First Whisker Dips: A FarKitten's Guide to the Depths of Web3

I recently reached out to the Warpcast community trying to figure out Web3. No response yet, maybe I asked the wrong way or in the wrong place. I don't know how to communicate on social networks, especially in the crypto community. So I'll start exploring on my own for now, and then maybe I'll figure out where, with whom, and how to communicate properly.

In my entrepreneurial journey, which I've named This is the Journey, I have a separate stream dedicated to Web3. I will start working on it with Farcaster, Warpcast, and in general with solutions built on Ethereum, since I became a user of Warpcast and Paragraph.

Here are the questions that came to my mind first:

1. Where do Farcaster and Warpcast fit into the coordinate system of blockchains and related technologies?

2. If we look at both projects as Social + DeFi, how does this manifest itself?

3. What's their tokenomics like?

4. Farcaster ecosystem.

5. Frames in Warpcast.

6. What I've already pawed at with my FarKitten paws.

Next, I will start to delve deeper into each of these questions. I must say right away that these will be the very first dips of the whiskers, of our collective image - the kitten-researcher, into the topic of Web3.

Let's enter this topic through a fundamental concept: the blockchain trilemma. It states that it is impossible to simultaneously ensure maximum decentralization, security, and scalability in a blockchain system.

Decentralization

The more decentralized a network is, the longer transactions are processed and the higher their cost. This is because, in a decentralized network, all participants (nodes) must reach a consensus (agreement) before a transaction is confirmed, which takes more time and resources than in a centralized system.

This is true for all consensus mechanisms:

• Proof of Work (PoW): Nodes compete for the right to add a block to the chain by solving complex tasks. The more nodes, the more competition, the longer the task takes to solve, and the higher the energy costs.

• Proof of Stake (PoS): Nodes validate transactions by staking their crypto assets. The more nodes, the larger the total stake, and the longer it takes to verify a transaction.

• Delegated Proof of Stake (DPoS): Nodes delegated by cryptocurrency holders vote for blocks. The more nodes, the more votes must be collected to confirm a transaction.

Reducing decentralization can make the network more scalable and in some aspects more secure (although overall, the overall security level is likely to decrease), but at the same time it loses some important properties, such as censorship resistance, transparency, and independence from centralized organizations.

Example: some blockchains, such as TON, Solana, EOS, NEO, Tezos, and others, have previously been criticized for centralization. In response to these concerns, projects have taken steps to decentralize.

Security

From a security standpoint, increasing decentralization has both pros and cons. On the one hand, the more participants in the network, the more difficult it is to hack and the more resistant it is to censorship. On the other hand, decentralization complicates the system, potentially creating new attack vectors. The anonymity of participants and the distributed nature of the network give attackers additional opportunities to falsify activity and cover their tracks.

While decentralized networks are potentially more resistant to many attacks due to distributed data storage and decision-making, they are still potentially vulnerable to 51% attacks, smart contract exploits, and DDoS attacks.

Example: 51% attack on Ethereum Classic in 2016.

Scalability

Scalability is the ability of a network to handle a large number of transactions quickly and cheaply. The more scalable a network, the less decentralized it is. However, achieving high scalability often requires reducing the level of decentralization or using compromise solutions that can affect security.

Decentralized networks face limitations in the speed of transaction processing and their cost, as they require consensus between all network participants before transactions are confirmed.

Example: Bitcoin - the average transaction processing time is 10 minutes, and the commission is in the range of $0.5 to $2.

Problems and Solutions

The blockchain trilemma outlines several problems:

• How to preserve network decentralization without sacrificing scalability and security?

• How to increase the security of networks without making them less decentralized and reducing their scalability?

• How to make networks more scalable without compromising their security and decentralization?

The blockchain trilemma is not a purely academic concept, but a real problem faced by all blockchain projects in one way or another. And there is no universal solution to it. This makes it all the more interesting to understand how solutions are assembled based on different layers, approaches, and technologies for different cases.

