Determinism vs Optimism
Determinism and Optimism as two contrasting schools of thought on protocol design. Read Inspiration to understand why MethLab chose Determinism.
Determinism
Determinism refers to predictable systems with defined entropy. It is characterized by an inherent resistance to tampering or manipulation. In the DeFi landscape, 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. Dependencies cease to exist all together and the protocol serves to enable the base primitive only.
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 aiding stability.
Secondly, deterministic architecture provides inherent security due to its unchangeable and defined design. Deterministically built base primitives reduce the complexity of the underlying infrastructure. These protocols have reduced attack vectors, and have discrete versioning. There are no patches. The entire v1 exists along with the v2. This enables thoroughly audited code to be deployed that was built foundationally instead of 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 also leading to a poor user experience for the users.
Optimism
Optimism is based on trust, centralisation and hope that certain actors will act in the best interest of the protocol. Optimism can be found in DeFi protocols in upgradable contracts, which can be modified to adapt to changing circumstances, in external dependencies like oracle, which provides off-chain data to smart contracts, and in governance, which services the protocol regularly to ensure intended functioning, and so forth.
Optimism in Protocols
Advantages
Optimism in DeFi platforms has served the 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 or patching vulnerabilities: 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 numerous attack vectors and weak security assumptions.