Disclaimer: This is not financial advice. I am just a curious soul trying to simplify crypto. Please do your own research.
In this post, I will dive deep into what Biconomy is and why is it needed?
Web 3.0 has gained a lot of adoption. Dapps, NFTs, and a lot of other use cases have cropped up.
While this is good, there have been a few challenges as well. Because of the increased traffic, the Ethereum network is congested and there is an explosion of gas fees.
Most of the dapps are based on Ethereum and many are moving beyond Ethereum for other scaling solutions. With that a widespread multi chain adoption may soon become a reality.
However, there are lots of complexities end users have to handle.
When you are using web 2.0 apps, do you spend hours learning how to use them? or do you have to pay fees for every action you take on the app?
To make web 3.0 more accessible these issues need to be solved.
Let’s look at a protocol trying to solve these challenges.
What is Biconomy?
It is a protocol for the makers to solve problems holding back the adoption of crypto. It simplifies the transactions in the dapps to ensure decentralization is truly accessible by everyone.
Biconomy is backed by Binance and Coinbase ventures among other top investors.
It helps developers create decentralized apps without worrying about integrations. They can build a cross-chain transaction infrastructure for decentralized apps without any hassle.
The ultimate aim of Biconomy is to accelerate web3.0 adoption by making all its components more composable, interoperable & usable.
Let’s say you have an e-commerce website. To facilitate the payments you may have built a payment gateway. but not every eCommerce site has its payment gateway. They need the help of third-party integrations like Stripe and Razorpay.
Now, dapps also have a similar type of requirement. Imagine a dapp needing a payment gateway. Not everyone may build one from scratch due to a lack of time or resources.
Biconomy provides plug-and-play SDKs and APIs which can be integrated into the web3.0 apps.
It aims to make web3.0 products as intuitive and easy to use as legacy web2.0 products.
And to achieve it they have a solution- the next-gen multi-chain relayer protocol. Before understanding what this next-gen multi-chain relayer protocol is, Let us look at the current problems with onboarding new users to web3.0.
Challenges of web3.0 apps
- The steep learning curve to use the applications. Before being able to use a dapp, users have to perform multiple steps. Installing wallet, purchasing ETH, understanding gas, estimating adequate gas, approving transactions, adding other tokens, and many more.
- Need to pay gas fees for using the app. You are a creator and want to sell your creation as NFT. But to be able to sell it you have to mint it which needs gas fees. High gas fees. A small transaction may have higher gas fees than the amount being transacted. Also if the transaction fails the gas you spent is lost.
- Transactions in their native token. To do any transaction in the blockchain you need to download a wallet and get the native token. For example, if you wish to perform a transaction in the Ethereum network you can only use the ETH token. If you have only bitcoin then you cannot use it for the transaction. you need to convert from Bitcoin to ethereum and then perform the transaction which is again a lengthy process. While bridges are there to solve it, they are slow and expensive. Imagine you have to wait 30 minutes to move to the next step while accessing a dapp. So, along with poor UX, the web3 economy is also fragmented. Users may either benefit from Ethereum’s network & composability or the cheaper & faster transactions of layer2 scaling solutions. But getting the best of both is difficult.
For developers to solve these challenges they have to build internal relayer infrastructure from scratch and would need to hold a treasury. Biconomy has built solutions to tackle these issues.
It enables the developers to make the apps seamless for new users. Few of the ways are as follows
- Users do not have to pay gas while Onboarding
- Option to pay gas in their token of choice
- Avoiding complexities such as changing network in the wallets
- Fast confirmed transactions
Biconomy also takes care of gas optimization and transaction management. It deals with the gas price fluctuations to reduce gas costs by as much as 40%.
How do they do it?
They solve it using a concept called Meta transactions and enable it at scale using Multi-chain Relayer Protocol
It allows users to do a transaction on the blockchain without needing any balance in the wallet. Any third party can pay the transaction fees for the user.
