Monad: A potential new disruptor for Layer 1

In the development of blockchain technology, Ethereum has laid a solid foundation for the entire industry as a pioneer of smart contract platforms. However, with the rapid growth of application demands, existing infrastructures like Ethereum face severe challenges in scalability and transaction speed, becoming a bottleneck for industry development. To address these issues, Monad has emerged, promising to redefine blockchain performance standards with a throughput of up to 10,000 transactions per second. Earlier this year, Monad Labs completed a $225 million financing round, highlighting the market's high recognition of its technological potential. This funding will be used to further develop and optimize Monad's Layer 1 blockchain, which is expected to bring revolutionary changes to the industry.

The Birth Background of Monad

Ethereum holds a leading position in the blockchain space, with the highest Total Value Locked (TVL) and the largest developer community. However, with the surge in the number of projects, the Ethereum Virtual Machine (EVM) faces serious scalability issues. The single-threaded nature of the EVM limits transaction processing speed and prolongs execution time.

To solve this problem, the industry has proposed various solutions, including sharding technology and Layer 2 scaling strategies. Sharding technology aims to divide the blockchain network into multiple smaller shards to improve storage capacity and performance, but its implementation requires long-term research. Layer 2 strategies build additional frameworks on top of the main chain to handle transactions and smart contract execution, but they face centralization challenges.

In the face of these challenges, Monad founder Keone Hon has offered unique insights. He believes that the current scaling path of Ethereum has issues, and the Layer1+Layer2 hierarchical strategy may undermine on-chain composability. Therefore, building a more efficient underlying network is the best solution, which is the origin of Monad.

Monad is a high-performance L1 that is fully compatible with Ethereum, focusing on applying "parallel processing" technology at the Layer 1 level to enhance EVM execution efficiency. It aims to achieve transaction parallel processing directly on the main chain without relying on Layer 2 solutions. This approach maximizes the processing power and scalability of the EVM while ensuring security and decentralization. Currently, Monad has achieved the capability to process 10,000 transactions per second, with the potential to increase this number tenfold in the future.

Since its establishment in 2022, Monad has completed two rounds of financing, raising over $240 million in total, with more than 50 investment institutions involved. Investors generally have high hopes for Monad's prospects, believing it will drive the adoption of cryptocurrencies in the next 2-3 years.

Technical Advantages of Monad

The uniqueness of Monad lies in its approach from the underlying foundational network, enhancing network efficiency through parallel execution strategies rather than adopting layer 2 solutions. This practice maintains the network's security and decentralization characteristics, which are crucial for the long-term development of Monad.

In terms of performance, Monad directly competes with well-known layer 1 public chains such as Aptos, Sui, and Solana, showing significant advantages in throughput and finality time. More importantly, Monad achieves full compatibility with EVM while ensuring high performance, allowing Ethereum developers to easily migrate their applications to the Monad platform.

Monad combines three core advantages: decentralization, high scalability, and Ethereum compatibility, and is expected to become an important player in the future blockchain space.

The working mechanism of Monad

Monad mainly achieves efficient operation by optimizing four core areas: MonadBFT, delayed execution, parallel execution, and MonadDB.

MonadBFT is the core of the Monad consensus algorithm, which draws on and improves classic consensus algorithms such as Tendermint and HotStuff. It adopts a two-round leader-centered fan-out and fan-in approach, ensuring fast confirmation and finality of the blockchain while reducing communication overhead and latency.

The delayed execution mechanism separates consensus from execution, allowing nodes to quickly reach agreement on the order of transactions without waiting for the execution of transactions to complete. This approach improves resource utilization efficiency, enabling Monad to handle more transactions.

Parallel execution achieves concurrency through optimistic execution, where the Monad optimistically processes transactions to determine dependencies. This approach uncovers the dependencies between transactions, enabling efficient re-execution while handling multiple transactions, further increasing throughput.

MonadDB is a database independently developed by Monad, optimized specifically for supporting parallel execution and asynchronous I/O operations. It is natively compatible with the Patricia Trie data structure, avoiding the limitations of traditional key-value storage databases when supporting parallel execution.

Despite being established for only two years, Monad's technical strength and potential have been widely recognized. The Devnet internal test network has reached 10,000 TPS, which is a very high starting point. If it can achieve the goal of scaling to 100,000 TPS in the coming years, Monad will become an important disruptor in the blockchain industry.

Monad Ecological Hot Projects

Although the Monad mainnet has not officially launched yet, its strong technical capabilities and market prospects have attracted numerous developers. Currently, over 80 projects have been deployed on Monad, and it is expected that when the mainnet launches, 150 projects will choose to build on this platform. Here are a few Monad ecosystem projects worth paying attention to:

aPriori

aPriori is a liquidity staking platform within the Monad ecosystem, focusing on miner extractable value (MEV). It provides users with efficient staking solutions while maintaining asset liquidity.

Financing Situation: Completed a $8 million seed round in 2024, led by Pantera Capital, with participation from Binance Labs.

Core Functionality:

• Liquidity Staking: Users can stake assets to obtain liquidity tokens, which can be used in other DeFi protocols.
• MEV Optimization: Optimize transaction ordering through smart contracts to maximize user profits.
• High Performance Support: Leverage the high throughput of the Monad network to support fast processing of 10,000 transactions per second.

Kintsu

Kintsu is a liquidity staking protocol in the Monad ecosystem, providing users with a flexible staking experience.

Funding Status: Completed a $4 million seed round financing in July 2024, led by Castle Island Ventures.

Core Functions:

• Liquid Staking: Users receive liquidity tokens after staking, which can be used in other DeFi applications.
• Decentralized Validator Mechanism: Supports permissionless entry for validators, enhancing network decentralization and security.
• Composability: Liquid Staking Tokens (LST) can be easily integrated with other DeFi applications.

Kuru

Kuru is a decentralized order book exchange (CLOB) in the Monad ecosystem, providing users with a trading platform for on-chain spot assets.

Funding Situation: Completed a $2 million seed round financing in July 2024, led by Electric Capital.

Core Features:

• Decentralized trading: Conduct transactions in a decentralized environment, ensuring transparency and security.
• Diversified financial products: Offering a variety of financial products such as lending, liquidity mining, and insurance.

Monad Pad

Monad Pad is a token and NFT launch platform based on Monad, supporting project parties or developers in early fundraising.

Financing Situation: Completed a $945,000 seed round financing in July 2024, with participating institutions including CMS and Sneaky Ventures.

Core Functionality:

• Token and NFT issuance: Support projects in early fundraising for tokens and NFTs.
• Original NFT series: Issue the "Purple Frens" NFT series, where holders can receive a share of the platform's revenue.