Published: August 21, 2024
Cartesi emerged in 2018 with a proposition that seemed ahead of its time. Contrary to being perceived merely as a Rollup-as-a-Service (RaaS) provider, Cartesi is an actual pioneer in offering infrastructure for application-specific rollups that can operate on top of a Linux environment – leveraging years of open-source intelligence and developer tooling. Not only can developers use the programming language of their choice, but Cartesi also overcomes the restrictive barriers of the Ethereum Virtual Machine (EVM), EVM+, and WASM.
If someone came up with the idea and started pitching an “application-specific rollup provider with dedicated computing resources and a Linux runtime, all while maintaining the integrity and settlement capabilities of Ethereum through optimistic rollups”, we are sure that multiple theses would start being released about how this could set a new standard for innovation and unlock unprecedented possibilities in dApp creation and functionality.
With its unique underlying framework and the network effects made possible as a byproduct, Cartesi can host applications that aren‘t possible on any other ecosystem, such as a fully on-chain casino or sports fantasy game.
Cartesi is an Optimistic Rollups framework for building application-specific rollups with a Linux environment. It provides dApps with a dedicated CPU and rollup where developers can use the libraries, programming languages, and tools they are already familiar with. Any package or library that is available for Linux can be used by developers to break free from the limitations of the EVM, EVM+, or WASM, alleviating the limitations of writing code that runs on-chain by performing more complex computations off-chain and that can be verified on-chain.
By integrating a Linux runtime environment, Cartesi offers a vast design space fueled by years of open-source intelligence, solving for the limitations of the EVM and the relatively short track record of environments like Solana’s SVM or the MoveVM. The emphasis on Linux means that the protocol eliminates the need for developers to navigate the steep learning curve of new programming languages, thereby opening up blockchain development to a broader audience.
A dApp running on Cartesi Rollups is composed of both on-chain and off-chain components. This is what turns Cartesi into an Optimistic Rollups framework. At its core lies the Cartesi Machine, a virtual machine (VM) that hosts a complete Linux OS for executing each dApp’s back-end as a conventional Linux application. This setup encapsulates the application’s state and makes its logic verifiable on-chain through interactive fraud proofs that ensure the integrity of off-chain computations.
Cartesi’s core innovation is anchored in the Cartesi Virtual Machine. Emulating a RISC-V instruction set architecture (ISA) is crucial for offering Linux compatibility, which is the leading and most used operating system. This compatibility grants dApp developers access to an extensive range of code libraries and tools, enabling dApps that rival traditional software in design flexibility, user experience, and efficiency, all verifiable on-chain. The choice of RISC-V positions Cartesi distinctively against alternatives like WASM and custom ISAs, which struggle with consistency and reproducibility across different operating systems. RISC-V’s direct support for Linux sidesteps these challenges, offering a seamless, high-performance environment for blockchain applications. This commitment to leveraging existing, efficient, and open-source solutions is what enriches the developer experience and could unlock use cases that aren’t achievable on any other chain.
To understand the significance of this it is worth highlighting Ethereum’s pursuit of a rollup-centric roadmap to increase transaction throughput and reduce fees. Unlike other rollups, what makes Cartesi different is that it was designed to solve not the scalability crisis, but rather the innovation and development crisis.
Software development thrives on the abstraction and compositional use of existing knowledge. Due to their recency and novelty, in Ethereum and other blockchain environments, the absence of a rich development environment forces developers to start from scratch, hindering the creation of complex dApps due to a lack of accessible, pre-existing content and tools. Unlike the EVM, which is limited by its inability to leverage the vast array of Web2 open-source development due to its unique coding requirements, Cartesi integrates a Linux environment. This integration allows developers to access mature, battle-tested libraries and a broad spectrum of programming languages and tooling.
While the EVM and similar rollup solutions like Arbitrum and Optimism offer cost and speed efficiencies, they do not substantially enhance design flexibility, remaining constrained by the foundational limitations of Ethereum smart contracts. These constraints force developers to make compromises (usually attempting to reduce gas costs) that can impact code quality and security. Alternatives like EVM+ and WASM, despite allowing the use of traditional programming languages, still fall short as they cannot fully leverage existing open-source libraries and tools without a complete operating system infrastructure, limiting their effectiveness in addressing the core challenges faced by dApp developers. Cartesi’s approach not only opens up new avenues for innovation but also provides a more flexible and powerful platform for dApp creation, overcoming the inherent limitations of previous blockchain development environments.
The whitepaper was published in July 2018, and the core team of contributors consists of experienced software engineers and mathematicians like Erick de Moura, Augusto Teixeira, Diego Nehab, and Felipe Argento, and business operators like Colin Steil and Marco Mirabella.
The Cartesi Foundation plays a pivotal role in advancing the ecosystem, operating as a non-profit organization dedicated to fostering adoption and ecosystem growth. It accomplishes this by providing funding and resources to developers, thereby extending the network’s reach. This is often done via grants and hackathons with $CTSI incentives.
