Smart Layer, an infrastructure developed since 2018, focuses on enhancing the scalability of token functionality. It integrates the existing Web3 with real-world applications, bringing the composability of tokens into the real world. This article references official documents and whitepapers. (This article is not investment advice)
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What problem does Smart Layer aim to solve?
Traditional Web2 integrations are limited to three features
Insufficient infrastructure for integrating real-world applications with Web3
Goal: Highly integrated token usage scenarios
Smart Layer solution
Smart Tokens
Smart Layer middleware architecture
Success case
Smart Layer provides Web3 integration solutions for small businesses
Web3 integration is a privilege for large companies
Smart Layer fills the gap in integration needs for small companies
Although it may seem that Web2 has completed most of its integration since its development, that’s not the case. Most websites still rely on three main types of integrations: login, social media sharing, and checkout functions. The most common tools for these three functions are Google ID, Twitter, and Apple Pay.
While integration is known to be fundamental for internet functionality, existing websites or applications usually cannot integrate more than these three functions. This phenomenon is known as the “Limit of 3” problem, and there is currently no good solution for it.
Businesses aim to create better user experiences and improve operational efficiency. However, the complex integrations and data-sharing regulations of Web2 hinder related developments.
Web3, with its composability, should be able to solve the problems of Web2. This is what many Web3 supporters advocate. However, it has not yet become mainstream for various reasons, despite the ICO frenzy in 2017 and the NFT boom in 2021, both of which treated tokens as speculative assets but failed to provide mainstream use cases beyond DeFi and digital collectibles.
The next wave of tokenization will be related to experiences rather than assets. Tokens can be combined with smart contracts to exhibit high composability and applications. The market also expects more integration with real-world applications and problem scenarios. However, the infrastructure to achieve the latter is currently severely lacking.
Although it is known that integration with real-world scenarios is necessary, there is still no perfect method for websites or applications to access on-chain data. The on-chain logic of tokens is also not suitable for extending to external services. These and other reasons have led to the existence of existing tokens merely as proof of assets.
Blockchain currently only provides trust guarantees and does not directly enable tokens to be used on any off-chain websites.
If a high level of integration between Web3 and daily life can be achieved, the following scenarios can be imagined, taking airline tickets as an example.
In the future, airline tickets can be tokens that demonstrate value within their issuance platforms (which current Web3 already enables). However, imagine that this ticket can be integrated across different systems. It can update a user’s travel status on social media, guide them to the boarding gate through Google Maps, or automatically convey flight change information to the hotel or car reservation system the user has booked. These simple applications should have existed long ago, but they have not been realized due to the isolation nature of the internet, with centralized hubs only providing fragmented solutions.
Smart Layer’s specific approach is to provide two main components to bring the scalability of Web3 tokens into the real world:
Introducing a new token standard (Smart Tokens):
The current token functionality is limited by smart contracts. Smart Layer addresses this issue by introducing a new token standard called EIP-5169 through TokenScript, which expands the functionality of tokens beyond representing assets and enables more composable business services.
Web2 to Web3 Middleware (Smart Layer):
For Web2 services that want to integrate token functionality, direct integration with underlying smart contracts is still required, but the lack of relevant infrastructure results in low scalability. Smart Layer serves as middleware that allows Web2 services to embed advanced token functionality into existing products.
The following are detailed explanations:
Smart Tokens are a key component of Smart Layer, designed to facilitate interaction between applications across multiple platforms. Smart Tokens are not just valuable digital assets; they enhance token functionality and support the application of external applications.
For example, a smart token for a car can be used across different applications and merchants, seamlessly connecting car owners with various vehicle services and functionalities. It can authorize short-term keys for customers on car rental websites or be used on insurance websites to report real-time location for immediate roadside assistance. This level of integration and utility sets smart tokens and Smart Layer apart from traditional tokens or NFTs.
Specifically, smart tokens add an additional layer of TokenScript code to the existing token contract, providing operational logic for tokens outside of the contract layer. This allows traditional service providers and applications to read or operate specific token logic.
TokenScript adds an additional layer of code that transforms tokens into programmable objects that can provide services to the outside world. This is something that smart contracts themselves cannot achieve. While smart contracts set rules, they do not provide services based on these rules.
Smart Layer represents the final step in bringing the composability of tokens into the real world.
Regarding the middleware that connects Web2 and Web3, Smart Layer also introduces a centralized network design framework:
Blockchain:
Provides an execution environment for smart contracts and token transaction rules while maintaining snapshots of token operations for verification. Smart Layer can operate on any blockchain that can provide the above functionalities.
Anchoring Nodes:
Responsible for network governance and security. These reputable organizations, selected by the Smart Layer DAO, maintain network stability and security. They verify whether service nodes are performing their tasks properly and issue proofs. Well-performing nodes can receive mining rewards.
Service Nodes:
Responsible for providing TokenAPI for the above-mentioned service integration. In addition to mining rewards, service nodes can earn fees by providing services when websites, applications, and token issuers request data.
These components work together to create a dynamic, secure, and efficient network that forms Smart Layer, providing the data and operational logic required for highly integrated scenarios.
Last year, the Smart Token Labs project introduced a new marketing concept for the Open Loyalty loyalty program at EDCON 2023. The URL sent to participants was a ticket proof, which, in addition to proving ticket ownership, was stored in users’ browsers through Smart Layer. This allowed holders to verify ownership simply through the URL in their browser without the need to open a wallet or sign transactions. This successfully improved the user experience for users and eliminated the need for brands to invest in building their own loyalty program systems.
(In a bid to capture the digital integrated marketing market, Visa launches a Web3 loyalty program solution)
In fact, there is no shortage of cases where Web2 integrates with Web3 in the market. Major brands, including Starbucks, Visa, Nike, and traditional financial institutions such as JPMorgan Chase and HSBC, have already tried to integrate blockchain applications into their products and marketing activities.
(JPMorgan Chase’s digital asset platform, Onyx, to test tokenized wealth management services with Avalanche)
However, most existing cases are limited to specific use scenarios (such as Starbucks’ loyalty program) or specific blockchain networks that have already been integrated over time (JPMorgan Chase’s blockchain integration platform based on the Quorum network). Currently, there is no comprehensive solution that covers all aspects of integration, and this type of demand is crucial for resource-limited small companies.
(Starbucks launches Web3 program, Starbucks Odyssey, to collect NFTs in exchange for exclusive experiences)
Large companies have taken the lead in trying due to their financial advantages and have achieved good results. However, small companies currently lack the opportunity to try. Smart Layer fills the missing layer in connecting Web2 services to Web3, providing a complete and low-cost solution that allows anyone to try.
Smart Layer supports most blockchains and can be used in any use case where code can be written. Its generality and scalability are the advantages that enable Smart Layer to enter the market of small and medium-sized enterprises.
(This article is not investment advice)
Smart Layer
Smart Tokens
Web3
User experience
Loyalty programs
Integration
Further Reading
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