CoinWorld report:
Author: Dewhales Source: DewhalesCapital Translation: Shan Ou Ba
In a recent study, Dewhales pointed out that projects are evolving towards a truly modular direction similar to Web2. Over the past decade of Web2, there has been an explosive growth in external libraries, frameworks, and containers. Previously in Web3, modules could be likened to frameworks that were difficult to integrate, requiring temporary solutions to combine them. Now, it resembles Web2 with libraries, where a program can call upon many different libraries. In Web2, the richness of libraries often led to significant bloat in application size; ideally, a banking application should be 20-50 MB, but due to libraries, it might swell to 500-800 MB. However, the current situation in Web3 is slightly different.
Web3 is gradually moving away from the Fat Protocols paradigm of providing developers with numerous SDKs.
These comprehensive products often leave developers with “just a bit” rather than tools with truly broad functionality. Additionally, from trends over the past few years, the pendulum of cryptocurrencies has swung from centralized solutions to decentralized solutions, with Web3 development now focusing primarily on true decentralization. Lava Network is one of the cornerstones laying the foundation for a truly distributed and decentralized Web3.
2. Introduction to Lava Network
To gain an overall understanding of Lava and its objectives, consider the following analogy:
Lava is a postal system,
while other providers are individual mail carriers. If a city has only one mail carrier and they fall ill, no one can deliver mail. If there are many carriers from different companies, competition arises, making it hard for consumers to choose a specific one. With Lava, anyone can join the collective of “Lava” carriers to deliver mail in any manner—by bike, car, or on foot. You pay a single fee, and Lava’s algorithm selects the best carrier for your needs. You don’t have to choose your own carrier or maintain relationships with multiple providers simultaneously.
Lava acts as a marketplace,
whereas other providers are individual stores. Currently, in Web3, there are no infrastructure aggregation services, leading to increasing decentralization in this part of the stack with the introduction of new blockchains and combinations. For each rollup deployment on Celestia, developers must use new providers or set up a node to use it. Lava eliminates the need for developers to manually select individual providers. When developers connect their applications to Lava, the protocol not only connects them to the most efficient nodes available for fetching responses but also routes their requests to the right providers—across chains, protocols, and API interfaces.
3. Overview of Lava Network and RPC
The Lava protocol aims to provide decentralized and scalable blockchain data access. Lava is a fast, reliable, and decentralized RPC network applicable to all blockchains, addressing inherent issues with centralized blockchain data providers like Infura and Alchemy. Additionally, Lava features incentive pools that blockchains can create to foster infrastructure development. This is used to compensate providers, while users/developers can access RPCs for free. Learn more about current solutions’ drawbacks in the “Competitors” section. Furthermore, the team emphasizes that Lava will support more features and modules in the future.
Currently, the first service module on Lava is RPC, supporting over 30 chains. Future additions may include subgraphs, oracle APIs, anti-MEV APIs, and more without requiring permission.
What is RPC:
RPC (Remote Procedure Call) is a method allowing programs to invoke procedures (functions) in another program. In blockchain environments, they serve as full nodes facilitating read/write access to the blockchain for other network participants. RPC nodes are typically used by those without or unable to run their own full nodes or light clients, significantly reducing friction when accessing the blockchain. Users implicitly trust the provider’s integrity when connected to RPC providers, as no self-checking is done.
Uses of RPC:
Users need RPC to connect to any blockchain and perform basic operations such as minting, trading, sending transactions, deploying smart contracts. For Dapps, RPC enables interaction with any blockchain network. For example, Dapps can use RPC to send transactions, read data from the blockchain (gas prices, account balances, etc.), or subscribe to certain events on the network. RPC also allows Dapps to interact with blockchain networks without disclosing their private keys.
On one hand, Lava’s description may seem akin to routers or relays. However, Lava actually penetrates various aspects and components of web3: different ISPs, services, dApps, many users’ unseen different processes. Thus, further investigation is needed into how Lava exactly operates.
4. General Operation Principles of Lava and Lava SDK
1. Chains and Rollup on Lava create an incentive pool consisting of native tokens, stablecoins, or even memecoins.
2. Chains and Rollup define required infrastructure services by writing simple specifications (“specs”) and adding them to Lava for providers to offer services.
