Web 3: the mirage of decentralization?

Mirror with larks On his blog, one of the co-founders of Signal messaging, a cryptography enthusiast, warns about Ethereum. He published a post that seriously questions the decentralization of the second largest blockchain network, and by extension other DeFi-oriented blockchains: facts that show the limits of Web 3 in 2022.

Dapps not so decentralized

As we mentioned recently, Web3 will grow in 2022 and even beyond. This term has literally become the most used word in the crypto community, perhaps only beaten by “metaverse”. the Web 3 is intended to be decentralized and refocus Web 2 applications around the user, to start with his data and his “virtual intimacy”.

In order to immerse yourself in the internet of the future, Moxie created two Dapps (decentralized applications) related to NFT’s. This allowed him to dissect their functioning and its verdict is final : there is nothing “distributed” about apps as popular asOpenSea, the NFT giant. However, the distribution of the network and its data is one of the fundamental principles to ensure the decentralization of a blockchain.

“To be perfectly clear, there’s nothing particularly ‘distributed’ about the dApps themselves: they’re just regular React websites. At most we can concede that the general state and the permissions as well as part of the logic of the development are updated in real time on blockchains, but we just move the centralized database there. »

Moxie, in a blog post

Blockchain and crypto enthusiasts tend not to care about the client/server aspect of operations. Recall that he is laborious in all respects run their own servers (already in web 2). However, This is where the problem lies. Although all protocols and smart contracts be decentralized, the majority of Dapps uses two main companies to interact with blockchain Ethereum.

The current network infrastructure of the crypto community does not ensure complete decentralization of the blockchain and Web 3 data.

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Did you say Web 3.0?

In this case, companies – Infura and Alchemy – sell API (application programming interface) access to an ethereum node that they run for their customers (Open Sea among others). They also provide analytics, enhanced APIs implemented to core Ethereum APIs, and access transaction history of each wallet…

According to Moxie, almost all Dapps use the services ofInfura orAlchemy to operate their transactions on the blockchain. In reality, when you use your MetaMask with a Dapp, Metamask only requests information from Infura (private company, centralized). The society which rotates the node respond then to MetaMask, which updates your balance based on the information provided by Infura. And Infura’s answer to your Metamask itself is not encrypted !

Image representing the logo of the NFT OpenSea trading platform
OpenSea, the leading NFT trading platform, is valued at $13 billion.

Another thing that the NFT collector probably ignores is that the space within a block is limit, so expensive. This makes storing images on a blockchain too expensive and irrational so far, the data is therefore hosted “off-chain”. Moxie also highlights the fact that instead of point straight to info “on chain”, NFTs only contain a URL that points to the data in question.

“The URL often just points to VPS servers running Apache somewhere. Anyone who has access to this virtual machine can buy the domain name linked to the NFT in the future, compromise it and change the image and description of the NFT in question – even without owning the token. »

NFTs and the OpenSea case

This URL is finally hosted by a single actor (private), probably on a single machine. It should temper greatly an idealized vision of the current state of affairs regarding Dapps. We are therefore a long way from the standards of decentralization and information distributed and brandished by Web 3. Indeed, if Infura (or a hacker) decided to modify the characteristics of your NFT by compromising the machine on which it is stored, it could, of totally unilateral way. And without being the rightful owner of the non-fungible token!

To sum up, this means that if your NFT is removed from OpenSea, so it will also disappear from your wallet… MetaMask allowing only to visualize “ the data assigned to you, hosted on a centralized server“. what seems totally opposite to philosophy and to the ambitions of Web 3. So much effort, sweat and engineering up front to finally achieve decentralized operations and end up entrust them to a centralized private actor.

Decentralization, an (infra) structural problem

Now that the observation concerning the backstage of Web 3 is established, how do we remedy it? By starting to see things in the face. As mentioned above, no one, not even the developers of your favorite Dapp, wants to run their own node/server. They therefore request Infura or Alchemy.

This therefore means that if the protocol runs autonomously and decentralized, the infrastructures that support it are not at all. Moxie notes that it is therefore necessary to build solutions allowing distribute trust without distributing infrastructure. This is a critical point in the crypto sector, and Messari’s forecast for 2022 highlights it as well.

Dynamic, ambitious and booming, Web 3 is still in its infancy. The contribution of specialists in cryptography (more than in cryptocurrency) who do not believe, but verify is essential, these revelations are the perfect example. After more than 10 years of existence, the adolescence of cryptocurrencies could be punctuated by existential crises.

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