If we generalize and oversimplify, then the solution to the blockchain trilemma is a multi-layered architecture. It allows you to divide the network functionality into different levels, each of which can be optimized to achieve different goals.

Layer 0 (zero level)

• Infrastructure: Hardware and software, data transmission networks.

• Tasks:

  • Ensuring the operation of blockchains.

  • Transfer of assets and data between blockchains (examples: Cosmos, Polkadot).

  • Simplifying development on different blockchains.

  • Fast and cheap transactions on cross-chain exchanges.

Layer 1 (first level)

• Examples of blockchains: Bitcoin, Ethereum, BNB Chain, Solana

• Tasks:

  • Conducting secure transactions.

  • Creating smart contracts.

• Problems:

  • Slow transactions.

  • High commissions.

  • Limited scalability.

Layer 2 (second level)

• L1 scaling solutions (examples: Polygon, Optimism).

• Tasks:

  • Increase transaction speed.

  • Reduce commissions.

• Methods:

  • State Channels: Multiple transactions off-chain, quickly and with low commissions.

  • Nested Blockchains: Separate networks over the main blockchain.

  • Rollups: Combining transactions into a compact package to improve scale and efficiency.

  • Sidechains: Parallel blockchains to improve load and throughput.

Layer 3 (third level)

• Application layer: Decentralized applications (DeFi, games, exchanges).

• Tasks:

  • Expanding blockchain functionality.

  • Meeting the specific needs of users.

• Examples: Uniswap, Orbs.

If we theorize a little, then layer 3 solutions, from the point of view of solving the blockchain trilemma problem, can directly use the capabilities of the underlying layers down to L0, and not only their vertical but also those built on other blockchains and alternative technologies (for example, IFPS).

Advantages of Multi-Layered Architecture

• Solves the "blockchain trilemma".

• Increases functionality.

• Improves interaction.

• Provides "communication" between blockchains.

Blockchain layers are the key to scalable, secure, and functional use of blockchain technologies.

For our topic, let's break down the "vertical" by layers. I will remind you of the template for the hierarchy of layers:

• L0: Infrastructure and transfer of assets and data between blockchains.

• L1: Conducting transactions, and creating smart contracts.

• L2: Solving L1 scalability and commission problems.

• L3: Decentralized applications.

Layer from L0 to L3 for Warpcast

• Layer 0: the considered "vertical" here can include hardware, software, and networks on which everything works and basic infrastructure components that are not blockchains, but used in other layers, for example: IPFS (https://ipfs.tech/) - decentralized temporary file storage) and Arweave (https://arweave.org/) - decentralized long-term data storage).

  • Layer 1: Ethereum (https://ethereum.org/) is both a blockchain, a native cryptocurrency, and an ecosystem/platform on which you can build your solutions.

    • Layer 2: Optimism (https://www.optimism.io/) is a layer 2 blockchain that runs on top of Ethereum and is a tool for scaling it.

      • Layer 3: Farcaster (https://www.farcaster.xyz/) is a decentralized social network protocol built on Optimism, allowing developers to create a variety of decentralized social networking applications (dApps) using ready-made features based on smart contracts.

        • Warpcast (https://warpcast.com/) is a decentralized social network built on the Farcaster protocol.

This is a simplified view. For example, part of Farcaster's architecture works directly on Ethereum, and Frames in Warpcast is a built-in feature of the Farcaster protocol.

Farcaster and Warpast can be attributed to the third layer, but the concept of L3 itself is still very fresh and unsettled.

I note that for L3, as well as for the L0 layer, there is an inconsistency in classification because I am trying to include two different logics in one model:

• layers, as elements of the architecture of the final application (in our case, this is Warpcast);

• layers, as a tool for solving the blockchain trilemma and, in general, expanding the possibilities of blockchain technologies, then:

  • L0 will contain only those solutions that ensure the compatibility of different blockchains, allow the transfer of digital assets between them, and so on.

  • L3 continues to expand the possibilities for scalability, performance, and so on.

