---
title: 2.4 The Product Stack
description: Investigating the infrastructure that creates a sustainable crypto ecosystem
---

# 2.4 The Product Stack Around This Landscape

The crypto ‘Product Stack’ is perhaps the most improved facet for crypto in recent years. In the 2017 - 2018 market, minimal infrastructure existed, such that one could speak of ‘blockchain’ but not much about the infrastructure needed to make a blockchain into a sustainable ecosystem. 

In the past four years, infrastructure for L1 ecosystems has come a long way. Such infrastructure includes: 


* **Oracles:** Ways of bringing off-chain data into smart contracts. 
* **Indexers:** Ways of tracking actions on chain and between smart contracts.
* **Storage Solutions (IPFS, Arweave, Machina):** Ways of storing data on-chain or in a decentralized manner. 
* **Bridges**: Ways of moving assets between chains, either in a permissionless and decentralized manner, or in a centralized / multi-sig design structure. 
* **Custody Providers and On-Ramps:** Ways of having a centralized institution hold assets, market make, and participate in products, on behalf of retail and other institutions. 

To continue the geopolitical analogy the crypto product stack is much like the services and infrastructure layer of a city or country: It is the roads, raw materials, picks and shovels, and resource distribution machinery that helps a city build different buildings and venues around the area. And, following this analogy, there is a certain amount of composability between these products, such that together they provide for more advanced dApps and products that can be built on top of an L1. 

## Oracles

**“Blockchain oracles are entities that connect [blockchains](https://blog.chain.link/what-is-a-blockchain-and-how-can-it-impact-the-world/) to external systems, thereby enabling [smart contracts](https://chain.link/education/smart-contracts) to execute based upon inputs and outputs from the real world.”**


![](@site/static/img/bootcamp/mod-em-2.4.1.png)


### Why Do Oracles Matter? The On-Chain, Off-Chain, Cross-Chain Trichotomy

_“Oracles expand the types of digital agreements that blockchains can support by offering a universal gateway to off-chain resources while still upholding the valuable security properties of blockchains. Major industries benefit from combining oracles and smart contracts including asset prices for finance, weather information for insurance, randomness for gaming, IoT sensors for supply chain, ID verification for government, and much more.” [(Chainlink)](https://chain.link/education/blockchain-oracles)_

**On-Chain Data:** Data held on-chain in storage or refers to a limited amount of data stored in smart contracts or decentralized storage, that is most often utilized for calling specific commands (so called, ‘function calls’). 

**Off-Chain Data:** Refers to the massive world of data that has emerged since the inception of the internet, and is usually stored in a centralized repository or ‘data center’. For crypto in its current state, the bulk of off-chain data coming on-chain is used for price feeds, insurance claims, game algorithms, and limited amounts of physical world data (weather, temperature, etc.) used for prediction markets, insurance claims, and so forth. 

**Cross-Chain Oracles:** Read and Write Information Between Different Blockchains and off-chain data sources. 

Oracles are the necessary communication technology capable of transmitting information, into a blockchain ecosystem, out of a blockchain ecosystem, and between blockchain ecosystems. They are fundamental for a number of use-cases and products that can be built on top of an L1. 

**The Tech Tree for Oracles:** 

The reason why Oracles matter for crypto, is because of the enhanced products that can thrive from off-chain data feeds. Below is a list of the most popular industry clusters that drastically grew thanks to Oracles: 



* **Oracles for Price Feeds and DeFi. Synthetic Products. Derivatives:** Off-chain data for Decentralized Finance applications range from simple price feeds (price oracles) pulling data from centralized exchanges, to data on synthetic products including stocks, bonds, and treasuries. The uses range from concentrated liquidity for AMM’s to lending rates to users. For many builders, having reliable Oracle infrastructure is the most important component of building a successful DeFi ecosystem. 
* **Data for Insurance Claims. **Decentralized insurance for events taking place off-chain is heavily reliant on Oracles for providing timely claim data from the off-chain world. This refers to agriculture, weather, thermostat, shipping logs, and so forth. 
* **Dynamic NFTs:** Dynamic NFTs refer to NFTs that can change appearance, value or distribution, based on external / off-chain events. Oracles ensure that such NFT’s can operate dynamically by correlated the off-chain / external event with the NFT such that when the event happens, the NFT is able to update. 
* **Gaming**: Any mathematical algorithm or ‘Verifiable Randomness’ as it pertains to the generation of rewards in loot boxes, random match customizations (PVP), or synchronizations with real world events, is all dependent on Oracles communicating such off-chain data, on-chain to the game in question.  
* **Enterprise Solutions:** Enterprise blockchain solutions tend to center around the potential of leveraging existing business software and data (ERP system data, supply chain data, insurance claim data and so forth), and uploading that data on-chain to create automated and value laden business networks. Applicable off-chain data fields include: Supply chain, ERP data, IoT Sensor Data, AR/VR data, AI data / activities, biological data, etc. 
* **ReFi:** Regenerative Finance lives at the intersection of environmental data, and financial markets. Oracles bridge the majority of environmental data on-chain either for informing such markets, or creating entirely blockchain native assets (like Carbon Credits). Such areas include: Remote sensing data, carbon methodologies, carbon credits, biodiversity credits, real-time deforestation data, and so forth. 
* **DeSci:** Decentralized Science refers to the infrastructure supporting the financing of scientific research and coordinated research among decentralized communities. Oracle’s in the future will most likely be used to connect off-chain activities including: Academic research, clinical trials, photos, experimental data, and so forth, with releases in value or triggers to funding. 


