Disclaimer: The opinions and viewpoints expressed in this article are solely those of the author and do not necessarily represent the perspectives of the editorial team at crypto.news.
As the blockchain environment expands, the volume of data it contains and generates also grows. This presents a challenge in terms of storing, querying, and retrieving data across a complex and diverse landscape. However, in the face of these challenges, the web3 community is innovating to overcome them.
Here are four key trends influencing the web3 data sector and some insights into how they might evolve.
1. Data availability is a critical aspect of addressing Ethereum’s scalability trilemma
With Ethereum transitioning to a rollup-centric ecosystem, data availability has emerged as a central issue in tackling the scalability trilemma. Validators require access to blockchain data to validate transactions, but space on the Ethereum network is limited. While the planned upgrade to proto-danksharding aims to alleviate this, its implementation has been postponed to a later date.
Modular blockchains like Celestia, Avail, and Eigenlayer DA have emerged to tackle this challenge by providing a platform for rollups to publish transactions at a reduced cost while maintaining security similar to Ethereum. However, distributing data across multiple blockchains may introduce risks, as any failure in data delivery could jeopardize a dapp’s infrastructure. Platforms will need to demonstrate speed, resilience, and accuracy in delivering valid data.
2. Data APIs challenge traditional oracles
In the past, bringing off-chain data onto the blockchain was a major hurdle for developers. Decentralized oracle networks like Chainlink addressed this issue by allowing off-chain data to be verified by a node network before being integrated into the blockchain. Decentralized APIs such as API3 and Airstack now offer a solution that eliminates the need for third-party oracles, providing access to both on- and off-chain data with verifiable accuracy and authenticity.
These decentralized API services offer advantages such as transparency, lower costs, and reduced latency compared to traditional oracles. The competition between decentralized APIs and legacy oracle providers is expected to intensify as they vie for the attention of dapp developers.
3. Indexers simplify data complexity
As the blockchain data landscape becomes more intricate with the growth of dapp development and user activity on various platforms, the need for reliable indexing services has increased. The Graph was an early player in this space, but limitations exist for data users looking to access data from multiple chains and sources using a single API. Subsquid has entered the market with a decentralized, multichain data lake and query engine, offering seamless access to blockchain data from different parts of the web3 ecosystem.
Indexing is a critical area of development in the web3 data sector, with projects differentiating themselves based on factors like multi-chain support, integration with decentralized components, speed, accessibility, and cost.
4. Inscriptions launches face diminishing returns
The introduction of Bitcoin Ordinals in February 2023 caused a stir in the blockchain community, enabling users to inscribe data into BTC units and create fungible and non-fungible assets. While this feature gained popularity on Bitcoin, its adoption on smaller networks may yield diminishing returns. Newer platforms may not benefit significantly from inscriptions, leading to limited utility beyond hype.
Despite the challenges posed by Ethereum’s scalability and Bitcoin’s utility, these developments are driving innovation and competition in the web3 space. This competition is beneficial for dapp developers and users, offering a range of choices and opportunities for growth.
Marcel Fohrmann, the co-founder and CFO of Subsquid, brings over seven years of crypto experience and expertise in venture capital. Subsquid offers a distributed query engine and data lake to provide developers with access to on-chain data from various chains.