If we do not forget about the above-described problem, then this classification can be quite useful for us.

Farcaster is a technology/tool for creating solutions that can be classified as social networks and other mechanisms that allow stimulating, accumulating, monetizing, and building more abstract socio-economic derivatives from human interaction.

If we take it broadly, then SocialFi seems to me as a technology that acts in two ways:

1. helps to rethink and redefine many fundamental approaches to human interaction;

2. allows us to find and fill in gaps in social interaction that were previously unnoticed, uninteresting, or inaccessible to those who developed social networking services only based on Web2 principles.

Interestingly, there has been a shift in Web2 for a long time, if not towards decentralized solutions, then at least towards the implementation of content, attention, and activity tokenization.

Farcaster is an interesting and serious player in the SocialFi industry, and its approaches to creating decentralized social networks look promising.

To fully explore the topic of DeFi, I still lack both theoretical knowledge and practical experiments. I will work on it.

Let's take the first step in studying DeFi now.

During the research, I realized:

• some categories for classification are useless, for example, the term "altcoins";

• it will not be possible to reduce the classification to a linear, tree-like format, and to get a complete picture, at least tables should be used, and even better, an interactive representation with parametric filters;

• there will be several classifications, possibly in such sections:

  • financial entities and instruments,

  • used technologies,

  • the influence exerted on the world in general, on Web3 and the crypto industry in particular,

  • applied use for personal life and business, in the role of an entrepreneur.

So far, I will give a simplified vinaigrette-style variant of financial and technological aspects.

1. Native coins: BTC (Bitcoin), ETH (Ethereum), BNB (BNB Chain), SOL (Solana), TON (TON Blockchain), ADA (Cardano), AVAX (Avalanche)

2. Stablecoins:

   1. Secured by fiat currencies: USDT (Tether), USDC (USD Coin), BUSD (Binance USD)

   2. Secured by a basket of cryptocurrencies: DAI (DAI)

   3. Secured by goods: PAXG (Pax Gold)

   4. Algorithmic: FRAX (Frax), FEI (Fei Protocol)

3. Utility tokens:

   1. Access to products/services: FIL (Filecoin), TFUEL (Theta Network), GAS (NEO)

   2. Management of protocols/dApp: UNI (Uniswap), AAVE (Aave), COMP (Compound), THETA (Theta Network)

   3. DeFi: LEND (Aave), MKR (MakerDAO), SUSHI (SushiSwap)

4. Security tokens:

   1. Tokenized securities (shares, bonds): STX (Blockstack), RLX (Paxos), TZERO (tZERO ATS), BITO (ProShares Bitcoin Strategy ETF), ETHE (Grayscale Ethereum Trust), GDLC (Grayscale Digital Large Cap Fund)

   2. Tokenized real assets (real estate, art): DGX (DigiShares), REALT (RealT)

5. NFTs:

   1. Collectibles: CryptoPunks, Bored Ape Yacht Club, NBA Top Shot

   2. Games: AXS (Axie Infinity), GODS (Gods Unchained), SAND (The Sandbox)

   3. Functional: ENJ (Enjin Coin), MANA (Decentraland), RARI (Rarible)

6. Central Bank Digital Currencies (CBDC): e-CNY (Digital Yuan), E-euro (Digital euro), DCash (Digital dollar).

Many tokens can fall into several categories. For example, ETH and BNB are both utility tokens.

In addition to the blockchain-based digital assets mentioned earlier, there are also interesting digital assets built on other technologies. Here are a few examples:

• XRP is the native cryptocurrency of the Ripple network, which uses a unique consensus mechanism called the Ripple Protocol Consensus Algorithm (RPCA). RPCA is not a blockchain-based consensus mechanism but instead relies on a network of validators to verify transactions. This makes XRP more scalable and energy-efficient than some other cryptocurrencies.

• IOTA is a cryptocurrency that uses a technology called Tangle, which is a directed acyclic graph (DAG) instead of a blockchain. DAGs are more scalable than blockchains because they allow transactions to be processed in parallel. IOTA is designed for use in the Internet of Things (IoT) because it is very lightweight and can handle a large number of transactions.

