Liquid Layer
Liquid Layer Theory.
Magma is based on Liquid Layer Theory.
Tier 1 networks and composable settlement layers such as Ethereum began each with their own objectives and have began looking similar recently sharing the same technical pain points. While some have solved for high network costs; things like bot manipulation, liquidity fragmentation and MEV remain issues.
Liquid Layer Theory is a fundamental principle leverages Ethereum's economic security through liquid staking pools to produce network level forges which forwards the economic security to new interconnected layers. This enables the network to maintain credible neutrality, achieve enhanced interoperability all while maintaining long-term alignment with Ethereum.
The Forge Vault provides economic safety guarantees which enables fast finalization on the network.
Forges leverage restaked ETH (which represent the lowest opportunity cost without compromising economic security) paired with inflation adjusted application tokens to power it's trust layer. This dual staking model creates a Schelling point incentivized by bonding yields from mainnet.
Benefits of pooled economic security: if $3B is restaked across a network of applications, then to attack any of the apps the attacker needs a majority of the $3B.
The newly forged network level receipt tokens facilitate node operations, network fees (gas), and incentivizes re-staking and reward distribution across its own and application (L3) networks, while maintaining data availability and economic security on Ethereum.
Application layer networks maintain their sovereignty enabling these networks to benefit from the larger networks economic security while mitigating dilution of incentivized rewards.
How it works
The Liquid Layer's multichain network is economically secured by permissionless ETH liquid staking pools.
The network token on Magma, LAVA; is used to operate Nodes and cover network fees for transactions.
LAVA is created by combining liquid staked ETH tokens along with application tokens in the Forge to create new supply.
Rewards received from the pooled restaked reward generating ETH (enabled via Ethereums Proof of Stake validation) are shared by Node operators and re-stakers.
Application Chains (L3) that run on Magma can operate forges of their own, incentizing liquid restaking through their LAVA based custom gas token in a dual staking approach. App chains can also distribute rewards to node operates local to their network. These "app chains" can also use their networks as Trusted Execution Environment (TEE) operating semi private smart contracts as accounting-coupled severless functions.
Forging
The Forging process lets users supply a mix of registered tokens, with an emphasis on liquid staked tokens given their low opportunity-cost economic security, reducing them to their atomic level in such a way that allows the base value to converge into the new network token.
Forged tokens are marked (labeled) by their originators using a long lived algorithm which persists transparent proof allowing for trusted yield distribution.
The global supply of the network token LAVA is never increased or decreased other than by the forge Vault.
Once the forged tokens reach maturity, they can be redeemed for their underlying value based on their markings, which indicate what was used to create them. Circulating supply is reduced and the underlying restaked ETH and application tokens are unlocked from the forge Vault. While anyone can earn a bounty for redemption, the marked originator will receive the underlying assets along with corresponding yield.
DA
The standard requirement for data availability is to ensure all transaction data is sent to every node that is participating in consensus before a decision can be reached.
This is a core to technical security in blockchain technology. It's often seen as a bottleneck for throughput. The incurred high costs of posting transactions to Eth L1 as calldata becomes financial bottleneck.
Also avoided are centralized DA solutions which allow DA operators to freeze the rollup and censor its users.
Data availability remains on Ethereum and is economically underwritten by the pooled restaked LSTs used in the forge.
Application level (L3) networks can configure data availability committees.
Application level networks can be bootstrapped with protocol owned operating nodes to increase availability. This additional distribution of operators help add censorship resistance for services, runtimes and applications built on top of the network.