Modular Chains, Scalable Value: A Glimpse Inside the Modular Internet Financial System

Onomy Protocol
Onomy Protocol
Published in
5 min readMar 27, 2024

Flexible security models are the future of scalable blockchains. Onomy’s status as a provider chain will establish it as a Hub that secures a new generation of independent flourishing L1s that are all tied together by the collective, modular security provided by the $NOM validator set. Infinitely scalable, purpose-driven value with true governance and interoperability is what will lead to the Internet Financial System, and is what Onomy is driving towards.

What’s the IFS, you ask? An alternative financial system residing on the web. One that abstracts away all on-chain complexity and is more akin to traditional finance, yet retains the crypto ethos and all the cutting edge features that come with it. From consumer apps, to trading, gaming, paying, collecting data, and of course, meme degeneracy. One click, one ecosystem.

Think of it this way. Right now we have memecoins. With Replicated Security offered by provider chains like Onomy, we could have memechains. Onomy will help create scalable consensus through modular security. Great utility will naturally attract additional security. Not everyone needs to fight for the same blockspace, and not everyone has to.

A Modular Ecosystem of Value

Using modular security, L1s will flourish all with their own sovereign rules and be able to spin up utility at breakneck pace. Builders can focus on their apps instead of infrastructure. Rather than roadmaps detailing potential future governance votes for $PEPEWIFBAG holders, it’ll be easy to have it live from the first TGE, with consumer chains allowed to lend security in exchange for fees to provider chains. Holders can sign in with a Cosmos wallet and instantly enjoy voting power as they join a new appchain, and then the carnival of created value will really begin as communities rally to distinguish themselves.

Now, exchange the concept of memechains with appchains that are ideologically driven to improve the current financial system, the state of privacy, medical bureaucracy, remittance, sensor arrays, local internets, foreign exchange, authentication, data-custody, gaming, art, and of course good old store of value, then you see why flexible, modular security is such a tantalising long term proposition.

Bringing Out The IFS Guns

Onomy sees modular security as the key to the Internet Financial System (IFS), where sovereign digital decentralised appchains trade, provide utility, and exchange data and value permissionlessly and free of censorship through federated micro-economies.

Investing in an appchain secured by Onomy we — the broader crypto community — are not just investing in an Ethereum-locked token using ancient architecture that’s difficult to build on and scales only through sheer pain and massive expense. The expense and snail’s pace function of monolithic chains like Ethereum is hugely problematic.

Block space is at an absolute premium, and the fact that its use only makes the gas fees go up, is anathema to the wider adoption of crypto. The current status quo stalls recognition of its ability to rewire the sysadmins of daily existence and deliver value to a huge decentralised swathe of stakeholders while doing so. Token value only delivers on their status as speculative assets or solutions to the problem of the L1 like Ethereum itself, not for the actual use-case they provide.

How can industries like Forex, real world assets, consumer DeFi, or derivative markets, or stablecoin remittance, or any financial model exist in a world where the grander the scale of the activity, the more inefficient it becomes? Efficiency is the lifeblood of global finance. Modular security is needed to deliver it.

Organic, 100% Homegrown Token Utility

Through Onomy, tokens will find their use-case fast. Tokens that are access-control for the dynamic, sovereign, lively appchains whose value proposition can be completely unique and driven by the community’s wishes, but have interoperable value with an entire decentralised economy of other appchains which they can interact and trade with.

This is the modular chain thesis, a belief that shared security can be offered to all chains. Either through ironclad Replicated Security from the Cosmos Hub or provider chains like Onomy, or through Opt-In Security or Mesh Security. Mesh Security is more for chains who want to share security amongst one another without having to run additional validators, instead staking tokens with one another to create shared security incentives.

As chains prove their value in the wider ecosystem, they will gravitationally attract from validator security that reinforces their place within it. These security regimes are ‘complementary, not rivalrous’, and act as ‘upgrade paths for maturing appchains’, per Binance’s recent report.

With these rented security paradigms, appchains can keep their sovereignty and scale infinitely while simultaneously reinforcing value to every other appchain that interacts with them. This creates faster innovation, and better yet creates opportunities for certain validator sets on consumer chains to differentiate themselves by focusing their validation efforts on chains that are providing for one sector of the blockchain economy, say RWAs or Forex.

It creates opportunities for small validator sets to provide specific services for micro-sections of the wider blockchain industry. Provider chains can validate on-chain activity faster than any monolithic chain ever could, and thus provide the throughput required for something vast, international and high frequency like payments or bold-yield swaps.

Ethos Intact

All of this can be achieved while never sacrificing crypto’s core principles of decentralised, immutable, censorship free trust. Onomy, with the focus on DeFi, foreign exchange, stablecoins payments, and real-world assets — the advanced mechanics of modern finance writ large on-chain, will be a nexus point for that innovation.

It is with great pride then that Onomy will become the 2nd ever provider chain of Replicated Security on Cosmos, second only to the Cosmos Hub, but with a different mission — one to empower the next generation of consumer apps that build towards an open, shared, incentivised, yet sovereign and decentralised internet. Our place as a forerunner for the modular chain thesis is assured, and soon other appchains on Cosmos will be able to use Onomy’s validator set to secure their appchains and enjoy the decentralised trust and sovereign development of their use case.

Onomy’s replicated security thesis is coming to fruition, with the very first consumer chain, to soon be launched on mainnet. Pending DAO approval and final tests, the Onomy Exchange shall arise as Onomy’s first core consumer chain, paving the way to many more Onomy & contributor-build chains & products.

NOMing Around

As the modular Onomy economy scales, $NOM holders earn fees from chains the validators secure, as well as airdrops, incentives, and direct access to a novel, secure ecosystem building at the bleeding edge of Web3.

Once approved, any appchain project will be able to petition Onomy for its validation services and enjoy the full benefits of Replicated Security provided by $NOM instantly while they set about creating the scalable utility that leads to blockchain being a part of our everyday lives, with it finally able to provide the efficient value-data transfers necessary to make the Internet Financial System a reality.

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Onomy Protocol
Onomy Protocol

Offering the infrastructure necessary to converge traditional finance with decentralized finance.