What Is Monad?

Monad is a high-performance blockchain platform designed as an Ethereum Virtual Machine (EVM)-compatible Layer 1 (L1) scaling solution. The smart contract platform offers full compatibility with the EVM, all while focusing on scalability and decentralization.

Key Takeaways

• Monad is a high-performance blockchain platform designed as an EVM-compatible Layer 1 scaling solution.

• Monad offers full compatibility with the EVM, allowing users and developers to access existing apps within the Ethereum ecosystem.

• Monad claims to have a throughput of 10,000 transactions per second (tps).

The technical limitations of Ethereum, the pioneer smart contract platform, and other existing infrastructures like Solana have been some of the most critical challenges in the blockchain industry. Hence, the need for scalable and decentralized blockchain solutions has become extremely urgent over the last few years. To address these issues, Monad promises enhanced efficiency with a high throughput of 10,000 transactions per second.

The Team Behind Monad

The Monad blockchain was designed by Monad Labs, a diverse group of professionals brought together by co-founders Keone Hon (CEO), James Hunsaker (CTO), and Eunice Giarta (COO). The team is experienced in low-latency programming and distributed systems design and claims to be building towards a more performant future in blockchain technology.

Scaling the EVM

The Ethereum Virtual Machine (EVM) is a component of the Ethereum network that is responsible for the execution of smart contracts. The EVM has been vital in the rise of decentralized applications (dApps) and decentralized finance (DeFi). However, the growing popularity of DeFi and the continuous expansion of dApps has resulted in significant challenges for the EVM – especially in terms of scalability. 

One of the biggest challenges around scaling the EVM is that it is single-threaded, which means all transactions are executed sequentially. This limits the number of transactions that can be processed within a single time period, and also increases the time of execution.

At time of writing, there are two proposed solutions to scaling the EVM: sharding and parallel processing.

Sharding

Sharding involves splitting a larger blockchain network across multiple shards, increasing storage capacity and enhancing performance. Each shard holds a set of smart contracts and account balances, where nodes are assigned to individual shards to verify transactions and operations. Instead of every node being responsible for every transaction across the network, nodes are now assigned to specific shards, only coming together to agree on a universal Layer 1 state.

Parallel Processing

Parallel processing is also known as parallelization, or parallel transaction execution. By structuring the network to process transactions simultaneously instead of processing transactions sequentially, more transactions can be validated at the same time. Monad uses parallel processing, offering developers a high throughput Layer 1 that is EVM-compatible, making it easy for them to port their dApps over.

How Does Monad Work?

Monad is able to improve on Ethereum Virtual Machine’s limitations while retaining its desired qualities, thanks to its combination of various innovative technological mechanisms. For instance, the blockchain offers full bytecode compatibility for the EVM, which enables the migration of existing Ethereum applications to Monad without code changes. Monad is also equipped with full Ethereum RPC (remote procedure call) compatibility, facilitating the use of infrastructures, such as self-custodial wallets and blockchain explorers.

Specifically, Monad provides optimizations in four primary areas, and they include;

Parallel Execution

Most existing EVM-compatible blockchains, including Ethereum, Avalanche, and Binance Smart Chain (BSC), process transactions in a sequential order. Monad, on the other hand, achieves scalability by executing transactions in parallel. 

However, Monad performs parallel transaction execution while maintaining compatibility with Ethereum by structuring its blocks similarly, i.e. with a linearly ordered set of transactions. This ensures that despite the different execution mechanics, the outcomes of Monad’s transaction execution remain identical to those in Ethereum. 

Typically, a blockchain must first determine and confirm which transactions can be processed independently before executing them in parallel. However, Monad employs optimistic execution, where the blockchain assumes that all transactions can be executed independently and tries to process them simultaneously.

Nonetheless, an incorrect execution could occur if two transactions, which are dependent on each other, are processed simultaneously. For instance, one of the transactions might require the other (suitably called prerequisite) transaction’s output as its own input. Monad resolves this by re-executing the incorrectly executed transaction with the “updated” data from its prerequisite transaction. 

Finally, Monad uses a static code analyzer to predict transactions that depend on each other. This would help to save time that would normally have been used in trying to execute transactions that have prerequisite transactions. 

Deferred Execution

Another highlight mechanism of the Monad blockchain is that transaction execution is separated from the consensus process. This implies that transactions don’t have to be processed before the blockchain nodes reach a consensus on the ordering of transactions in a block — as opposed to the Ethereum network.

In Ethereum, the execution mechanism is designed such that all nodes have to process transactions before reaching consensus — all within a limited timeframe. This also requires setting conservative limits on the computational workload in order to maintain network reliability and performance.

Monad allows the nodes to determine and agree on a block’s state before the transactions within the block are executed. This way, transaction execution does not hold up the consensus process. Ultimately, this “deferred execution” mechanism helps enhance the efficiency and scalability of the network, enabling it to process more transactions within a shorter period.

