Developers Need to Integrate Centralized and Decentralized Systems
Today, billions of people use millions of centralized applications without understanding or caring about their databases, protocols, or other infrastructure. It is unlikely that the majority of users will actively demand decentralized infrastructure for these applications in the near future. The companies behind these applications lack significant economic incentives to decentralize storage or governance.
Looking ahead, end users will continue to expect user-friendly applications that shield them from the technological complexities while providing a seamless experience. Whether centralized or decentralized, these future applications will need to exchange data effectively. Therefore, developers of tomorrow's applications will need to find ways to integrate both centralized systems and various blockchains into a unified user experience.
This integration of centralized and decentralized elements will allow end users to benefit from global systems, irrespective of their decentralized or centralized nature. By catering to user demands for simplicity and ease of use, developers can bridge the gap between web2 and web3 technologies, enabling a cohesive and inclusive digital landscape for all.
Centralized Integration Approaches Are Not a Solution
A wide range of integration solutions exists, from enterprise middleware to lightweight iPaaS, in order to integrate traditional centralized software and SaaS services. These kind of solutions can be used easily to relay data between blockchains and centralized software as well, simply using dozens of commonly available blockchain APIs. However, the centralized nature of iPaaS creates risks of manipulation, failure, and censorship, limiting their use for transacting with tokens and other on-chain value. These characteristics completely prevent these systems from being utilized as public infrastructure to connect blockchains with each other. This poses a risk of undermining the individual decentralization benefits of each blockchain. In conclusion, traditional integration approaches have very limited utility to connect centralized systems to blockchains and none to connect blockchains between them.
Decentralized Integration is complex
The earliest attempts to facilitate integrations in a decentralized way are oracles that securely aggregate and write data from centralized systems to blockchains (and more rarely in the other direction), with price feeds and exchange rates being the most common use cases.
Later, smart contract automators enhanced this bidirectional data transfer capability, between the blockchain and the external world, by enabling on-chain data transformations. They achieved this by utilizing relays to independently transmit data on-chain, from one smart contract to another.
More recently, so-called cross-chain messaging systems have used specialized smart contracts on different chains, along with a mix of proprietary and existing automators, relays, and oracles, to move value and arbitrary messages between chains. Today, developers need to implement multiple of these complex technologies to solve integration needs and deliver apps that meet the user experience their customers demand.
The early stage of development and resulting immature state of these individual integration technologies, coupled with their large number and the absence of a globally agreed-upon solution, exposes developers to security vulnerabilities. This situation creates a patchwork of integration methods, leading to a systemic risk for the entire Web3 ecosystem.
Implementing decentralized integrations introduces complexities and risks. Firstly, for a given protocol, developers must navigate the challenges specific to each integration, which may require adaptations and compromises. Secondly, the unavoidable need of combining multiple integrations within the same protocol significantly increases the potential risks and complexities. The interplay between different integrations amplifies the overall risk profile. Lastly, scaling the DeFi ecosystem increases the risk to a house of cards when these protocols are combined since each protocol by itself already involves a range of risky integrations.