It allows simplifying the processes for users with the ultimate aim of improving the UX and increasing adoption.
The user isn’t signing a transaction. They are giving a smart contract permission to sign a transaction for them.
Biconomy enables this at scale by providing a non-custodial and gas-efficient relayer infrastructure network.
Users don’t have to go through the complicated process of acquiring any token, and they don’t have to be bothered with the gas fees. They just have to sign a message which has the details of their transaction. The relayer takes care of everything and submits the transaction on-chain. With the help of this solution, developers can ensure a smoother UX for their end-users.
meta transactions are fully non-custodial. end-users have full ownership of their private keys. The wallet is independent of the meta transaction.
Meta transactions can eliminate pain points for the end-user involved in crypto.
- Depositing stablecoins into a lending protocol
- Swapping tokens and more!
How is the Biconomy decentralized relayer infrastructure managed?
Two distinct roles manage the infrastructure –
Executors run the relayer nodes and are responsible for executing the meta transactions on the respective blockchain.
Executors payout per transaction– Gas fee + Premium fee + Bico rewards
Whereas the validators help secure the network by verifying the executor’s transactions. Validators verify the transactions relayed by the executor nodes.
Validators payout per block – Bico block rewards
The meta transactions are enabled on multiple chains. So dapps in these networks can enable the benefits for their users. Users can easily and instantly move funds across chains.
This enables the flow of value & messages across different chains in an easy, affordable, secure, and decentralized way.
There are currently 2 major offerings of Biconomy
True to the name, it provides a gasless experience on the dapps.
Gasless != Free
It allows the dapp developers to pay the gas fees for their user’s transactions.
Provides a seamless experience for the end-user.
Imagine youtube asking you to pay gas to play a video. In Web2.0 these costs are absorbed as user acquisition cost or infrastructure cost.
With gasless, the user now doesn’t have to spend hours to understand and set up the wallets. This makes it easy to onboard users even those who are not tech-savvy.
Why bother users with the complex process if you can handle them behind the scenes with Biconomy.
It is a cross-chain bridge that enables instant cross-chain transactions. The hyphen bridge currently connects various chains much faster and cheaper than the native bridges.
Takes into account the fragmented ecosystem problem we discussed earlier.
Think of it as a superhighway network to seamlessly connect all the L2 and the upcoming base layer communities.
Hyphen ensures the architecture scales seamlessly across chains as well.
So the benefits of multi chains are availed by the users. The tradeoff between network & composability of Ethereum and the cheaper & faster transactions of Layer 2s is no longer needed.
BICO is the Native and governance token. It plays a key role in decentralizing the network. Holders propose and vote on the decisions affecting the network. Any BICO holders can submit proposals
Acts as the Network fees. incentivizes the stakeholders to secure and maintain the network
Executors and validators need BICO to maintain the Biconomy multi-chain relayer infrastructure and get rewarded in BICO for their work. They need to stake BICO to contribute.
In case of any bad behavior the network slashes a portion of the staked BICO tokens
This ensures that the network functions successfully in a decentralized manner.
For those who want to stake Bico but they don’t want to operate as a node. they can delegate their stake to node operators. And get their share of the reward.
There are 1 billion BICO tokens. The allocation of the token is as follows.
Token Release Schedule
The release schedule is designed so that the vision of the investors & team is aligned for the long term.
Token Supply on key dates
Biconomy is on a mission to make web3 accessible to everyone. After mainstream adoption, a significant portion of the users who are not exposed yet to crypto would not care about the chain and the mechanics involved. Biconomy helps developers hide the mechanics from the end users and make it easy to use.
Biconomy is now working to further decentralize & scale the protocol with a growing network of node operators, delegators & liquidity providers. Increase support for all major chains & tokens on Hyphen & Gasless and actively grow the Biconomy ecosystem and partner integrations.
With Biconomy growing rapidly, hope the users get to use web3.0 apps which are as easy to use as the web2.0 apps.
Interesting times ahead.