Not by Ethereum alone: what do layer-one newcomers actually have to offer?

With the likes of Solana, Avalanche, and NEAR rising to the blockchain olympus, 2021 may well be called the year of alternate layer-ones. Along with the ever-growing transaction fees, the world’s largest blockchain keeps failing to cover emerging specific use cases.

While the promise of Ethereum 2.0 is alluring, its node design in fact prevents rapid-fire transactions per account, and the execution layer business logic it needs to accommodate the state reversion. Ethereum’s limited computation model and PoS consensus bring along high fees and severely bottlenecked throughput, with gas spent to skip ahead of the line, rather than paying for the actual production cost of running a node.

How exactly are purpose-built chains better?

What every business wants from blockchain systems is cryptographic certainty. To leverage blockchain for more agility and speed, you’d need to carefully consider all the limitations of smart contract functionality for your concrete business use case. Just like everything else, there is no one-size-fits-all blockchain — some chains work better than the others for certain use cases.

That’s why tracking and verifying documents and signatures on the Ethereum chain that was created mostly for scripting financial transactions, doesn’t sound like a very good idea.

‘Companies can determine whether they should invest in blockchain by focusing on specific use cases and their market position’.
Blockchain beyond the hype: What is the strategic business value? McKinsey.

Niche public chains purpose-built for specific applications have already proved their cost-effectiveness and immediate business value for many companies. Just like Algorand with its native protocol-level integration for financial instruments targets the financial use case, or Flow was designed for in-game NFTs, there needs to be a blockchain explicitly made for tracking and auditing operational records, such as counterparty signatures and other informal sign-offs.

First scalable blockchain to make informal interactions trusted

The lion’s share of operational data today remains uncaptured and unverified. Everyday agreements and transactions, social media interactions, and other informal interactions are hard to track due to their smaller scale and informal character. Unlike commercial, legally-binding contracts that are tracked by tons of sophisticated software, informal operational data and social signals remain buried in messengers, Slack chats, and even SMS exchanges.

Silicon Valley-based Taraxa aims to solve this by using immutable audit logs to capture and record off-chain unstructured transactional agreements right where they occur (chat messengers, collaboration platforms, etc.), thereby making them more trustworthy.

The platform aims to make it possible to measure a person/entity’s reputation by pulling off-chain signals (who does business, how often, etc.) from informal transactions into a quantified reputation system running atop a public blockchain ledger built specifically for the audit logging use case.

Under the hood, there are certain network architecture choices specifically made to deliver highly parallelizable, stateless audit logging:

• Audit logging requires a massive scale: block DAG topology has sub-second inclusion latency and enables simultaneous transactions per account at a time.
• Audit logs are stateless: concurrent execution takes advantage with no risk for conflicts.
• Audit logs require true finality: Taraxa never forks and has no state reversions.

A reputation quantifier of this kind will be able to log transactional data (contracts, party commitments, and such) and deliver clear and measurable reputation profiles to financial institutions, fintech solutions, social communities and any other contractual relationship, thus adding an extra layer of trust to mitigate operational and financial risks.

This holds promise for more interesting applications, such as quantifying off-chain reputation, social media interactions, credit scoring for uncollateralized lending in DeFi, and more.

With the recently released Californicum testnet, the project is now on the path to the mainnet and a broader roll-out of their in-house built application. Users can run a Taraxa node, participate in the massive staking program with 20% APY, and other testnet missions.