Bitcoin’s core monolithic infrastructure is foundational in cementing the network’s security as a peer-to-peer cryptocurrency network, but the same impenetrable infrastructure has also hampered efforts to improve bitcoin’s scalability.
Since all of the operations on a monolithic blockchain — including validation, broadcasting, and data storage — take place on one network, there’s no fast and simple way to implement software upgrades, integrate with other networks, and respond to user demands.
Because Lorenzo’ Protocol’s primary focus is to help bitcoin blossom in the decentralized finance (DeFi) ecosystem, scalability has always been a key concern and one of the primary reasons Lorenzo uses a modular software architecture. Unlike monolithic blockchains, a modular infrastructure splits different functions into distinct “modules,” making it far easier to implement changes, integrate with DeFi protocols, and adapt to challenges promptly.
Lorenzo’s team believes only a modular architecture offers the ultimate solution to bitcoin’s scalability challenges because all modules handle their distinct tasks while still communicating and relying on the bitcoin network’s shared security.
Key Reasons For Modularity
Below are the four elements that drive Lorenzo’s commitment to a modular blockchain infrastructure.
Superior Adaptability
Lorenzo aims to scale bitcoin adoption in DeFi by offering users seamless staking and liquid staking services. The only way to ensure scalability keeps pace with the fast-moving cryptocurrency market is if the underlying infrastructure is adaptable, which is possible with the help of a modular architecture.
This adaptability also makes it easier to respond to market demands and ensure bitcoin hodlers always have the best possible staking and liquid staking experience, further boosting adoption and improving bitcoin’s liquidity throughout DeFi.
Flexibility
A big part of a modular blockchain’s increased scalability is its heightened flexibility compared to the monolithic model. With a modular architecture, Lorenzo Protocol is better equipped to constantly change and enhance services, giving users a wide range of options to use their bitcoin for liquid staking activities.
Additionally, because Lorenzo Protocol complies with the Ethereum Virtual Machine (EVM) standards, developers most familiar with Ethereum have the tools to build compatible DeFi tokens and decentralized applications (dApps), giving users even greater options for using their bitcoin in DeFi. Modularity helps seamlessly transfer innovative liquid staking derivatives (LSDs) throughout the Lorenzo App ecosystem, opening new avenues for bitcoin liquidity to flow through the cryptocurrency market.
Efficiency
Because modular blockchains assign different tasks to different blockchain segments, each module in this infrastructure has a lower average computational burden. Beyond helping with flexibility and scalability, this “spreading out” of software requirements means congestion won’t pool in one place, making it less likely for users to experience slow throughput.
The modular model’s increased efficiency also helps keep network fees low, further boosting bitcoin’s value proposition as a liquid staking asset. The quicker and cheaper the liquid staking experience is, the more likely users will feel confident using their bitcoin in DeFi.
Streamlined Governance Procedures
Bitcoin has a history of major hard forks. Although not all these network splits were contentious, they sometimes led to significant disputes in the core developer community and confusion over the identity of bitcoin with market participants. Although disagreements are common in every cryptocurrency project, it’s ideal to resolve these differing opinions democratically rather than splintering off into separate projects.
While a modular blockchain architecture can’t prevent disagreements, it provides a more amenable platform for resolving issues without severe network disruptions. It’s far easier to tweak the coding on one module than change the entire infrastructure on a monolithic blockchain.
Lorenzo Protocol: Maximizing Modularity For Bitcoin’s Bright Future
Considering all the positives modular blockchains offer, it’s the obvious choice to fulfill Lorenzo Protocol’s mission of simplifying bitcoin liquid liquid staking for DeFi participants. The adaptability of modular blockchains helps users stake, send, and stake their bitcoin throughout various Layer 2s, opening up more possibilities for bitcoin as a worldwide DeFi asset.
With modules as the basis for the Lorenzo Protocol, bitcoin can achieve its maximum potential in the growing DeFi ecosystem.
