Is Ethereum going off track?

In an interview with BanklessHQ on September 5, 2024, analyst Max Resnick discussed in depth the future development of Ethereum, including decentralized sorters, Ethereum-based Rollups, the comparison of ZK and Optimistic technology, the challenges of L2 tokens, and the goal of increasing Ethereum throughput.

Original article: Is the Ethereum Roadmap Off Track?

Author: 0xBreadguy

Compiled by: Vernacular Blockchain

Cover: Photo by Shubham Dhage on Unsplash

On September 5, 2024, BanklessHQ hosted an interview titled "Is the Ethereum Roadmap Off Track?" , an in-depth discussion of Ethereum's future development roadmap. The main guest of the interview was Max Resnick, an analyst and commentator in the crypto space. The interview focused on the following aspects:

1) Decentralized sorter : Discussed how to decentralize sorters in L2 (second layer) solutions, as well as the current technical challenges and implementation difficulties. The interview pointed out that although decentralized sorters are a worthy goal, there may be certain challenges in actual operation.

2) Ethereum-based Rollups : Ethereum-based Rollups are introduced as an improvement to L2, which uses Ethereum for sorting and gives up a portion of the execution reward. This approach is considered a good choice for aligning incentives, which can improve both L1 performance and L2 user experience.

3) Comparison between ZK and Optimistic technologies : ZK (zero knowledge) technology and Optimistic technology were compared. Although ZK is considered to be a better technology, Optimistic has dominated the Ethereum roadmap to a certain extent due to its early launch and significant market impact. The interview suggested that the Ethereum Foundation should return to its focus and work hard to improve the coordination between the mainnet and ZK.

4) The value and challenges of L2 : The risk of L2 Token depreciation was discussed, and it was predicted that each team might take measures to weaken the value proposition of ETH in order to increase the value of their own tokens.

5) Ethereum’s future goals : It was mentioned in the interview that Ethereum needs to significantly increase its throughput, with the goal of achieving a 100-fold performance improvement in order to remain competitive in the blockchain field.

Overall, this interview provides deep insights into the Ethereum development roadmap from an atypical perspective and offers constructive comments on current technologies and strategies.

Here are some key points from the interview as summarized by @0xBreadguy :

1. Decentralized sorter

Max believes that if L2 really cares about this issue, it should prioritize decentralizing their sorters. In fact, this is not difficult to achieve because we already have all the necessary components to achieve this goal (i.e. consensus mechanisms), which have been applied on every L1.

This is one of the few points where I have a slightly different opinion, but only slightly.

I think the PoA/rotational model is a good middle ground for fully decentralized consensus because it allows L2 to operate without the full consensus overhead while avoiding the incentive misalignment that would result from L2 being a fully independent blockchain (thus increasing their likelihood of becoming L1).

For example, @megaeth_labs's model uses a set of sorters that rotate based on time, such as a US server serving as the leader during the US time period.

2. Users are the lifeblood of Ethereum

Max pointed out that one problem now is that users migrate from the mainnet to L2 to use the same application scenarios, which makes L2 look like a parasitic existence (tribute to @KyleSamani). He sees application requirements as a spectrum, which includes different attributes such as decentralization and permissionlessness. The current problem is that the application scenarios of Ethereum and L2 basically overlap. His ideal situation is that DeFi should continue to run on Ethereum, while other value-added applications (such as paying for coffee) can be done on L2.

I couldn’t agree more and created a graphic showing the difference between the current landscape and an ideal symbiotic state.

Of course, there will always be overlap in user choices, but the core idea is to align incentives and improve the performance of L1 so that users can clearly understand that Ethereum retains strong decentralized features and should be used for high-value transactions, while the better user experience and lack of decentralization provided by L2 are sufficient to cope with low-value transactions.

I maintain that the “monetary properties” gained from L2 cannot make up for the loss of execution on the mainnet, and Ethereum’s biggest challenge to date remains the messaging problem.

3. Rollups based on Ethereum

Max believes that Ethereum-based architectures are more "aligned" versions of L2 because they use Ethereum for sorting and give up execution rewards to a certain extent. In addition, improvements to the mainnet will simultaneously improve the Ethereum-based Rollup user experience and L1 capacity (especially block time).

He also proposed the concept of "super Ethereum-based" Rollup, which provides user protection in the block instead of maximizing the rewards of block builders. If Ethereum had adopted this Ethereum-based design from the beginning, the current situation might be better because the incentive mechanism and ecological direction would be more consistent.

This is exactly what I think. He also mentioned that it is a shame that these designs came too late because the lack of incentives makes it difficult to switch to Ethereum-based designs (I have also commented on this before: https://x.com/0xBreadguy/status/1830221991749484630). Although the team is pushing for this change, it may already be too late.

I appreciate Max's perspective more and more.

I would also like to add that Gwenyth Taiko is an Ethereum-based framework that has a property that I think makes L2 a true extension of the Ethereum network: atomic composability with L1 contracts.

4. Is L2 Ethereum?

1) Optimistic vs ZK

Max pointed out that ZK technology is superior, but Optimistic has taken the market share not only because it was ready early, but also because its prominence has guided the Ethereum roadmap to some extent. He believes that the Ethereum Foundation (EF) should return to the core and work to improve the alignment between the mainnet and ZK.

He also noted that ZK plays a role in the area of ​​need (bandwidth), while Optimistic helps with execution.

I don't have much to say about this, because I also think ZK technology is better, but it still has some research problems to solve. I would like to add that Max mentioned that publishing ZK state differences to the mainnet, although there is some compensation in bandwidth, there are also some losses, such as losing the history within the batch. (For example, A->B and B->C will be treated as A->C on the mainnet)

2) Ethereum needs to increase its throughput 100 times

Max specifically mentioned that Ethereum's throughput could be "increased 100 times" through various proposals such as shortened block times and multiple parallel proposers to catch up with other blockchains.

I thought this was a great opportunity to visualize what a “100x” improvement would mean on a chain like Solana.

Here is the data throughput of Bitcoin, Ethereum, Solana, and Ethereum with a 100x increase today:

Even if a 100x improvement is achieved (Vitalik is skeptical that this can be done while preserving Ethereum’s value), Ethereum will still be far behind Solana. I don’t think this goal should be considered unattainable, after all, it brings many synergies.

5. Other Viewpoints

He pointed out that although ZK technology is superior, Ethereum's roadmap is dominated to a certain extent by the Optimistic team and should return to balance. He is increasingly skeptical about whether Arbitrum and Base can have a positive impact on Ethereum as a whole, mainly because of their corporate governance structure and some of the benefits they need to give up (such as user fees). He also mentioned that compared to other L2s, the fees charged by Base to users are much higher than the rent it pays to the mainnet, which feels a bit excessive.

He predicted that L2 Tokens might depreciate, so teams might work to weaken ETH’s value proposition to increase the value of their own tokens. It all involves incentives. Finally, he emphasized that while Ethereum has many people committed to a good vision, they may deviate from the best way to achieve a common goal.

6. Summary

Overall, this interview provides an atypical perspective and valuable insights, and I highly recommend listening to it. His views are highly consistent with my views on the future direction of Ethereum, and I also hope that Ethereum can adopt some of these suggestions.

I like this quote in particular and would like to end with it: “I don’t think people envision that Ethereum’s future will be a cheap and featureless infrastructure platform that is used by a bunch of big companies to make as much money as possible.”

That really hits the nail on the head.

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