• XNO is a cryptocurrency that uses a block-lattice structure, where each account is its blockchain. This allows for instant and fee-less transactions. XNO is ideal for micro-transactions in games and payment systems.

Farcaster is a decentralized social network built on Optimism, an L2 scaling solution for Ethereum. It gives users a lot of control over their data, content, and social connections.

Farcaster uses a hybrid architecture that combines the benefits of blockchain and off-chain solutions to provide high performance, scalability, decentralization, and privacy.

1. Decentralized Identity: Unique Farcaster identifiers (FIDs) that are stored on the Ethereum blockchain via the Optimism solution. This ensures that data is independent of any Farcaster application.

2. Farcaster Name Server (FNS): A system that provides human-readable names, similar to domain names, making it easier to find and identify users.

3. Off-chain Data Storage: User posts (casts) and other data are stored off-chain for speed and scalability. This function is performed by Farcaster Hubs - distributed nodes.

4. Frames: Mini-applications that serve as the building blocks for content and interactive features on the platform. Developers can create frames to extend the functionality of Farcaster.

• Farcaster Mobile App: The main mobile app for creating profiles and interacting with the platform.

• Farcaster Web App: Provides access to the platform through a web browser.

• Farcaster API and Developer Tools: Provides developers with the ability to create and integrate their applications.

I still have more questions than answers about the Farcaster ecosystem. As with any other platform, they lie in three highly interconnected planes:

1. Technological implementation (some answers here: https://docs.farcaster.xyz/, if you dig deeper then here: https://github.com/farcasterxyz/).

2. User scenarios and cases.

3. Economic component.

All this interests me not only from an ordinary point of view, and even less from a speculative one (although its nature and mechanics also need to be understood), but precisely from an entrepreneurial and partly IT point of view.

Frames are a unique feature of Farcaster that allows you to securely integrate external applications into the Warpcast user's social feed.

For example, through the Paragraph Frame, you can access my blog on Paragraph (https://paragraph.xyz/@blog) directly in Warpcast.

Frames are a separate topic for study and practice, I will come back to it with experimental cases.

1. Registered an account in Warpcast.

2. Linked a Metamask cryptocurrency wallet to Warpcast.

3. Registered an account in Paragraph.

4. Linked the same Metamask cryptocurrency wallet to Paragraph as to Warpcast.

5. Now, when I publish an article in Paragraph (this will be the fourth one), I immediately share it in Warpcast - it is displayed there through the aforementioned Frames.

Upcoming plans:

• I will understand all the basic features of Warpcast and Paragraph.

  • I will attach Google Analytics to the Paragraph (and immediately a question came up ... is there a decentralized system for collecting statistics and analytics - I need to look for it!).

• I will learn more about Ethereum, as well as what L2 solutions are based on it.

• I will understand the basics of Optimism and get acquainted with interesting solutions to it.

• I will learn how Paragraph works (architecture, features, etc.).

• I will study the device of cross-chain bridges and wrapped tokens.

• I will create my Frame in Warpcast.

• I will conduct experiments on minting NFTs.

There is still a lot of work to be done in studying Web3, even if we consider only the vertical at the top of which Warpcast and those solutions and technologies that are nearby are located. I want to maintain three intertwining lines here:

1. A deep theoretical understanding of the subject area.

2. Practical tests and experiments - it is necessary to pass the key things through the paws of that very FarKitten* researcher.

3. Comprehension, as an entrepreneur, of how all this can be used in business and to improve the quality and interest of my own life.

*- FarKitten ... I'm not sure if anyone caught my hint at FarCats (Farcaster's mascot, in the form of 1661 NFTs) through the image of FarKitten. I am deliberately going here for such, so far, terribly clumsy attempts to penetrate the cryptoculture (with my vision). Since I set out to understand the meme culture, stable concepts, and other concepts of the crypto community.