Whether we like it or not, centralization remains an important concern and issue for our industry, faced with most large blockchains, even Ethereum.
To combat this, protocols such as Rocket Pool and Etherfi have worked to lower the bar for people to join the network as validators. A new protocol, Heroglyphsapproaches this problem differently, turning to speculation to the role of the single player more attractive.
Developed by OGs like 0xMakico-founder of Sushiswap, this new system seeks to exploit the often overlooked potential of Ethereum. Graffiti— a small segment of arbitrary data in block headers — to strengthen a more distributed and robust network of full validators by providing them with the ability to earn, deploy, and lease (yes, lease) tokens.
Ethereum's centralization problem
While Ethereum's move to Proof of Stake (PoS) brought many improvements, such as energy efficiency, it also ushered in a new era of concerns around centralization.
Indeed, the consolidation of validation power in the hands of a few large operators presents significant risks, including greater vulnerability to regulatory pressures (as we have seen with block and relay builders) and potential network outages.
This centralization dilutes the fundamental decentralized philosophy of blockchains and should be avoided. Here then, let's identify the Heeroglyphs.
How Heroglyphs attempts to solve this problem
Heroglyphs aims to combat validator centralization with a feature called Graffiti, which uses a small piece of arbitrary data that validators can include in the blocks they propose.
Through Graffiti, Heroglyphs introduces three key operations: encoding, translation and leasing, each designed to maximize the potential of this small piece of data in its transactions. Let’s break down these pillars:
- Coding involves integrating critical operational data into the Graffiti type of the Ethereum block, encoding commands for the creation, issuance, transfer and transformation of assets such as NFTs, memecoins and beyond. By inserting this data into Graffiti, block space becomes a secure and immutable medium for developing tokens and storing detailed transactional instructions.
- Translating tracks encoding, acting as an operational executor within Ethereum. Whether creating new NFTs or processing transactions for memecoins, the translation system ensures that these operations respect the parameters described by that token encoded in the Graffiti.
- Rental introduces a strategic and economical layer to the use of Graffiti. In this model, validators or miners assign and pay a regular fee of value to each Heroglyphs “ticker”, i.e. token. This value determines their operational lease and paves the way for competition. For example, other validators may outbid leases if they consider a ticker to be undervalued and want it for themselves. Most revenue from rentals and actions such as minting or transferring tickers in the Heroglyphs network is shared among all full validators.
Overall, this new platform represents a fresh, degeneracy-centric approach to decentralizing Ethereum's network.
The big vision? Use Graffiti to foster a new meta-system in which solo players are actively incentivized to participate, making the validator experience more lucrative, engaging, and fun. Validators now have the tools to create and manage their own tokens, granting this role a new privilege.
If the Heroglyphs mission comes to fruition, Ethereum will become more robust and we will have a new case study on how speculation can be beneficial and bring real value to crypto. In the meantime, here's a protocol to watch around the memecoin and NFT border!