The Foundation is also responsible for the maintenance of Cartesi’s digital presence across various platforms such as the official website, Discord, governance forums, Telegram channels, and Reddit. A significant part of the Foundation’s activity involves funding and organizing events designed to engage and expand the community. These events range from ETHGlobal, hackathons, and meetups to educational workshops through the Cartesi Community Grants Program.
Most importantly, the Cartesi Foundation is the actual admin of the protocol treasury, which includes the fully unlocked $CTSI Foundation reserve, directing funds and resources towards various initiatives within the ecosystem. This management is transparent, with the most recent report published in 2024 revealing a runway of 6 years and 10 months, including all assets, and 3 years and 7 months when excluding $CTSI holdings. To be specific, the Foundation’s assets are 48% $CTSI holdings, 43.5% fiat holdings, and 8.5% in non-CTSI crypto holdings (the majority of which is $stETH, $USDC, and $DAI). In 2023, the Foundation’s expenditure was allocated across ecosystem grants (17%), core R&D unit grants (35%), core company grants (20%), and Cartesi Foundation Initiatives, Operations, and Marketing (28%).
Ethereum’s rollup-centric roadmap is driven by the shift towards modularity and a diversity of execution environments. This evolution underscores the industry’s pivot from monolithic to modular architectures, where functions such as sequencing and data availability (DA) are decoupled from the core blockchain, enhancing efficiency and scalability. Modular blockchains seek to optimize one or more of the four core functions, which are Execution, Settlement, Data Availability (“DA”), and Consensus. Out of those, Cartesi excels at execution.
As Ethereum unbundles its original monolithic architecture, Cartesi emerges as a pivotal player in this new paradigm, offering versatility and allowing Cartesi rollups to be deployed as L2s, L3s, or sovereign rollups. This results in a more customizable tech stack that can integrate specialized layers like Celestia, EigenDA, or Avail for DA, or use Ethereum or other L2s for settlement.
Rollups are responsible for execution, helping to offload complex computations off-chain and making it verifiable on-chain by posting compressed data to a settlement layer. As computation happens off-chain, developers can leverage alternative Virtual Machines (AltVMs) to avoid the limitations of the EVM. These AltVMs can be EVM+, the Solana VM (SVM), the MoveVM etc. A Virtual Machine (VM) is simply a program that is able to emulate all the work being done on a computer – think of it as a digital version of a computer that includes all the components of a physical computer (CPU, memory…), but that exists entirely in a virtual setting.
The Cartesi VM, built on the RISC-V open standard, emulates a complete computer system, including an operating system like Linux. This is the main differentiating factor versus other alternatives. This breakthrough allows web3 developers to utilize a vast array of existing code libraries and tools, offering a dedicated CPU for each dApp, thereby avoiding resource competition between dApps.
This architecture makes it simpler and more appealing for We2 developers to start developing dApps on-chain. They can access decades of code libraries, programming languages, and tooling without having to learn new abstractions or design paradigms.
Cartesi started building rollups in 2018 before the term was even popular. It wasn’t until December 2021 when Vitalik’s Endgame article came out convincing the Ethereum community that it should pursue a rollup-centric roadmap.
Back in the day, alternative L1s and “Ethereum killers” sprung up, often recycling the EVM or tweaking some functionalities, most often related to DA. Recognizing the limitations and tradeoffs of each design, Cartesi understood that blockchain scaling was about specialization and modularity, allowing projects to excel by focusing on what they do best.
This modular approach was not about following trends but about fundamentally rethinking how blockchain components could excel individually and synergize collectively to unlock new levels of scalability and developer utility. By advocating for application-specific optimistic rollups, Cartesi aimed to offer a holistic solution that not only enhanced scalability but also expanded programmability and the tooling ecosystem for developers.
Since the start, the vision was clear: to pave the way for a modular blockchain ecosystem where developers could focus on the business logic of their applications and not waste resources on highly technical topics related to execution environments or data availability.
Despite smart contracts being around for nearly a decade, finding life-altering use cases or significantly boosting economic output remains a challenge. Innovations like Uniswap and overcollateralized lending have introduced permissionless trading and lending, yet they grapple with issues of security and capital efficiency. Ethereum’s struggle for mass adoption persists amidst high gas fees and security vulnerabilities.
Meanwhile, generalized rollups and L2 solutions don’t fully address these problems, partly due to EVM’s inherent flaws and their one-size-fits-all nature, leading to competition for resources among dApps and inefficiencies. Not only that, but as more L2s enter the market, liquidity gets even more fragmented, which is a large problem considering that they can’t rely on battle-tested interoperability solutions yet.
Even after EIP-4844, one under-discussed issue is that EVM-compatible rollups fall short in achieving the necessary computation scalability to complement Ethereum’s significant data availability advancements. As more applications deploy on and share the same VM they compete for limited CPU capacity, creating a zero-sum game where only a few applications can thrive, leaving the rest with congestion issues and higher gas costs.
Application-specific rollups, particularly when combined with a Linux runtime environment, present a solution by offering a tailored space for dApps, optimizing for security, efficiency, and functionality. This contrasts with the limited capabilities and speed of decentralized computing models, which restrict developers to niche programming languages and complex solutions for simple features.