![](@site/static/img/bootcamp/mod-em-2.4.2.png)


### Centralized and Decentralized Oracles:

The idea of smart-contract based execution is that permissionless code can execute decisions in the place of centralized stakeholders. Oracles can challenge this capability in the following manner: If the data input for the self-executing code, is itself dependent on a centralized third party, then we have only kicked the can down the road. This raises a serious question about the nature of the Oracle itself - and to what extent an Oracle is decentralized, or centralized. 

**Top Solutions To Date:** 

* Chainlink.
* BAND. 
* Seda (formerly Flux). 
* API3 - Decentralized API’s. 

## Indexers

A second essential product is known as an indexer. An indexer is a way of collecting, organizing, storing, and displaying on-chain data. Indexers fetch raw data from nodes and process them in such a manner whereby they can be queried quickly and easily by a user or smart contract. 


![](@site/static/img/bootcamp/mod-em-2.4.3.png)


Indexing is useful for handling on-chain data, specifically as it refers to trading, account activity, and data spread across multiple blocks. Its high level value proposition as part of the product stack is to allow users to benefit from the history of data processed on chain and across blocks, as well as to better organize and operationalize such data. 

**Top Solutions to Date:** 


* The Graph - Decentralized Indexing Service. 
* Certain dApps (Mintbase) or Protocols (NEAR) may build their own indexing service to emphasize certain queries. 

## Storage Solutions

Storage protocols fulfill the need of holding data that cannot be stored on the blockchain, in a decentralized repository. Most often the CID (the cryptographic hash of the storage entry) is stored in the transaction meta-data on-chain, such that it can be used as a reference point to larger data stored off-chain (images, videos, text documents, etc.). With high costs for storage on-chain (either in deposits or capacity), data intensive solutions can benefit from offloading data to a decentralized storage protocol. 

Once more, similar to the question of centralization with Oracles, having centralized storage is a limited value proposition when the goal is to decentralize digital system management. A number of decentralized storage solutions exist - some requiring token payment (File coin) for data storage, and others simply using inscription and multiple servers in different locations. 

**Top Solutions To Date:** 

* IPFS / Filecoin
* Arweave 
* Sia Coin 

## Bridges

Bridges are extremely important infrastructure for moving value and data between blockchains. While this has most commonly been used in reference to the metric of _Total Value Locked _moving between chains, the premise also applies to users. 

Bridging infrastructure allows value to flow from one ecosystem into another, or from one rollup into another. Certain ecosystems even have bridging protocols built into their design such as Cosmos’ IBC network (inter-blockchain communication network).

What matters beyond _what_ a bridge in crypto does, is the design of the bridge: _To what degree is it centralized or controlled by a few people vs. decentralized and operational without the sign off or control of a few people?_

**NEAR’s Rainbow Bridge:** 

Fully decentralized, with value being approved by the different validator nodes on each respective chain. 

**Cosmos Bridge Design: IBC**

Specific chain nodes connected to the bridge provide consensus. 

**Wormhole - Solana:** 

Consensus comes from multi-sig of trusted parties. 

**Polygon Bridge Design:** 

Multi-sig based bridge, whereby less than 10 entities have full control over the ability for assets to move between chains. 

Bridge security is a crucial component in bringing certain assets into an ecosystem - specifically stable coins such as USDC and Tether (USDT). If these assets are centralized, the party can block transfers in or out of an ecosystem in a crisis scenario (as USDC did with USDC on Solana during the FTX meltdown). What is important to takeaway from this is that an ecosystem is only as strong as the value flowing in and out of the ecosystem - much like a country is only as strong as its imports and exports. 

## Custody Providers and On-Ramps

Amidst the failure of Celsius, BlockFi, FTX, and many others, it may be easy to overlook the clear value proposition of custody providers and on-ramps. 

Custody providers like Fireblox and Finoa provide institutions and investors with asset storage - both hot and cold - such that these larger capital players can hold tokens from a specific ecosystem. What is often overlooked is that while an ecosystem may be extremely well developed with solid products, not having infrastructure for incumbent financial players and institutions will seriously limit the capacity for the ecosystem to grow. 

On-Ramps, such as centralized exchanges and payment processors, as well as neo-banks create liquid markets for ecosystem tokens. This is perhaps one of the largest factors in the success of Ethereum: Not the fact that the solutions built were incredible and durable, but rather that they were the first ones that retail and institutions had access to. 

Any ecosystem would do well to prioritize custody and on-ramp infrastructure in a timely manner with the development of the projects inside of their ecosystem. With custodians and on-ramps ecosystems can benefit from more users, larger investors into products, and liquid markets for launched tokens. Without such players projects inside of ecosystems usually struggle to survive. 

## Conclusion

The product stack and infrastructure support for any L1 ecosystem is important for the further development of that ecosystem and the many different types of products inside of it. Ecosystem building as a whole, continues to be analogous to country building, insofar as crucial infrastructure must be in place so as to optimize development and streamline the number of users, investors, and liquid markets, for increasingly complex products. Storage, Indexing, Oracles, Bridges, and Custodians form the core backbone of the emergent product stack in crypto from which many other solutions can come to life. 
