ICrypto

Hotest Blockchain News in First Media Index

Horizen and the Importance of Layer-0 Blockchains

When dapps need to compete for bandwidth on a blockchain, it harms the user experience, and that’s why Horizen makes sense as the layer-0 blockchain. Combine Horizen with its cross-chain protocol Zendoo, you create a blockchain of blockchains: Every dapp on their own blockchain, connected to the Horizen mainnet. 

A blockchain is a distributed digital LEDGER of transactions. It is constantly growing as completed blocks are added to it with a new set of records. 

In a blockchain like Bitcoin or Ethereum, an application developer doesn’t have the ability to program the underlying blockchain: That’s the job of the core developers. This means that every application is competing for the same bandwidth, is subject to the same economics (e.g., gas costs), and is subject to the same architecture, from the consensus mechanism to block size.

This isn’t the case with layer-0 blockchains like Horizen. On Horizen, developers can create their own blockchains that communicate with the Horizen mainchain through Horizen’s cross-chain protocol Zendoo. This allows them to have full control over the economics of their blockchain and application, as well as its bandwidth and computational resources.

Let’s explore the benefits of these layer-0 blockchains in greater detail.

Complete Developer Control

With a layer-0 blockchain, developers have complete control over the governance of their applications. This means that they can set their own transaction fees, as well as the amount of bandwidth and computational resources that their application uses.

This is in stark contrast to Bitcoin and Ethereum, where developers are at the mercy of the core developers. For example, if the core developers decide to increase the gas costs for a particular operation, then the developer is powerless to do anything about it.

By giving developers this level of control, Horizen enables them to be more creative in designing their applications.

Solving Front Running

A major problem with traditional DeFi apps is that all transactions hit the public mempool, which enables front running and a number of other attacks. To combat this, developers can create their own blockchains that obscure order flows with zero-knowledge proofs, preventing any attackers from gaining an advantage.

Front running has become a pervasive issue in DeFi, where sophisticated arbitrageurs selectively pay higher gas fees to get better deals, which has been referred to as a form of “bullying capitalism.” This is a concern for any project with public mempools, including Aave, Balancer, Compound, Curve, dYdX, Sushiswap, Uniswap, 0x, and the rest.

Flash-loan attacks take this idea to the extreme. In a flash-loan attack, the attacker takes out a series of large loans that base prices on an oracle, and through a series of transactions, they manipulate the price that the oracle reports. This can allow the attacker to make a profit at the expense of everyone else using the oracle.

In essence, flash-loans enable bad actors to become price-manipulating whales, and exploit millions of dollars in new-found price differences, all in a matter of seconds. Indeed, virtually all DeFi protocols have been implicated in flash-lending attacks, including bZx, Compound, Kyber, Uniswap, Synthetix, Balancer, Harvest, Curve, Akropolis, Value.DeFi, SushiSwap and the list goes on. Recently, a flash-loan hacker made off with $200 million, making up an astonishing 0.2% of the total value locked in DeFi.

More broadly speaking, privacy is fundamental to our financial life. With banks, we trust them to keep our financial data confidential. However, with DeFi applications, all your financial transactions are public knowledge. This is a major issue that can be fixed by using side-chains that provide privacy.

For example, the centralized finance project Celcius uses the Horizen zkAudit application to provide its user with a transparent audit of its community assets, proving value in real-time without disclosing customer information.

Separate Economic Rules

Another advantage of programmable layer-0 blockchains is that they allow developers to create separate economic rules for their applications. This means that they can set their own transaction fees.

In other words, developers can more easily capture the economics of their applications by configuring their own transaction fees. In a sense, developers can act as stakers in their applications by launching a Horizen sidechain.

The business goal of any DeFi app is to capture as much value as possible. By giving developers the ability to set their own transaction fees, Horizen allows them to do just that.

At the same time, Horizen is massively scalable, which means that default transaction fees are extremely low. This is in contrast to Ethereum, where the gas costs for transactions can get quite high. This means developers can set transaction fees on Horizen sidechains and still offer competitive rates when compared to Ethereum.

Greater bandwidth

Traditional DeFi apps compete for bandwidth in ever-more congested networks. This can lead to high transaction costs and long wait times.

Horizen solves this issue by allowing developers to create their own sidechains that have their own dedicated bandwidth. This means that applications no longer have to compete for resources with other applications.

As a result, developers can focus on creating the best possible user experience without having to worry about network congestion.

True Privacy

When you sign up for a major crypto exchange or DeFi application, you’ll usually be asked to provide private documents, ranging from your passport to utility bills. This is because these applications need to verify your identity in order to prevent money laundering and other financial crimes.

This means you’re giving up your privacy in order to use these applications. In spite of this, these measures are vulnerable to data breaches, as we’ve seen with a recent hack of Binance. Further, cybercriminals can forge documents in order to gain access to user accounts.

Blockchains like Horizen allow developers to create truly private applications that don’t require any user documents. This is made possible by the use of zero-knowledge proofs, which allow applications to verify users without learning anything about them.

As a result, users can feel confident that their privacy is protected when they use these applications.This is made possible by the use of zero-knowledge proofs, which allow transactions to be verified without disclosing any information about the participants or the amount being transferred.

Conclusion

Horizen offers a number of advantages over traditional blockchains like Bitcoin and Ethereum. These advantages include complete developer control, separate economic rules, greater bandwidth, and true privacy. That’s why layer-0 solutions like Horizen are both a benefit to developers and to consumers alike. Horizen and Zendoo allow every developer to launch their own sidechain, giving them complete control over the technical aspects of the chain. 

Share
 29.12.2021

Hotest Cryptocurrency News

End of content

No more pages to load

Next page