Cartesi offers a pathway out of this conundrum, providing an execution environment where developers can work with the tools and libraries they are already familiar with. Application-specific rollups diverge from the shared VM paradigm and offer applications their own dedicated CPU. As we transition from Ethereum Layer 1 to EVM rollups and further to dedicated appchains, we see an expansion in computational capacity.
But still, even beyond the sheer scale of computational and data capacity, developers grapple with another significant challenge, which is the lack of mature development environments, characterized by inadequate software tooling and libraries. While this has improved over time with Solidity and developer frameworks like Foundry, the scenario starkly contrasts with the traditional software development realm, where extensive libraries across various programming languages enable developers to build complex applications.
The EVM has been the backbone of Ethereum’s smart contract and other EVM-equivalent environments, but it comes with inherent limitations that stifle innovation and complexity in dApp development.
By design, regardless of the actual execution environment, blockchains are in the business of selling blockspace – this is a limited resource that can experience high (if not infinite) demand. Competition for blockspace, driven by finite resources and associated gas costs, leads developers to prioritize gas optimization over software functionality. This has resulted in design compromises that affect code readability and security.
On the one hand, traditional Layer 2 (L2) solutions like Arbitrum and Optimism offer partial relief by reducing gas costs but do not significantly enhance design flexibility due to the persistent bidding dynamics and inherent limitations of the EVM. On the other hand, other alternatives focus on EVM-alternatives like EVM+ or WASM and can offer the ability to write smart contracts in traditional programming languages like Rust or Python, but they only provide marginal improvements to the dApps design experience. The reason for that is because they can’t realistically support a fully-fledged infrastructure to host an operating system (OS). Without the benefit of an OS, dApp developers lose access to decades of open-source software development.
Cartesi addresses these challenges by integrating a complete Linux OS, enabling developers to use a wide range of programming languages and libraries, thus transforming the dApp development landscape. Cartesi Rollups, which are application-specific and offer interactive dispute resolution, provide a scalable and secure environment for dApps, overcoming the computational and design limitations of the EVM. This approach not only enhances computational scalability but also opens up a new realm of possibilities for dApp functionality and developer creativity. By allowing each dApp to operate on its dedicated CPU and supporting the Linux runtime, applications can achieve the same level of complexity and efficiency as traditional Web2 applications, without compromising on decentralization or security. This paradigm shift enables developers to focus on innovation rather than infrastructure.
In gaming, Cartesi enables complex and interactive gameplay previously unattainable on blockchains by offloading heavy computations off-chain. In DeFi, Cartesi allows for sophisticated on-chain financial analyses and real-time risk assessments, overcoming the EVM’s limitations in processing power and accessibility to open-source libraries (currently being outsourced to risk managers like Chaos Labs or Gauntlet, whose job happens in closed doors). For NFTs, Cartesi facilitates true on-chain ownership by enabling the entirety of an NFT, not just the deed, to be stored on-chain. In AI, Cartesi aims to merge AI’s pattern recognition with blockchain’s verifiability, creating a common ground for AI and blockchain to interact through the Linux OS. This integration supports traditional AI development tools and libraries and paves the way for more complex, secure, and innovative blockchain applications.
Key to Cartesi’s innovation is the provision of a boundless design space for developers. This is achieved by offering each dApp a dedicated CPU and Linux runtime where developers can access a comprehensive suite of open-source libraries and programming languages within a fully-fledged operating system environment.
This capability not only facilitates the exploration of new dApp functionalities beyond traditional EVM limitations but also supports the deployment of Cartesi rollups as L2, L3, or sovereign solutions. With this approach Cartesi can foster a positive-sum game philosophy, adding value to underlying chains without strictly competing for market share.
By deploying each dApp in its own high-performance rollup chain, Cartesi fosters an environment where there’s no resource cannibalization among dApps, preventing network gentrification and paving the way for a new class of dApps that were previously untenable on existing chains, each with their unique developer experience and design patterns.
In conclusion, Cartesi’s journey since 2018 highlights a pioneering path forward. The team has introduced the innovative proposition of a blockchain-based Linux operating system and application-specific rollups. The Cartesi Foundation continues to push for more broader adoption, continuing to roll out incentivized hackathon initiatives and other developer-focused efforts. In July, the team announced a partnership with Avail, enabling Cartesi’s Linux-based VM stack to be integrated with Avail’s modular data-availability capabilities. This is in addition to maintaining an active presence at conferences, prioritizing some media appearances, and all-around efforts focused on getting Cartesi’s name out there. Overall, Cartesi’s optimistic rollup framework, built on top of a Linux environment, gives developers the tools to overcome a great share of the challenges and limitations present in the infrastructure space today.
Revelo Intel has never had a commercial relationship with Cartesi and this report was not paid for or commissioned in any way.
Members of the Revelo Intel team, including those directly involved in the analysis above, may have positions in the tokens discussed.
This content is provided for educational purposes only and does not constitute financial or investment advice. You should do your own research and only invest what you can afford to lose. Revelo Intel is a research platform and not an investment or financial advisor.
