NFTs

Decentralizing Ethereum with Heroglyphs

Understanding Heroglyphs, the new protocol sticking rewards in Ethereum Graffiti
David C David C May 9, 20243 min read
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Decentralizing Ethereum with Heroglyphs

Whether we want to admit it or not, centralization remains a significant concern and issue for our industry, facing most major blockchains, even Ethereum.

To combat this, protocols like Rocket Pool and Etherfi have worked to lower the bar for people to join the network as validators. A new protocol, Heroglyphs, approaches this problem differently, turning to speculation to make the solo staker’s role more enticing. 

Developed by OGs like 0xMaki, the anon co-founder of Sushiswap, this new system seeks to harness the often overlooked potential of Ethereum’s Graffiti—a small segment of arbitrary data in block headers—to empower a more distributed and robust network of complete validators by providing them the ability to earn, deploy, and lease (yes, lease) tokens. 

via Heroglyphs

Ethereum’s Centralization Issue

While Ethereum's shift to Proof of Stake (PoS) brought many improvements, like energy efficiency, it also ushered in a new era of concerns around centralization. 

Namely, the consolidation of validation power in the hands of a few large operators poses significant risks, including greater vulnerability to regulatory pressures (as we’ve seen with block builders and relays) and potential network failures. 

via Ethereum Censorship Dashboard

This centralization dilutes the foundational decentralized ethos of blockchains, and needs to be guarded against. Here, then, cue in Heroglyphs.

How Heroglyphs Attempts to Solve This

Heroglyphs aims to tackle validator centralization through a feature called Graffiti, which uses a small piece of arbitrary data that validators can include in the blocks they propose. 

via Heroglyphs Whitepaper

Through Graffiti, Heroglyphs introduces three key operations: encoding, translating, and leasing, each designed to maximize the potential of this small piece of data within its transactions. Let’s break these pillars down:

  1. Encoding involves embedding critical operational data into the Ethereum block's Graffiti like, encoding commands for the creation, emission, transfer, and transformation of assets such as NFTs, memecoins, and beyond. By inserting this data into the Graffiti, the block space becomes a secure and immutable medium for developing tokens and storing detailed transactional instructions.
  2. Translating follows the encoding, acting as the operational executor within Ethereum. Whether minting new NFTs or processing transactions for memecoins, the translator system ensures that these operations adhere to that token’s outlined parameters encoded in the Graffiti.
  3. Leasing introduces a strategic and economic layer to the use of Graffiti. In this model, validators or miners assign and pay a regular tax on a value to each Heroglyphs "ticker," i.e. token. This value determines their operational lease and sets the stage for competition. For example, other validators can outbid each other for leases if they see a ticker as undervalued and want it for themselves. Most revenue from leasing and actions such as minting or transferring tickers in the Heroglyphs network is shared among all complete validators. 
via Heroglyphs

All in all, this new platform is a novel and degen-centric approach to decentralizing Ethereum’s network. 

The grand vision? Use Graffiti to foster a new meta-system where solo stakers are actively incentivized to participate thanks to making the validator experience more lucrative, engaging, and fun. Now validators have the tools to create and manage tokens all their own, granting the role a new privilege. 

If the Heroglyphs mission pans out, then Ethereum will become more robust, and we’ll have a fresh case study in how speculation can be beneficial and provide real value in crypto. In the meantime, this is a protocol to watch around the memecoin and NFT frontier!

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David C

Written by David C

105 Articles View all      

David is a writer/analyst at Bankless. Prior to joining Bankless, he worked for a series of early-stage crypto startups and on grants from the Ethereum, Solana, and Urbit Foundations. He graduated from Skidmore College in New York. He currently lives in the Midwest and enjoys NFTs, but no longer participates in them.

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