3. Providers join Lava to offer services for infrastructure defined by specifications and earn rewards from the incentive pool. This is particularly advantageous for new launches or pre-launch chains not yet supported by a few major providers.
4. Lava aggregates providers and dynamically routes requests in the best way possible based on geographical location and service quality of providers. Users do not need to manually research and select the best provider; Lava dynamically meets user needs for each request.
5. Users and developers get free infrastructure.
6. Providers’ monthly rewards depend on the computing power and service quality they provide.
7. Developers can purchase subscriptions for services with higher rate limits (e.g., more RPC requests). Subscription fees are also paid monthly to providers.
Current on-chain data providers suffer from being highly decentralized, with no single provider offering all functionalities—each lacks some features or support for specific networks. Therefore, multiple solutions are needed to cover the necessary data stack. Lava also highlights the issue of centralized infrastructure failures.
Lava acts as a marketplace and settlement layer for accessing blockchain data with dynamically market-driven pricing. Payment settlements, conflict resolution, and pairing are completed on-chain. To ensure competitiveness, communication between providers and consumers occurs directly, with data and requests offline (i.e., not through the Lava network). Lava aims to allow users to access RPCs not only but also from different locations worldwide for better speed and user experience.
Technically, Lava offers a PoS-based blockchain solution developed using Cosmos SDK and Tendermint core. Given Cosmos’ positioning as a hub allowing different networks to interconnect, this appears logical. However, it raises a concern that Cosmos is an expensive solution connecting different networks through IBC technology. In fact, the current IBC transport layer requires lightweight clients paired between each chain. For most EVM-based chains, running full lightweight clients is prohibitively costly, limiting IBC’s access to high-bandwidth, low-cost chains. Validator requirements are standard for Cosmos:
While Cosmos is prominently featured on the single page, accessing the Gateway Lava reveals support for a significant number of chains (including some providing RPC on testnets). As of mid-June, only 16 chains were available; by July 7th, there were 24 available chains:
Lava also provides an SDK, a powerful JavaScript/TypeScript library designed for developers, allowing them to integrate plug-and-play RPCs across all supported chains in the Lava ecosystem. It enables decentralized access and can be used in both server and browser environments. By importing Lava-SDK into their projects, developers can easily interact with different blockchains and create decentralized applications effortlessly.
Tools provided by Lava:
Gateway
– Easy-to-access Web UI for online project management and URL-based API access on all supported chains and APIs.
SDK with Badge Servers and Integrated SDK
– SDK with an innovative badge system for hiding and protecting the frontend dApp’s private keys. The SDK also supports native integrations with viem, web3.js, ethers.js, CosmJS, etc.
Server Suite
– Concurrent, high-throughput binaries availableThe Design and Architecture of Lava Network
Let’s explore the benefits of Lava’s decentralized design:
Consensus-based data accuracy.
Clients utilize a threshold algorithm to sample API endpoints, minimizing response conflicts probabilistically. Consensus builds around data in the network, with plans for a lightweight client to further eliminate trust assumptions. Developers need not worry about outdated or inaccurate data.
Network redundancy scales with peak traffic.
Applications interact with a provider list, enhancing uptime and service coverage. The network swiftly operates RPC nodes to establish new Lava Network specifications for provider connections and service delivery.
Connecting to multiple providers = high uptime
Clients pair with a provider list, rating providers in a peer-to-peer system based on latency, freshness, and availability to determine rewards. Providers earn rewards based on QoS per session, ensuring users receive optimal experiences without downtime.
Specification supporting any chain, any API
Using Lava as a provider, developers can adjust configurations to access any chain and API currently available on the network. DAOs and contributors can swiftly introduce new support to the network through open-source means, saving developers from the hunt for suitable providers. All RPCs developers need are accessible through a single open protocol.
Summary of Lava Network:
But if we don’t look under the hood through a small glass window, we only see part of the engine; opening the hood reveals something much larger and complex:
Participants in the Lava Network:
Validators
Secure chains and earn LAVA by securing them. Validator nodes are responsible for providing blocks, voting on blocks, and verifying states to safeguard the Lava blockchain. The formation of validator rewards will be further discussed in the “Tokenomics” section.
Delegators
Stake LAVA with providers and validators on the network. This enhances network security and allows delegators to share risks with providers and validators in exchange for rewards.
Service providers managing services for consumers
Providers stake on the network and run RPC nodes in relay chains requested by consumers (e.g., Cosmos, Ethereum, Osmosis, Polygon, etc.). In many cases, providers also operate nodes for specific blockchains. They receive payments in LAVA for servicing consumer requests. Providers may earn rewards, penalties, or exclusion from the chain based on RPC service performance. Unlike validators, provider rewards come from:
1) Subscription payments from service consumers,
2) ipRPC rewards for ipRPC specifications – as described in the ipRPC pool,
3) Delegation rewards – as described in further staking below,
4) Reward boosts
Providers are paid by CU and paid in LAVA. Each provider receives a portion of the subscription price paid by service consumers. The share received is determined by dividing the CU quantity provided by the provider for that consumer by the total CU used by the consumer in the subscription. This gives an accurate percentage of service CU attributed to the relevant provider.
Champions
Earn LAVA by creating, maintaining, servicing, and supporting specifications on the Lava Network. Many champions create specifications and propose them on-chain, maintain existing specifications with necessary updates or changes, or develop software serving specifications (node clients, API clients/indexers, or other innovations). Some rewards are reserved for champions.
Consumers
Anyone using web3 APIs with the Lava protocol. Examples include developers, wallets, dApps, exchanges, indexers, etc. They use LavaSDK, ipRPC endpoints, gateway endpoints, or server kits to retrieve data. Consumers initiate relay requests. They interact with relay chains and participate in the Lava Network for reliable RPC calls. Lava facilitates decentralized interactions with blockchains, allowing consumers to maximize privacy, transaction speed, data reliability, auditability, and node availability. Consumers on the Lava Network are divided into developers and the applications they create.
Enterprise clients using Lava Server Kit
– This is a GO language reference implementation providing self-hosted gateway access to blockchain APIs, designed to run as backend servers. It can accept raw RPC queries, wrap them with protocol layers, and send them directly to providers on our network in a decentralized manner. Lava Server Kit is more concurrent and performant than Lava SDK, suitable for enterprise applications needing high throughput and scalability.
Specifications
Are foundational components providing multi-chain support for Lava, presented in JSON format. These specifications define the minimum requirements for API operations of specific chains on Lava. Using these specifications, Lava determines supported chains and methods, setting corresponding costs, prerequisites, and checks.
Lava Gateway
Is a web platform for developers, offering instant access to blockchain data. Leveraging Lava Server Kit, the gateway provides hosted entry points for developers needing RPC via the Lava Network. This setup allows users to manage and customize Web3 APIs conveniently from their browsers.
Lava Network Re-staking
The topic of re-staking has been on everyone’s lips for a long time, but for Lava, it takes a more complex turn in an unexpected direction. Unlike typical re-staking with native tokens like LST and AVS, re-staking within the Lava Network allows token holders to delegate their tokens to specifications provided by providers, claiming a portion of rewards granted to selected providers. All re-stakers are eligible to receive a portion of the provider’s profits.
LAVA delegated to validators can be re-staked. LAVA tokens can be re-staked with providers without introducing additional collateral, garnering higher returns at a higher risk. Conversely, whenever providers stake tokens, an equivalent amount is re-staked with validators. In other words, provider staking serves as both self-delegation (to oneself as a provider) and standard delegation (to validators).
Purpose of re-staking:
– Provides delegators a way to help choose the best providers and earn rewards
– Offers additional income for validator delegators
– Reduces security costs for the network
Competitive Landscape
Currently, there are numerous RPC providers — according to Alchemy’s data, there are 29. Major players include Infura, QuickNode, and Alchemy. However, the products offered by Lava Network are entirely distinct from theirs.
Disadvantages of centralized RPC providers:
Wallets can censor countries, providers can block transactions for certain dApps, gateways may return inaccurate data, and occasionally malicious data.
Due to errors during the release of the testnet earlier this year, Solana Foundation’s RPC endpoints went offline. While this doesn’t affect the network’s ability to create new blocks, it means users must rely entirely on private RPC providers as publicly available RPCs are no longer accessible.
RPC providers often face catastrophic configuration issues; for instance, providers in the Ledgerwatch Erigon project recently encountered problems with endpoints failing and HTTP endpoint URLs permanently closed, as documented in project logs.
The Optimsim airdrop illustrated that due to preemptive traffic overloading their public RPC, the airdrop failed, resulting in a 60% loss in token value.
Furthermore, large providers serve only a few chains. Lava allows any chain to provide fast and reliable RPCs to its users/developers without permission. This is achieved through incentive pools (incentivizing public RPCs). Additionally, RPC endpoints may go offline during high loads, and centralized providers do not take responsibility — a facet of Lava Network’s GTM strategy.
In essence, we see significant differences in several parameters. Yet, it remains to be seen how Lava performs. Feedback indicates that unlike other RPCs with downtime, using Lava RPCs can improve application performance by approximately 10 times, even on Arbitrum. The team suggests that generally, CU/price is defined by the ecosystem, and due to the novelty of Specs, Lava will be able to offer an infinite number of CU/prices as defined on demand.
From a different angle, another competitor might be EigenLayer. This is not only due to the idea of re-staking (although from a different angle) but also due to the architecture and principles of the protocol. The issue is, while EigenLayer supports Network Bootstrap (AVS), Lava Network provides bootstrapping its RPC infrastructure through a mechanism called incentivizing public RPC. Unlike EigenLayer, which uses LST and nativeETH’s approach to enhancing the security of the crypto economy is similar to that of Lava Network, which has established a rewards pool on Lava consisting of its own tokens, stablecoins, and even meme coins.
8. Lava Tokenomics
Lava tokens offer direct utility through a subscription model and staking provider nodes (Specs), ensuring integrity and continuity of their services. Additionally, validators on the Lava Network stake tokens. Token holders can delegate them to providers and validators, participating in governance.
There are other aspects to fund flow: Chains contribute incentive tokens to Lava, rewarding providers and stakers for their specifications, while developers (Champions) earn rewards by creating, developing, and maintaining RPC and API specs and software.
Furthermore, Lava tokens are integral to protocol expansion. They incentivize public RPC pools, where tokens from other platforms implementing Lava RPC can be used alongside Lava tokens. ipRPC pools accommodate native Lava tokens (LAVA) and IBC-wrapped tokens from any blockchain.
For access and connectivity, the rewards pool relies on server suite/gateway interfaces. Selected consumers with special subscriptions act as sponsors for end-users, enabling them to allocate rewards from ipRPC pools to providers when end-users consume data. Thus, rewards for providers serving ipRPC specifications exceed regular network service rewards.
Like other blockchains, validators earn rewards through staking. Staked validators earn rewards from four sources:
1) Block rewards from reward reserves
2) Block rewards from subscription commissions
3) Block fees from network transactions
4) Delegation rewards (as mentioned in the “re-staking section” above)
LAVA’s supply is fixed with no additional tokens to be minted. Additionally, Lava has developed a new deflationary mechanism to attract providers in the early stages of the mainnet. 6.6% of the supply is allocated to “Provider Drops,” a monthly reward distribution mechanism designed to incentivize provider participation. Monthly rewards vary based on paid demand for services on Lava; earlier joining providers receive larger rewards as demand decreases with more consumer uptake.
At the end of each month, all unallocated validator rewards are burned.
Lava will have 1,000,000,000 tokens at Genesis, with no inflation.
25% – Public allocation, future plans, and reward reserves (provider airdrops and validator rewards). Fully unlocked upon release. Excluding reward reserves: continuously unlocked from release to the fourth year.
31% – Research and ecosystem, protocol maintenance and development; plans for providers, validators, and champions. 25% unlocked upon release. Remaining 75% continuously unlocked from Year 1 to Year 4.
17% – Investors, with 33% unlocked in the first year. Remaining 67% continuously unlocked from Year 1 to Year 3.
27% – Contributors, early contributors, core team, advisors, etc. 33% unlocked in the first year. Remaining 67% continuously unlocked from Year 1 to Year 3.
9. GitHub
GitHub
Highly active, even considered a benchmark for truly active GitHub repositories. This study notably emphasizes activity within the Lava Network repository, showing substantial activity in project work, particularly since July 2023.
https://github.com/lavanet/lava- is the main repository. It has 44 contributors (as of July 2023, it was 23), working on the repository primarily in Go, with additional languages such as Shell, Python, and others. There has been consistently high commit frequency since June 2022, with all Pull Requests on record, indicating genuine activity. The new versions are active; the first version was released in November 2022, and 115 versions have been released in under 1.5 years (33 versions as of July 2023), which is a very good number:
Currently, there is an unresolved issue titled Contribution – Persistent rewards for providers when closed. The existence of this issue indicates maintainers’ prompt and active efforts to resolve them. The repository looks good in terms of code, written using well-known tools and libraries (Cobra).
https://github.com/lavanet/lava/tree/main/ecosystem/lava-sdk- The Lava SDK repository is also quite active. It has fewer contributors (6), with a lower commit rate, but still more active compared to most crypto projects in the main lava repository (as of July 2023, this repository is currently included in the main lava repository). The SDK (Software Development Kit) aims to allow developers access to Web3 API through the Lava network. It’s implemented in JavaScript/TypeScript, designed to run in browsers, providing multi-chain peer-to-peer access to blockchain APIs.
https://github.com/lavanet/docs- The documentation repository is also actively updated and has a large number of contributors (43 as of the end of May 2024, 6 as of the end of July 2023):
https://github.com/lavanet/cosmos-omnibus- This repository is a branch of the Akash Network repository designed to run nodes. In other words, you can say Lava nodes are based on Akash technology. The attributes of this repository are unmarked.
https://github.com/lavanet/lava-providers- Another interesting repository that has been actively developed over the past few months. It includes a resource for Lava Access SDK to discover the first provider to connect to initial paired data through provider nodes. In other words, this repository contains JSONs that Lava uses to provide decentralized solutions for connecting new consumers to the network via provider nodes, providing reliable and controlled network connections.
10. Supporters and Integrations
Lava also announced supporters for its 2024 financing round, including: Haskey, Tribe Capital, Jump, Quiet, Node.capital, Finality, MH Ventures, Alpha Lab, Chorus One, YTWO, kommune, Protocol Labs, Alliance, Kepler, Dispersion Capital, Chainlayer, Compa, Galileo, Anagram, Caladan, Dispersion Capital, and Interop Ventures.
The Lava Foundation has raised $11 million to develop the Lava ecosystem and fund protocol development. Additionally, Lava completed a $15 million seed round, led by Tribe, Jump, and Hashkey.
Furthermore, Lava has partnered with NEAR, Evmos, and Axelar to conduct incentivized RPC activities, distributing hundreds of thousands of rewards in the form of node operator rewards to provide reliable infrastructure. Other partners include (or use Lava’s projects):
Learn web3DAO
– Conducting educational initiatives and hosting practical workshops for developers on the Lava SDK.
In addition to
Learn web3DAO
, Lava also spoke at Solana Hacker House, positioned as an environment for developers and learning.
Caddi
– Users can access more accurate gas prices across multiple networks using Lava. Caddi allows optimized exchange pricing and, beyond DEX, enables connection to centralized exchanges via APIs. However, the app is not yet widely popular based on available social media metrics.
ZyberSwap
is a DEX on Arbitrum planning further launches on Optimism and zkSynk. According to DeFiLama data, its TVL scale is relatively small at $4.18 million.
Arcadeum
– An online casino offering a variety of gambling games on its website.
Chorus One—
Provides Stake-as-a-Service (SaaS) solutions to users upon the launch of the Lava core network.
Another unique aspect of Lava’s partnership establishment is the launch of incentivized public RPC activities. Specifically, in this initiative, Lava collaborated with Union Labs to incentivize public remote procedure calls (ipRPC) with a $100,000 token reward pool. Union Labs is an independent compatibility layer using zero-knowledge proofs to provide secure bridges connecting any app chain, L1, and L2. After the Union mainnet’s planned launch in summer 2024, node operators will have the opportunity to become Union RPC providers through Lava, streamlining developer processes by integrating providers into a single access point. Participants in the initiative will receive a portion of the reward pool within three months of the expected initial release date.
Additionally, Axelar mentioned Axelar’s participation in the community forum. Their incentivized public RPC endpoints have become primary RPCs on Axelar. At launch, Axelar’s main and test networks processed over 7 billion RPC requests, distributing over 31,000 AXL tokens among high-quality Axelar node operators. Support for archive data and CosmWasm API has been added, significantly enhancing performance through enhanced caching. In April, Axelar’s CU reached 11.4 billion computation units, demonstrating direct usage and demand for Lava RPC.
