Taming Fire

Decentralized RPC for Uncensored Web3: Our Investment in Lava

Or Harel

A chain is only as strong as its weakest link

The past year has illustrated just how important decentralization is. Canada’s authorities froze bank accounts, Ukraine's authorities limited the withdrawal limit to $3K per civilian, and Russians around the world were removed from the international SWIFT system.  All of these actions were carried out with a click of a button. 

Just recently, the Crypto-Mixing Service Tornado Cash was blacklisted by the US Treasury. This historical banning of code has many implications, and has set in motion a cascading chain of events. These range from legal issues (code is speech) to the additional centralization of the tech industry and crypto. The next major domino to fall was Circle, the NY-based (regulated) company offering/issuing USDC ‘blacklisted’ Tornado Cash ETH addresses.

This fire continued to spread. The founder of MakerDAO – the leading decentralized stablecoin project behind DAI where over 50% is collateralized by Circle’s USDC – is calling on DAI to drop the dollar peg amid Tornado Cash fallout. “I think we should seriously consider preparing to depeg from USD,” Rune Christensen announced via the MakerDAO Discord earlier today. “It is almost inevitable it will happen and it is only realistic to do with huge amounts of preparation.” 

This dangerous precedent of code censorship wasn’t received well in the crypto community. As an act of protest, some Tornado Cash users started sending ETH to known and “famous” crypto wallets.  This further highlighted crypto’s privacy needs and the distorted, upside-down logic (and moral) behind collective punishment – where users are guilty until proven innocent.


Shortly afterwards, Infura, the default centralized RPC service for Metamask, was obliged to block its remote procedure calls to Torando Cash. This wasn’t a huge surprise as it’s not the first time they have been actively censored... 

What was surprising is that Pocket Network – which proclaims to be “a decentralized RPC protocol for ANY blockchain” – followed suit.

The common denominator here is centralized control or SPoFs. A Single Point of Failure is a part of a system that, if it fails, will stop the entire system from functioning. SPoFs are undesirable in any system with a goal of high availability or reliability – be it a business practice, software application or other industrial systems. 

But don’t be spoofed: centralization is a spectrum. At one extreme lie fully centralized networks and at the other extreme lie fully decentralized or distributed networks. If a network includes a single centralized node (such as fiat-crypto on/off ramps and everything in between), it becomes less decentralized (in proportion to the size or significance of the node). Until all of these SPoFs are addressed, crypto can be massively crippled – or even shut down for an indefinite time.

‘Sup, Lava? Scalable. Uncensored. Private. 

Lava is building a scalable peer-to-peer (P2P), decentralized RPC layer for Web3. Using cryptoeconomic incentives and an appchain, Lava creates a trustless market for blockchain access, pairing RPC endpoints with applications. Node runners earn income by providing RPC services and contributing towards decentralization which is a prerequisite for uncensorable and permissionless access. Developers access accurate blockchain data, without fear of scalability issues, privacy exploitation or censorship.

Lava Protocol and the Blockchain together operate as a market and settlement layer for accessing blockchain data, underpinned by dynamic market-driven pricing. Payment settlement, conflict resolution, and Consumer-Provider pairing are all done on-chain. P2P communication channels are established directly between providers and consumers. Data and requests remain off-chain, cryptographically signed and verifiable by both ends. This ensures that network actors can be held accountable for inaccurate responses and requests; trust requirements are minimized. 

There are three core economic players in the Lava Network.  These are the validators who secure the network, the providers who run services for consumers, and the consumers who pay providers for API access. Lava’s model rewards providers who provide a high quality of service, subjectively rated by each client.

The Tokenomic flywheel of the Lava market will be fueled by LAVA, a native utility token with the following use cases: Transaction fees and transfers, Payment for compute units, and incentives alignment by staking, slashing and burning to punish malicious or faulty actors.

Apps and dApps use Lava as the backbone infrastructure to access blockchain data from many different chains and services, and eliminate single points of failure. For more in-depth information about Lava read the Litepaper.

The Tree of Knowledge: Good and Evil

At Node Capital we believe that the decentralization of the crypto stack is not just an imperative for all current and future crypto users, but an important and worthy goal that will, one day, set free the poor and bankless. Technology is defined as “the application of scientific knowledge for practical purposes”. Fire or Lava, like any technology, can be used for good and evil. It can scorch a healthy forest out of existence or decimate whole villages and ancient cities. But it can also be used to cook food, deter wild predators, light up the dark, fly air balloons around the world, and transform a once hunchbacked chimp into an upright “wise man”.

Richard Wrangham, a Harvard professor of Biological Anthropology, asserts that taming fire was one of the most important discoveries in human evolution, as it enabled us to cook food. Others claim that lava may have made us who we are.

We believe Lava Protocol’s technology will be a cornerstone in the Web3 revolution, and we are proud to support it along the way.

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This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice

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