banner

Advertisement

Why Democratizing Access to Pre-chain Data is Critical for Web3 

The battle for digital truth starts in the mempool.

Why Democratizing Access to Pre-chain Data is Critical for Web3 

We are in the midst of a web renaissance based on user and pre-chain data. Cryptocurrency and web3 promise new forms of ownership, access, and transparency. Indeed, anyone with an internet connection can now go on-chain and see verifiable, permanent digital truth. 

But there’s a battle being fought in the dark and chaotic moments leading up to this truth. That’s where expectations are being dashed in a pre-chain layer known as the mempool. 

In world where each on-chain interaction is categorized as a transaction, ceding this pre-chain data isn’t that different from the Web2 model, where data is commoditized and controlled by a few big players. The stakes are high. To construct platforms integral to the Web3 philosophy of transparency and decentralization, builders need equal access to the same pre-chain infrastructure.

Enter the Mempool

The more data you have, the better predictions you can make about future outcomes, and the more competitive you’ll be. The future truth appears on the pre-chain layer, but few have access to this data as it stands today. This is essentially known as the mempool. 

To watch what is happening in the mempool is to watch what will happen on-chain before it happens. And in contrast to the immutable nature of blockchains, the mempool is mutable, and therefore, transactions can be altered while in-flight. Because of this, the mempool is a competitive, live-auction game where winning gets your transaction confirmed as quickly as possible at the lowest fee. When you approve and sign a transaction, it enters the mempool—and joins tens of thousands of other pending transactions jockeying for precious block space. 

The mempool is not a static environment. It’s a highly dynamic, perhaps even chaotic, and potentially adversarial system. In other words, the game is on for transactions to get confirmed and go on-chain. 

Web1 was read-only and web2 added the ability to write, ushering in a more social web. In contrast, the users are the owners in web3, not the product. Just as data ownership is the cornerstone of an equitable web3 landscape, public access to real-time pre-chain data is the cornerstone of equitable web3 transactions. Prechain data is central to the web3 ethos because without it you only have a sliver of the truth. It’s like seeing the final score of a game without watching it. Yes, you see which team won, but you have no idea how. 

Web3 Philosophy

To construct platforms integral to this web3 philosophy, dApp developers and wallet providers need equal access to the same real-time infrastructure. 

If developers do not get equal access to this pre-chain infrastructure, innovation will be stifled and inferior products run by a few major “web3” companies will be available to users. Imagine there are two neighboring towns with the potential for a burgeoning restaurant business, except only one town has access to electricity. It’s obvious that the quality and availability of food for people in both towns will go up with equal access to electricity. Everyone benefits. 

In a world where each interaction with life on-chain counts as a ‘transaction,’ there is also an opportunity to provide unprecedented visibility and control, enabled by web3 tooling, for end-users to peer into their activity, receive notifications that alleviate anxiety, preview the most important transactions before action is taken, and go back and modify any steps along the way if something goes wrong.

Pernicious mempool actors can front-run transactions, steal earning opportunities, fight for arbitrage at a scale never imagined, and impact the entire ecosystem.

Just like the rise of the internet, smartphones and cloud computing, decentralized finance is a sea change for global finance.  The aim of web3 is to replace the centralized, incumbent gatekeepers of financial inclusion with decentralized, transparent, and empowering technology that was once looked down on as a pie-in-the-sky pipe dream. 

The Web2 world and financial systems we inherited are ripe with inequity and misaligned economic incentives. Barriers to access and information asymmetries are the norm. When one party has better or more complete information than the other, that can result in imbalances and exploitation. Herein lies the foundation for a world parsed into the haves and have-nots. 

If it can’t be used for evil, it’s not a superpower 

To best illustrate why democratizing access to pre-chain data is critical, it’s helpful to see the mischievous black-hat ways that bad actors can exploit this real-time data layer. Pernicious mempool actors can frontrun transactions, steal earning opportunities, fight for arbitrage at a scale never imagined, and impact the entire ecosystem. Case in point: The infamous Black Thursday market event in which multiple hammerbots saturated mining operations in mempools, increasing and accelerating Ethereum network congestion. The end result impeded regular transactions, causing a large number of transactions to be evicted or rejected from miner mempools.

Ethereum network congestion caused by Black Thursday. Source: Blocknative Research

These narratives illustrate how the mempool can be mysterious, confounding, and even downright dangerous. Until recently, going hands-on with mempool data has been out-of-reach for all but the most sophisticated and well-financed teams and adversarial individuals. There is, in fact, still a push for private mempools by those interested in gaining an advantage, even if it means an uneven playing field. This is why the mempool is often referred to as the “Dark Forest:” because users are often blind to threats in a pre-chain world full of predators

Defending Yourself in the Dark Forest 

With new Web3 developers, traders, and users coming into the ecosystem every day, it’s imperative that everyone has access to these demystified mempool superpowers to combat the bad actors. Properly equipped, teams can intercept attacks before they happen and guard against malicious transactions. 

Sifting through endless streams of data and trying to make sense of it without mission-critical Web3 tooling is like skydiving blind. Access to the pre-chain layer is also important for alleviating transaction anxiety and user friction. Making Web3 more user-friendly and accessible leads to growth in the DeFi economy, creating a more equitable ecosystem. 

A Fair and Equitable Future

There is no denying that competition is healthy for business. When businesses compete with each other, consumers get the best end-product, which also catalyzes innovation and helps drive economic growth while increasing standards of living. However, just as all entrepreneurs need access to the electricity grid—the same is true for builders and this real-time data infrastructure.

Without equal access to this real-time infrastructure level, the promise of an equitable Web3 is a shot in the dark. All developers need to be equipped with the same utility-grade tools, like mempool, to build Web3 to its fullest potential. And the best way to predict the future is to build it. 

John Jefferies, is the chief marketing officer at Blocknative. 

Get Smarter on DeFi and Web3

Get the 5-minute newsletter keeping 75K+ crypto innovators in the loop.