While blockchains have democratized access to information, significant barriers remain to easily and efficiently get this access. This blog post pictures the blockchain data challenges and potential solutions to bring order to on-chain data.

To the surprise of no one, the world of blockchain data is growing. After all, this is what happens when digital ledgers are capable of operating 24/7/365, and where transactions to deposit, transfer, or withdraw are occurring across all blockchains, in all time-zones, at all times, across the globe.

Blockchain Data: A Perspective

For most of us who have immersed ourselves into the blockchain world, the constant addition of new blocks and transactions to various chains carry little significance. As with most things, individual users are generally focused only on individual end results:

• Did I receive my deposit?
• Did the transfer go to where it was supposed to go?
• Has the withdrawal occurred successfully?

However, behind the frontends which facilitate these transactions, are the backends of the Web3 solutions which need to ensure that the application is providing the most relevant, useful, and real-time information to its users and consumers. In some cases, anything less would be catastrophic — as the regular wild swings of crypto markets require users to often make split-second decisions based on the latest information at hand.

Web2 solutions like Google have trained the world into believing that access to any data is not only instantaneous — but easy, simple, free, and limitless. After all, when a search on “best apple pie recipes” can yield 154 million results in 0.58 seconds, what could possibly be so difficult in aggregating the world’s data and presenting them in an easily digestible format?

Unfortunately, the experience in retrieving relevant data from blockchains is a far cry from what one can expect when querying Google, or in a more comparable example — when performing a search for information on a Bloomberg terminal. Such information, which has been thoroughly processed for its end users, is designed to be delivered to its customers in rapid fashion, with a high degree of accuracy.

Indexing and the Challenges With Retrieving Blockchain Data

Folks who use various blockchains to send and receive transactions will undoubtedly be familiar with resources such as Etherscan or other blockchain explorers. These tools, which allow users to view data which traces their transaction all the way through, provide only a small facet of what many Web3 solutions may need to successfully run their applications.

What is Indexing?

To first understand why Google works the way it does, and where raw blockchain data falls short, one must first understand the concept of indexing.

Anyone who has picked up a book has likely seen the index which often accompanies the last few pages of the reading material. These pages, which usually provide references to places or things mentioned within the book, provide an efficient way to direct the reader to the pages which they may be most interested in.

When picking up a book about sports injury rehabilitation, an athlete who has injured their knee may move directly to the index to search for the pages in the book which address rehabilitation methods for this part of their body.

In the same (but much more technologically advanced) way, Google has done the same with apple pie recipes, and an infinite amount of other queries which its users may have.

Raw Blockchain Data

There is an incredible amount of information which is currently stored on the world’s most popular blockchains. However, the raw nature of the data means that users who want to retrieve information from the blockchain must do so in the most cumbersome way — by starting with the first block and going through the entire chain to find (and calculate) what they need.

The unstructured and unindexed data means that users (or rather, Web3 applications) will need to spend an exorbitant amount of time running through the blockchain and extracting the information which is required.

A more useful analogy may be to reference the previous real-world example. Without an index in a sports rehabilitation book, the injured athlete must read through each individual page in order to find the relevant sections which contain guidance on how to rehabilitate knee injuries. This is hardly efficient, and one can quickly see how the book’s index speeds up the reader’s information gathering process.

Let us unveil the key features of a solution that bring order to on-chain data.

First Feature, Resolving Issues with Retrieving Data from the Blockchain

To serve its users meaningfully and efficiently, almost every Web3 solution will require data from the blockchain in real-time, or near real-time. From DeFi applications which may need to provide its customers with Total Value Locked (TVL), to blockchain games which may need to show transactional histories of its NFTs - data to provide relevant information is an expectation for an application’s end users. This expectation is not to be taken lightly, especially given how such information often drives significant financial decisions that an application’s users may take.

Recognizing the criticality of such needs, and the consistency with which this information will be required across the Web3 industry, we need an API as a first step towards providing Web3 dApps and protocols a single solution to deliver data needs to its end users.

Essentially, such API should provide historical, real-time, and raw data of all supported blockchains from genesis all the way to its latest block. Also should have capability of querying high volume blockchain events almost real-time – bringing the  ability to deliver critical data needs to its customers, and their end customers, within the blink of an eye.

