Determinism vs Optimism

Determinism and Optimism as two competing schools of thought on protocol design. Read Inspiration to understand why MethLab chose Determinism.

Determinism

Determinism, in protocol design, is characterized by predictable systems with defined entropy. It is characterized by an inherent resistance to tampering or manipulation. Determinism can be found in specific types of smart contracts and consensus algorithms, such as those underpinning the Bitcoin, Ethereum, and in AMMs curves like the x * y = k curve.

Existing DeFi infrastructure rests upon governance, multi-sigs, or complex architectures. MethLab embraces an deterministic viewpoint that these elements will operate with malicious interferences. For example, when upgrading, deterministic smart contracts and consensus algorithms require the replacement of the underlying programs which run them instead of patches/ version upgrades. In deterministic systems, dependencies cease to exist all together and the protocol exists to only enable the base primitive.

Advantages

Determinism fosters trust and transparency by ensuring that the rules governing a protocol cannot be altered without the migration of the underlying contracts. This transparency is evident in Bitcoin and AMMs.

Deterministically built base primitives reduce the complexity of the underlying infrastructure. These protocols have reduced attack vectors. The entire v1 exists along with the v2. This enables thoroughly audited code to be deployed that was built and tested independently instead of being co-mingled with existing infrastructure.

Determinism in Protocols

Challenges

Determinism comes with its own set of challenges and limitations. Updating or fixing bugs in an immutable system can be more difficult, if not impossible. The migration of contracts are required in the event of an upgrade, which can be a complex and time-consuming process. Not to mention, users are required to migrate their funds to the new contract.

Optimism

Optimism is based on trust, centralisation and hope that certain actors will act in the best interest of the protocol. Upgradable contracts, can be modified to adapt to changing circumstances.

Optimism in Protocols

Advantages

Optimism has served industry till now. It might also continue to serve users in key areas because:

• Flexibility and Adaptability: Optimistic protocols are able to adapt to market conditions through updatable parameters and levers. Users place trust in the admins or the governance to steer the protocol towards normal functioning.

• Ease of upgrading: In case a vulnerability is found, optimistic protocols can pause and upgrade the protocols or take other actions to ensure minimal fund loss.

Challenges

• Overheads: Optimistic Protocols need continuous servicing. From centralised actors or the governance to ensure normal function. This makes these protocols costlier and harder to maintain and operate.

• Security: Optimistic Protocols place trust in their dependencies and external parties. Protocols try to solve this using economic incentives and guardrails. This makes them prone to economic attack vectors.