MonadBFT

MonadBFT, an optimized derivative of the HotStuff algorithm, is the high-performance consensus mechanism of the Monad blockchain. It is designed to streamline communication between validating nodes and block leaders, reducing the consensus rounds and improving efficiency.

To reach consensus on a new block with MonadBFT (Byzantine Fault Tolerance), the block leader sends proof to the validating nodes that the previous block is valid. The nodes then directly send a signed “yes” message to the next leader, approving the block and signaling the readiness to move forward.

In a scenario where the block leader times out and the nodes fail to reach consensus, MonadBFT will trigger its fallback mechanism. It is a secondary communication process that consumes more time and requires mutual communication between all validators. However, this fallback mechanism ensures that the Monad blockchain still reaches consensus irrespective of delays or failures.

MonadDb

MonadDb is a custom on-chain database for storing the state of the Monad blockchain. Most Ethereum clients use data structures different from Ethereum’s Merkle Patricia Trie data structure, resulting in a suboptimal storage solution as one data structure will need to be embedded into the other data structure.

Given that Monad executes transactions in parallel, multiple transactions need to be able to read and write the database simultaneously. To address this, MonadDb employs a Patricia Trie data structure both on-disk and in-memory, which offers proper asynchronous i/o support to the database. 

This allows the blockchain to execute multiple transactions in parallel and perform work asynchronously.

Benefits of Monad

As already mentioned, Monad seeks to fill the gaps left behind by other EVM-compatible blockchains. The following are some of the advantages offered by the Monad blockchain.

EVM Compatibility

One of the highlight features of Monad is its full compatibility with the Ethereum Virtual Machine. This capability enables developers to migrate their existing applications on Ethereum to Monad without any code modifications while avoiding further investment in resources and development time.

Furthermore, full EVM compatibility facilitates the integration of a wide array of Ethereum-based tools, libraries, and infrastructures to the Monad blockchain. This interoperability offers a scalable solution to existing projects seeking to improve their efficiency while also being able to leverage Ethereum’s vast resources.

Lower Fees and Fast Transactions

Monad is designed to tackle the scalability challenges associated with most EVM-compatible blockchains. Monad provides a high throughput by employing a combination of different mechanisms, such as parallel execution and deferred execution, which enables more transactions to be handled in less time.

This reduction in network congestion leads to faster transaction times, thereby enhancing the overall efficiency of the blockchain. The increased efficiency also contributes to the lower transaction fees observed on Monad, making it a more economical option compared to Ethereum.

Potential Risks of Monad

While the Monad blockchain has numerous advantages, it also bears some potential drawbacks.

Technical Complexity

Indeed, Monad offers outstanding benefits in terms of scalability and overall performance. However, the advanced nature of its mechanics introduces a level of technical complexity that can be potentially challenging for both end-users and developers.

Due to the technical complexity, the cost of developing and maintaining applications and infrastructures on Monad may be unfavorable, especially for small-scale project developers and teams. Also, the intricacies behind the blockchain’s mechanisms, like parallel execution, may introduce unforeseen vulnerabilities and risks.

Centralization Concerns

Another potential challenge associated with the Monad blockchain is the issue of centralization. Specifically, venture capital (VC) involvement in the project adds an interesting perspective to this centralization conversation. Recently, Monad Labs successfully completed a $225 million funding round led by Paradigm, with contributions from other firms like Electric Capital, Coinbase Ventures, GSR Ventures, and so on.

For context, investors often receive a significant portion of a blockchain’s token supply as part of incentives for their investment. For instance, the Celestia project reserved more than 35% of its native token (TIA) supply for its investors. With only a few entities controlling a substantial amount of tokens, there can be an imbalance in the governance and decision-making processes within the network.

This disproportionate token distribution can lead to centralization of power, where large investors have the power to influence over network upgrades, policy changes, and other vital decisions. 

Monad vs. Other EVM-Compatible Blockchains

There are multiple other EVM-compatible blockchain in the space, including BSC, Polygon, and Avalanche. Let’s a take a look at Monad, and how it lines up against incumbents within the space. 

Conclusion

In this article, we explored Monad as an EVM-compatible Layer 1 designed for scalability, discussing how the blockchain network addresses the critical challenges faced by Ethereum. This piece highlights the various mechanisms Monad employs to process blockchain transactions efficiently while maintaining EVM compatibility and decentralization. Moreover, we discussed the benefits of Monad over other EVM-compatible chains and its potential downsides.

Looking forward, Monad shows significant potential to positively change the trajectory of Blockchain technology. With a scalable and efficient platform, the blockchain can become home to a wide range of developers and projects looking to overcome the limitations of existing blockchain networks. At the same time, the continuous development and improvement of Monad indicates the capacity of this project to encourage innovation in the decentralized finance industry.