If such API performs the retrieval and indexing  –  it eliminates the need for Web3 applications to query directly to the blockchain itself. Instead, applications can go directly to such indexed databases, and retrieve information in a fraction of the time it would otherwise take by going directly to the chain. This will allow customers retrieve whatever their project requires. Account balances, statistics, deposit/withdrawal histories, and more.

Second Feature,  Web3 Data Lakes Extending what APIs Can Do

Sometimes, pure, raw blockchain data is not enough. In the past few years, the blockchain community has seen a number of Web3 projects or protocols become so fundamental, that new applications choose to build on top of them. Common examples include Uniswap and AAVE, wherein applications which have built on them now require specific data from these solutions in order to effectively serve their own end users.

In such instances, raw blockchain data may only provide part of the solution to the data requirements of an application.

Having Web3 Data Lakes provides custom-tailored, structured data for Web3 applications. Common requirements of DeFi applications such as TVL, liquidity pool histories, trade histories, and more, can now be queried, calculated, and retrieved immediately – we may have the possibilities enabled by Web3 Data Lakes. Beyond the world of fungible tokens, Data Lakes to support NFTs are also an increasingly interesting use case. From obtaining access to NFT attributes to the number of NFTs a particular address may be holding, NFT projects which require to provide relevant NFT related data to its consumers will be able to leverage heavily on Data Lakes  – which will provide information near instantaneously.

Third Feature, Building a Data Hub

The capabilities offered by APIs and Web3 Data Lakes wouldn’t be very useful without the capacity to store the indexed and structured data. Web3 Data Hubs could be the home for all of the custom-tailored data of the dApps and protocols which are supported by its Web3 Data Lakes.

With data storage needs scaling upwards in the Terabyte range, Web3 Data Hubs contain and maintain all of the data which is produced by the protocol of interest  –  such as events, blocks, function calls, and more. These hubs can also contain all aggregated data, such as volume or TVL.

Fourth Feature, Real-Time Monitoring Capabilities

Having capabilities to provide real-time notifications from transactions impacting the blockchain is a must have feature. In the beginning, users could set up monitoring events tied to their wallets, or other blockchain addresses of interest. Events such as deposits or withdrawals could trigger real-time notifications for its users  – visualize the merit of  building solutions delivering messages of activity via Slack, Telegram, or Webhooks. The crypto community can get massive value in such capabilities, especially when it served to notify users of potential instances of fraud or theft.

Web3 projects can leverage real-time monitoring capabilities to trigger notifications which may be of interest to them. Whether an application needs to be informed when a smart contract gets called, when liquidity pool balances reach a certain threshold, when deposits or withdrawals are made, or even when events related to an NFT are occurring, Web3 applications can be informed instantly from the world of blockchain data that such solutions thoroughly index, organize, and made easily and efficiently accessible for its customers.

Fifth Feature, End-to-End Customization  Data Solutions Tailored Individually For Each Project

It is critical for on-chain data providers to enable customization that their solutions offer for each of its customers. Understanding that each Web3 application and project is different, and that data needs as well as the maintenance and support of those needs is required on a daily basis.

In an area as critical as providing real-time, accurate data, blockchain data solution providers who understands that Web3 projects require a certain level of support and expertise in order to ensure that their solutions can confidently provide the most accurate and up to date information will be the winners.

To Sum Up, Blockchain Data Will Be Instrumental to Web3 Adoption

Data may be the new oil, but without the proper rigs and equipment to identify, extract, and distribute it  –  the existence of the data, as with oil, is of little use. A suite of tools with the above 5 features will be foundational for Web3 dApps and protocols to power their backends to properly serve the inherent needs and wants of its customers. The number of blockchains growing in relevance is increasing with each passing year  –  as more and more developers and projects enter the Web3 ecosystem. 2021’s Electric Capital Report has only confirmed such beliefs -  seeing a rise across the “big” protocols in terms of developers and commits.

The number of blockchains which are becoming players in the Web3 world are also numbering in the dozens, which of course, brings significant amounts of additional data to be considered for those Web3 solutions which wish to associate themselves with those protocols.

As adoption into Web3 grows, one certainty is this: to achieve success in the decentralized world, data, and the means to obtain it cost-effectively, quickly, and accurately, will be a basic building block that projects will need to get right.

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