Part 2 - On Specialization of Machine Labor and A Slick Omnichain Future

🤖 On Specialization of Machine Labor and a slick Omnichain Future 🔮

To address the challenges of clunky user experience, redundant DApp development, and liquidity fragmentation inherent in multi-chain DApp implementations, the concept of Omnichain or Cross-chain DApps is proposed. Below is a definition from Chainlink:

📝 Cross-chain applications are "made up of multiple smart contracts deployed across multiple blockchain networks, creating a single DApp that intercommunicates." Such a DApp can leverage the unique advantages of different blockchains (L1, L2, sidechains, etc.) as they offer distinct approaches to scaling with varying degrees of decentralization, mechanism design, consensus, execution, data availability, and privacy.

Compared to the current multi-chain DApp implementation, where each instance is a similar copy with no inter-communication for a shared global DApp state, the cross-chain/omnichain DApp implementation enables developers to effectively "split up applications into modular components." Similar to the specialization of labor, various smart contracts on different chains can perform specialized tasks while staying in sync to enable a single use case by leveraging these blockchains' unique benefits:

• 💰 Asset ownership can be tracked on a highly censorship-resistant blockchain (high in decentralization).
• 🏎️ Low-latency trading can be conducted through a high-throughput blockchain (high in TPS).
• 🪪 User identification can be achieved on privacy-preserving blockchains (zero knowledge proof, etc.).
• 📚 Metadata can be stored on decentralized storage blockchains (data availability layer, etc.).

It is worth noting that in this context, the orchestration of the DApp will likely reside on the interoperability solution, through which users will interact with a single interface. This delegates lower-level operations to the Cross-chain Coordination Protocols, allowing:

• 1️⃣ The distribution of applications among various blockchains.
• 2️⃣ The integration of functionality and data from one blockchain with the capabilities of another blockchain.
• 3️⃣ The simultaneous updating of state across multiple chains or the execution of conditional actions on one chain contingent upon the contract state present on another chain.

This setup enables various applications, including cross-chain trading, yield aggregation, and lending. Instead of making multiple trades across different network pools, users can consolidate them into a single trade. Machines source liquidity from these pools to ensure the best execution price. This approach mirrors DEX aggregators' logic, where machines split trades for optimal prices on the same chain. The key distinction here is that the process is distributed across multiple chains :)