When enterprise developers build dapps on Ethereum, they often have to consider the entire tech stack and development process. The list of considerations range from application features such as Web2 interfaces to deployment, which is usually on a permissioned network hosted by a preferred cloud provider. Since most full-stack software engineers build off of SDKs and API calls, it’s important to establish the value of the application with consideration of the deployment network.
Get the best of both Web2 and Web3 worlds
Many enterprise blockchain business cases build on the principles of traditional Web2 development. Web2 focuses on operating with a fluid user experience with attention to detail on scalable and responsive code on multiple devices. A valuable decentralized application (dapp) in Web3 redesigns the economics and industry roles while building on complementary existing systems -- instead of fully replacing those systems with analogous Web3 features.
Say you would like to reinvent a syndicated loans issuance platform such as IPREO. This effort would require significant IT resources to spin up a minimum viable product from the ground up if you’re recreating features like tranche issuance calculations or calendar date exceptions. Instead, consider a path to lesser resistance: blockchain modules that connect these digital assets to new liquidity networks. The functionality is a re-issuance of an existing financial instrument to ABC network with a listing on XYZ automatic market maker rather than the full end-to-end dashboard.
To connect to pockets of liquidity, an enterprise developer must deploy with the same smart contract language that is compatible with the Ethereum Virtual Machine (EVM) and look to bridge the assets to networks with the desired investor and issuer markets.
Why build on public Ethereum?
Until now, publishing enterprise dapps on Ethereum requires significant system integration, executive buy-in and high set-up costs. Recently, we have seen more public blockchains working with enterprises to cover non-functional technical needs in order to meet minimum requirements of security audits and performance. However, the relatively tribal nature of the blockchain developer subculture means that mainstream enterprises are still conservative when it comes to building on Ethereum.
If you are an enterprise developer, consider the following advantages of building on public Ethereum vs. permissioned networks:
1. Faster setup and lower total cost of ownership
2. Immutability and longevity of the data stored with thousands of independent nodes
3. Composability and low barrier of entry to decentralized finance (DeFi)
1. Faster set-up and lower total cost of ownership
This is a standard private blockchain journey for a consortium:
After you develop your dapp, a lot of time is focused on node deployment adhering to enterprise software standards. On the business side, you are also trying to build a consortium to agree on the benefits and adoption before the tech is tested.
The consortium model usually chooses a separate tech vendor that does not have single ownership from one consortium member to prevent conflicts of interest. The tech vendor determining deployment and long-term support likely runs the Ethereum nodes on behalf of participants. This will get the product to market faster and focus on the business benefits.
The last step involves time and licenses for adding more nodes and mutualizing infrastructure costs across participants. Compared with private networks that remove tokens from their operation, public networks require ownership of native tokens to fund transactions. This gas cost pays for the infrastructure -- third parties running full nodes and running operations for mining/validating. In my time building enterprise projects, we have never seen this happen.
The public journey is much more straightforward. After you develop your dapp, the deployment is a choice between public networks with updated configurations on your Truffle setup. The added complexity is the gas costs for funding and running your transactions on this network.
To simplify connectivity to EVM-compatible networks, you can use Infura’s Ethereum API to connect your app instantly with a single line of code. Simplify your transaction management with Infura Transactions (ITX) using prepaid accounts without holding ETH on your balance sheets. ITX is a transaction relayer that manages your transactions to prevent dropped or stuck transactions.
You will also likely want to work with a team such as Diligence that can audit your contracts and monitor them when they’re live.
Public Ethereum has an overall lower total cost of ownership when you compare the operational cost of running a system on mainnet rather than focusing on the ownership and maintenance of the network itself.
A consortium may have more control in the private chain and face less security and treasury reviews at first. However, your infrastructure overhead and negotiations on consortium network matters tend to outweigh the convenience and added features of connecting to mainnet.
2. Immutability and Longevity
The Ethereum mainnet is secured by the interaction of thousands of independent nodes run by individuals and miners throughout the world. Private chains typically have a small number of nodes controlled by one or a few organizations. Those nodes can be tightly controlled, but only a few need to be compromised in order to rewrite the chain or commit fraudulent transactions.
At ConsenSys, we’ve recommended public networks to enterprise developers for their resilience of replicated data as you are able to recover more quickly with a larger network of more than 15,000 independent nodes. The more peers you have, the easier it is to find a seed and fully recover your recorded transactions. In consensus decisions, the more blockchain validators there are to verify transactions, the more difficult it is to coordinate a majority decision that may lead to an attack.
In a permissioned network, the security is governed by the node with the least security. Your network is only as secure as the weakest link. Any added nodes to the network may also increase the surface area of attack. Most institutions will recommend a base software security test in order to join as a full node owner. The node owner will have to pass standard penetration testing to prevent any hacking on the node in case it is a bad actor to the entire network.
3. Composability and Low Barrier to Entry on DeFi
The Ethereum network powers a vibrant ecosystem of third party applications and technology including DeFi and NFTs. A highly composable and interoperable system allows you to connect to DeFi to build financial products that enable and combine multiple apps to match specific user needs. The Ethereum mainnet offers enterprise developers the ability to gain access to market liquidity and provide innovative ways for users to participate in the exchange, trading or growth of that liquidity.
When we say composable, it’s much more than just an open banking API. It’s a set of open source live protocol contracts that can be called and extended. We’ve seen pure forks of open source code like with Uniswap to get sushiswap. The market has seen countless copies of DeFi models such as Compound and Aave, and it doesn’t look like things are slowing down anytime soon.
There’s more and more real value happening in DeFi leading us to believe that cryptocurrencies are not a fad. It is here to stay.