Networks of computers have existed for decades, but they didn't reach billions of people and trillions of devices until we figured out how to interconnect them (the Internet).

How can we bring decentralized networks like Ethereum to billions of people?

A 🧵 about networks.

With Web3, the next generation of the Internet, we now have the ability to store value and digital property rights onchain, not just information and digital media. Onchain is rapidly becoming the new online, as web3 enables you to store and send value to any person or app.

Technologist, Futurist, Founding contributor @Moonwell.

Onchain is not yet as mature as online. In the early days of the Internet, it was difficult to email people who went to a different school or workplace. It was also difficult to chat with people on a different OS or device. In many ways, Ethereum faces this same challenge today.

The insatiable demand for blockspace, just like demand for bandwidth, has created dozens of networks, just like the early Internet. Bandwidth was expensive and constrained, so telephone companies, ISPs, and businesses connected private networks to the Internet backbone.

With web3, we can now send and receive value and digital property, however, in many ways we are still in the early days, because it is difficult to send value to a person or application on a different network. Some early mobile services like SMS and MMS faced similar challenges.

The early solutions to sending value between Ethereum networks have been less than ideal. @Chainalysis reports that over $2 billion in value has been stolen from bridges in the year 2022 alone.

The early solutions to sending value between Ethereum networks have been less than ideal. @Chainalysis reports that over $2 billion in value has been stolen from bridges in the year 2022 alone. 

https://www.chainalysis.com/blog/2022-biggest-year-ever-for-crypto-hacking/

This is primarily due to their "lock and mint" architecture. Bridges typically require you to lock your tokens in a smart contract, then mint a different token on the network you are sending value to. This process is known as "wrapping." The wrapped token is issued by the bridge.

In this architecture, your original tokens will be stored in a smart contract for as long as you want to use the other network, potentially forever. During this entire time, your tokens are at risk of attack, and if any vulnerabilities are found, attackers can take them.

The solution to this was developed by @Circle, the creator of USDC, and is called CCTP. Just like TCP/IP enabled people on different home, school, or office networks to send email to each other, CCTP enables people on different Ethereum networks to send value to each other.

My prediction is that CCTP will become a core Internet protocol, just like TCP/IP, because it removes an entire category of security risks associated with bridges. With CCTP, your USDC is never at risk in a bridge smart contract, and only leaves your wallet for a few minutes.

Web3 developers can build powerful new apps and experiences with CCTP, because it functions as a low level primitive (just like TCP/IP) that facilitates value transfer between networks.

At first glance, you might think this is only useful for digital payments, and while that is a powerful use case, there are many more use cases enabled by CCTP. Here are just a few:

You can deposit value into an app on another network: a cross-chain deposit.

You can swap a token on one network for a token on another network. Before CCTP, many exchanges would only allow you to swap between tokens on the same network. Exchanges that are already live on many networks can achieve greater capital efficiency for both LPs and traders.

You can create digital marketplaces that offer the best curated art, NFTs, and other digital goods from multiple networks. Marketplace participants, including creators, curators and consumers, no longer need to worry about which network a given collection is on to purchase.

Ultimately, this leads to far greater capital efficiency and greater network effects. Just as the Internet grew in value every time another application or user came online, web3 will have an exponentially more powerful network effect as more apps come to CCTP connected networks.

Today, most people store their digital life in an online hub, whether it is a social network like Instagram, or storage like iCloud or Google Photos. Open Internet standards have enabled us to safely and securely store and transmit text, images, voice, and video.

Most people don't store their photos on a dozen different services, or keep their money in a dozen different banks. We prefer a trusted and secure digital hub. @Coinbase's network @Base, operated by the most trusted crypto exchange, is an easy choice as your onchain hub.

Now that we have CCTP, @Coinbase and @Circle are ready to bring the next billion people onchain. You'll be able to store most of your onchain value and digital property on @Base, while still using all the apps, games, and digital marketplaces on the top Ethereum networks via CCTP

I hope you've found this thread on networks and CCTP informative. In my next thread, I'll go deeper into how this will accrue value back to @Base and share an exciting new use case for @MoonwellDeFi.

Follow me for more.

Like/Recast the quote below if you can:

I hope you've found this thread on networks and CCTP informative. In my next thread, I'll go deeper into how this will accrue value back to @Base and share an exciting new use case for @MoonwellDeFi.

Follow me for more.

Like/Recast the quote below if you can:
https://warpcast.com/lukeyoungblood/0x7ef70470