve, and the Gro DAO invites all builders and contributors to help blaze a trail through this next monumental stage of the internet.
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DISCLAIMER: This article is for informational purposes only. It is not legal, tax, financial, or other advice. All of the products mentioned are speculative and involve risks. Refrain from taking action solely based on the information in this article. Please do your own research, make your own financial decisions, and/or seek independent financial advice from a licensed person. None of the information included in this article is an endorsement of the strategies mentioned.
All software developed by Gro DAO are tools that can be used to access and/or operate various DeFi protocols. Accordingly, users of Gro DAO products continue to control their assets and decide how to manage them with the help of these tools.
Originally written by JP5 & Jaypow
