Centralization Aids Web3 When Leveraged to Hasten Development of Dapps, Says James Bayly

The Value of Centralization in Web3

However, in his written responses to Bitcoin.com News, Bayly conceded that centralization can still be beneficial if the objective is to expedite the development of a decentralized application. He asserts that when leveraged in this manner, centralized middleware components or service providers can help Web3 developers “release a partial product quickly, get immediate feedback, and then iterate rapidly to solve this.”

In terms of Web3 centralization concerns, the Subquery COO suggested that, until recently, the Web3 industry’s primary focus has been to create dapps that attract millions of users. The nature of the middleware components used did not matter much, the COO argued. While developers have generally accepted this trade-off, according to Balyly, this arrangement has run its course and now is the time to “achieve the same [but] in a decentralized manner.”

Meanwhile, in his written responses sent via Telegram, Bayly also shared his thoughts on how Web3 developers should address challenges they encounter when aggregating and organizing data to power dapps. He also discussed the issue of data tampering and offered his views on how developers can mitigate this problem.

Below are Bayly’s responses to all the questions posed.

Bitcoin.com News (BCN): What are the different components of the Web3 middleware and what role does each play in the decentralized application ( dapps) tech stack?

James Bayly (JB): Middleware is a term used to define key building blocks that are required to power the decentralized applications ( dapps) that we use on a daily basis. Middleware is everything that exists between the underlying blockchain and the front-end application that you interact with. As a result, there’s been a huge focus on improving the quality of middleware in web3 over the past few years, teams are referring to this when they say “We need better developer tools”.

The key web3 middleware components which are pivotal in blockchain dapp development are indexers, RPCs, oracles and storage services. In fact, the utilization of these middleware services is what sets apart successful, large-scale, production dApps – they accelerate performance and can scale to thousands of users, while providing a superior developer experience to bring in more users, TVL, and value.

Indexers make dapps faster by speeding up data retrieval and enhancing the performance for users. They do this by creating and maintaining databases that store optimised data such as transactions, smart contract events, and blockchain state. They enable dapps to quickly retrieve and show historical data, monitor smart contract events, and unlock analytics on blockchain activity.

RPCs serve as communication interfaces that allow external applications to interact with a blockchain node. RPCs enable decentralized applications to interact with the blockchain network without running a full node. Under the hood of your favorite dapp, tens of requests are passing through RPC providers to query and submit transactions to the network.

There are other middleware services that you may be familiar with, for example Oracles and Storage Services. Oracles securely connect real-world data sources into blockchain smart contracts. Storage services provide decentralized and resilient storage solutions, they enable the storage and retrieval of large amounts of data on the blockchain or off-chain.

BCN: Web3 developers still face great difficulties aggregating and organizing data to power dapps. How should developers go about determining when and what data indexing services to use to efficiently access and query data in a completely decentralized manner across all major chains?

JB: Building a decentralized application is not a journey without a few hurdles. Some of the key challenges to consider are scalability, performance, reliability, interoperability and true decentralization.

Several market indexers will offer an open-sourced indexer SDK or a centralized managed service; these solutions address challenges like reliability and interoperability. However, to overcome performance and true decentralization, dApp developers need access to a decentralized indexing solution.

That’s what we set out to achieve with the Subquery Network, an open-source indexer that serves data to the global community in an incentivised and verifiable way. After publishing your project to the Subquery Network, anyone can index and host it – providing data to users around the world faster and reliably. It’s a better alternative that’s easy to use and works on all chains where you might want to build and deploy your dapp.

BCN: Moonbeam, a platform for cross-chain connected applications that unite assets and functionality from multiple chains, recently started using Subquery’s data indexing toolkit. Could you talk about some of the problems Moonbeam has faced and how has Subquery addressed them?

JB: Moonbeam is an Ethereum-compatible smart contract platform on the Polkadot network that makes it easy to build natively interoperable applications. This Ethereum compatibility allows developers to deploy existing Solidity smart contracts and dApp frontends to Moonbeam with minimal changes.

But this cross-chain aspect (connecting both Polkadot and EVM) posed issues for Moonbeam. Before Subquery, there was no open-source tool that allowed developers to flexibly collect and query data across both Ethereum and Polkadot. Without a strong indexing solution, Moonbeam’s innovative Ethereum/Polkadot compatibility, which allows smooth interaction between different blockchain networks, loses its effectiveness.

With Subquery’s innovation, one tool can now query and filter EVM logs and transactions in addition to Polkadot data sources in one network. It helps Moonbeam achieve their goal of bridging the gap between Polkadot and EVM, and providing an easy-to-understand entry point into the Polkadot ecosystem.

BCN: Do you believe that the Web3 industry is slowly becoming more centralized and thus losing its decentralization characteristics?

JB: Earlier I mentioned the importance of good middleware to dApps, it’s the difference between a decentralized application with millions of users and one with hundreds of users. However, there is a hidden truth behind the mask of “decentralization” most of these middleware services wear.

This trade-off has been something that we’ve accepted for some time, but we strongly believe that we can now achieve the same in a decentralized way.

BCN: You have been vocal about the issue of centralization in the Web3 infrastructure landscape. In your view, what does centralization mean for developers as well as end users and can you illustrate through examples the threats it poses to the industry?

JB: Centralization is something that I think people get confused about, there are many misconceptions around it. Firstly, centralization is not binary, it’s a spectrum, you can be partially decentralized and still have a lot of way to go but be pretty happy with where you are because the centralized components are not critical. I think it is important to consider the question, “If the centralized services (including those our team runs) shut down right now, would my app completely break, or could users continue to interact with the key features purely through the blockchain” – that’s the real test.

Secondly, centralization is great to a point – it really helps you speed up development! People are sick of waiting for years for a product that was promised with much fanfare, instead, you are much better to release a partial product quickly, get immediate feedback, and then iterate rapidly to solve this. As you confirm your learnings, you can progressively decentralize components and get the benefits of both worlds – this is the approach we took at Subquery.

The sad reality is that many leading dapps are utterly reliant on centralized middleware components in the extreme. We believe that this centralization poses a substantial threat to the envisioned unstoppability of a web3 future, at any given moment, a single entity can shut things down, they can break web3 applications, and they can completely undermine supposedly decentralized applications and networks – this is extremely risky!

BCN: Data tampering could potentially have catastrophic effects on dapps users yet many still have single points of failure making them vulnerable to hacks and tampering attempts. In your opinion, how serious is the risk of data tampering and how can it be alleviated?

JB: This is a big problem, when showing data to users, you need to be sure that the data you present is correct, e.g. the destination wallet and amounts are correct. If you fail to do so, you open the door to hackers to exploit your users – this will destroy your dapp.

As a data provider to applications, this is something we care about. Our main data source is the raw blockchain data, and while we can only trust that data on the blockchain has not been tampered with, the responsibility lies with us to ensure that the data cannot be tampered with between the blockchain and your dapp.

We do this in a number of ways, firstly by recommending Indexers run projects in a “deterministic” way, this means that we can guarantee that two Indexers will always output the same data – that the project always yields the same result.

We can then use this aspect in our decentralized network to ensure that all Indexers are in complete agreement at all times. This is done with proof of indexing, a hash that Indexers must submit to verify the data that they have and which we can use to compare multiple indexers.

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