BlockShots: Blockchain Simplified

Traditionally blockchains execute transactions sequentially. Some of the newer chains have been trying parallel execution of transactions to improve blockchain performance. In this episode we understand what are parallel transactions and how they work.

In this episode we understand what are real world assets and why they are being tokenised.

What are real world assets?Any thing of value that has been generated or created in the real world before being represented digitally.

For example: Fiat currencies, Art, Commodities, etc.

Benefits of tokenisation: Enhanced liquidity, easier trade, easier record keeping and tracking of ownership.

After a brief break, we are back with new episodes.

Ethereum recently upgraded to a new update called Dencun. In this episode we understand what this update is and how it is important.

9 different updates clubbed together. Biggest and most important — introduction of blobs. Protodanksharding.

Reduce transaction fee on rollups by providing cheaper data availability. EIP 4844. No fee reduction on Ethereum L1 transactions.

Restaking is staking of already staked tokens. But how is the possible?

If tokens are staked for one purpose — providing econoimic security for consensus of a network — they could be further staked to provide security to other networks or apps.

The process of restaking works by overriding the withdrawal and slashing conditions of user’s staked tokens.

Listeners are encouraged to also check out the Episode 22 where Proof of Stake and Staking are explained.

Modular blockchains has been one of the buzz words in the last year. In this episode, let’s understand modularity in blockchains.

In the beginning, consensus and execution were part of the same blockchain like Ethereum 1.0. Then execution was decoupled and put into rollups. Then came the need for storing rollup data in the L1. And then we got DA layers as separate networks.

Now we have consensus on L1, execution on L2, and data on DA layers. This is how we have modularised the blockchains.

In this episode, we understand what are altcoins?

Altcoin was first used for any coin other than bitcoin. But the definition has evolved a bit among different circles in the crypto land. Listen to the full episode to explore the topic in detail.

In this episode, we understand what are orphan or uncle blocks. This is more of a Proof of Work related concept where two blocks are produced at the same time. One of them becomes part of the chain - based on the longest chain consensus rule - while the other becomes and orphan (Bitcoin) or uncle (Ethereum 1.0) block.

Listen to the full episode to understand what eventually happens to these blocks and transactions inside them.

In this episode, we understand the two ways of doing blockchain governance - on-chain and off-chain.

When the decisions to update the blockchain software are driven by processes off the chain (online forums, meetups, etc.) then it leads to off-chain governance.

When the decisions are made using a voting process that is recorded on the blockchain (as transactions) and when the update of the blockchain is driven via this voting, then it is on-chain governance.

A fork choice rule is part of the blockchain consensus mechanism and it is used to find out the canonical chain for adding new blocks.

Fork choice rule becomes relevant when there is a fork caused by network partition or two blocks being produced at the same time. A fork could also happen when there are dishonest validators in the network.

When validators produce new blocks, they need to identify which block should be the parent of the block being produced. To find the parent block, validators have to run a function to find out the longest chain. This function is called the fork choice rule.

Depending on the blockchain consensus rules, the fork choice rule takes as input the current chain, the votes or attestations on finalized or seen blocks, and other relevant consensus data.

Rollups are L2 scaling mechanisms where transaction execution is done offchain in the rollup node or sequencer. The state is updated on the L1 based on this execution. Rollup nodes also publish transaction data “rolled up” as batches and blocks on the L1 chain.

When it comes to following the blockchain data structure of adding the reference of previous (parent) block to the next block — rollups do that.

But the representation of blocks and consensus on L2 could be different. In addition sequencers could just be centralized in some rollups.

Hence, rollups do use some characteristics of blockchains while customising some things to suit the execution on L2s.