Truth be told, data will always play a key role for both consumers and service providers, be it on Web2 or Web3.
Blockchains are lauded for their data immutability, security, and transparency. The ability to store data in distributed ledgers across a network of decentralized nodes spanning globally rather than a centralized location (a third-party server or data warehouse) makes blockchain technology a forward-looking change agent for traditional business models.
Meanwhile, the Web2 ecosystem has no shortage of data – data that can be optimized to derive actionable insights and information. It is no hidden fact that several Web2 companies regularly buy, sell, and broker user data. This data is also used to build better products and enhance user experience, which has worked in favor of several Web2 brands.
Amid the transition to Web3, startups and projects building the decentralized internet will require seamless access to this readily available data to create sustainable products and services. At the same time, accessing and putting this data to use becomes increasingly crucial for blockchain technology to enter the mainstream market and make a lasting impression.
Enter Boba Network, an Ethereum layer-2 scaling and augmentation solution that extends the network’s capabilities and functionality through hybrid compute, a pipeline connecting siloed Web2 data with Web3 protocols, decentralized applications, and smart contracts.
The Barriers Preventing Off-Chain Data From Arriving On-Chain
There’s a problem with off-chain data: blockchain technology isn’t built to interact with external APIs and servers. By design, blockchains and the smart contracts deployed on them operate in closed environments. This was done knowingly, helping blockchains achieve immutability, security, and other characteristics missing in Web2 (like less outages, greater decentralization).
On top of that, legacy blockchain networks like Bitcoin and Ethereum aren’t interoperable, meaning they can’t transfer or access data between each other. The same goes for most of the second and third-generation blockchain networks. While some advancements have been made in this area, such as cross-chain interoperability, blockchains and the Dapps and protocols built atop them end up operating in siloed environments (only compatible with blockchains that share similar features), thus catering to specific communities.
This limitation of data accessibility has been hindering blockchain’s growth for a long time. Within the blockchain ecosystem, smart contracts have superpowers. But when it comes to accessing external data sources in real-time, smart contracts aren’t built for it. In fact, due to this problem, emerging technologies like Web3, NFTs, and the metaverse haven’t been able to achieve the level of adoption that was intended.
Hybrid Compute To The Rescue
Multiple solutions have already emerged to address the lack of connectivity between off-chain data and on-chain environments. Yet, these solutions come with their own set of problems. Take, for instance, the increasing use of oracles to access off-chain (external) data. While oracles provide the secured framework for decentralized applications (dApps) and protocols to access off-chain data, they are highly centralized. This means that developers using oracles for their dApps and protocols are directly compromising the core feature of Web3 – decentralization.
Without a way to plug smart contracts into off-chain (real-world) data and applications, neither Web3 nor enterprises will be able to leverage the actual benefits of blockchain. Additionally, there needs to be a standard solution that allows developers to access on-chain data from individual blockchains and ecosystems without compromising security.
On-chain products and services can only expand their features by accessing and integrating real-world data in real-time. For a second, imagine the possibilities of a blockchain-based AI trading platform that can access real-world macroeconomic data in real-time. The platform can automatically update (and backtest) its trading strategies with the help of real-world data, potentially improving algorithmic trading outcomes.
Hybrid compute is one solution that aims to break down the walls between on-chain and off-chain ecosystems without compromising on any of the core features of blockchain technology. Developed by Boba Network, hybrid compute enables Boba’s Solidity smart contracts to interact and communicate with existing Web2 platforms via external Web2 APIs.
Many use cases can be unlocked by enabling blockchain-based smart contracts with advanced functionalities so they can interact with off-chain resources. The decentralized finance (DeFi) ecosystem is one such area, especially with the frequent criticisms of its illiquidity. One possible use for an off-chain to on-chain bridge would involve helping DeFi dApps and protocols bring in the liquidity from a diverse range of real-world assets (real estate, invoices, and other cash flow instruments).
It can even help emerging sectors like GameFi and SocialFi, as well as the flourishing NFT sector. SocialFi and GameFi platforms can harness this bridge to enable users to access their platforms by simply connecting their off-chain data rather than signing up for digital wallets. At the same time, unlike Web2, users can exert better control over their data, how they share it with, who they share it with, and for how long.
Lending platforms can utilize users’ off-chain financial records (like credit scores and history) to offer optimized rates and benefits. NFT marketplaces can employ this off-chain to on-chain bridge to construct new models derived from off-chain data and advanced technology like machine learning (ML).
At the same time, Boba’s hybrid compute enables Web3 developers to deliver the best possible user experience for their users by gathering the best features of the Web2 and Web3 ecosystems. Using Boba’s smart contracts, developers can gain access to multiple data sources to build a wide range of on-chain reward models to engage more users.
For example, an emerging project can airdrop rewards to its followers based on real-time data from their engagement across existing social networks. If a project is running a campaign on Twitter, Boba’s smart contracts can help the project access real-time data (likes, follows, retweets, comments, and tags) that’s occurring off-chain and, in turn, reward the most deserving participants.
Hybrid compute bridges the gap between Web2 and Web3, helping both ecosystems symbiotically benefit. As momentum gains, this novel connectivity solution will also play a key role in lowering blockchain’s entry barriers and accelerating the adoption of Web3 dApps with more real-world utility.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice