The Problem with Ethereum’s Atomic Composability Still Remains

Ethereum

EthereumHere’s Why the merger does not address Ethereum atomic composability

The network merge of Ethereum is a significant achievement in the history of open-source software and Web3. This shift from the more energy-intensive proof-of-work consensus mechanism to the less energy-intensive proof-of-stake consensus mechanism has largely been lauded for its increased sustainability. However, while the news of the day is about energy conservation, the network merge avoids an impending problem for Ethereum. After the Merge, network updates are supposed to start improving Ethereum scalability, but these proposals threaten the viability and sustainability of a healthy Web3 ecosystem. Atomic composability, which enabled decentralized finance (DeFi) on Ethereum in the first place, is jeopardized. And when you disrupt atomic composability, you undermine the very thing that makes an ecosystem truly long-term sustainable.

 

What is atomic composability, and why is it important?

Atomic composability is a technical term that means that any application on a network can interact with any other application without friction. In the implementation of sharding or layer 2 systems, Ethereum will consciously break composability by segregating parts of its network from one another. Consider the health of a rainforest or a desert to put this concept into context. According to experts, one-third of all edible fruits and vegetables could not grow without pollinators. You’ve probably heard about the declining bee population, but the story keeps repeating itself all over the world. The destruction of agave plants for tequila production endangers the survival of the bats that pollinate the desert’s most important cactus, putting the entire ecosystem at risk. Whaling eventually leads to the depletion of fish stocks.

In reality, biodiversity is critical for the survival and growth of natural ecosystems, and when this cycle is disrupted, the consequences are far-reaching and devastating. The Economics of Ecosystems and Biodiversity organization published a report in 2009 highlighting how much economic value for humans is directly related to ecosystem biodiversity, including up to 50% of the pharmaceutical industry and 100% of the agricultural industry, among many others. So, if biodiversity is so important and valuable in physical ecosystems, why isn’t application diversity critical to the survival and growth of digital ecosystems? The answer is yes.

The greater the application diversity within an ecosystem, the more its apps can “cross-pollinate” with one another, resulting in a more robust, resilient ecosystem capable of fueling all types of growth. This can also lead to the development of new species of applications and the creation of new wealth for the humans who rely on them. The key to Web3 eco-diversity is to protect the four superpowers. Tokenization, decentralized applications, two-sided markets without intermediaries, and composability are Web3 four superpowers.

Taking away one of these superpowers by isolating specific applications from one another via specific types of blockchain sharding or layer 2 implementations (as nearly every smart contract platform does) is akin to isolating the bat from the plant it pollinates. We are seeing the consequences of destroying natural diversity, separating flora and fauna from the ecosystems in which they have thrived and are interdependent. We can’t afford to make the same mistake now, at the dawn of Web3, as we strive to create the most dynamic, flourishing digital ecosystem for the future of global finance. Decentralized networks that preserve all four superpowers, including atomic composability, will provide the most room for emergent digital ecosystems to thrive.