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As we all know, there is a concept of the Blockchain Trilemma in blockchain. Blockchain cannot take into account the three dimensions of scalability, security and decentralization at the same time. For any blockchain, it is possible to satisfy at most two of the dimensions at the same time. Since the birth of Ethereum, there is no doubt about its security and decentralization. However, its poor scalability (throughput of 15 transactions per second) has often caused network congestion and high handling fees. . The emergence of Layer 2 on Ethereum is to solve the scalability problem of ETH. In short, it is to increase the transaction speed of Ethereum. Vitalik, the co-founder of Ethereum, announced the start of eth2.0. So far, the development process is still very slow. During this period, some developers have sought a compromise and second-best method, and Layer 2 solutions have emerged as the times require. — Try to migrate the transaction data processed by the Ethereum layer outside of Ethereum to improve transaction speed and load.
At present, everyone also has a common view that Layer 2 will be the most effective expansion solution before the arrival of ETH2.0. Although it is a compromise method, it has to be said that layer2 is developing rapidly. As of the time of publication, according to L2beat data, the overall lock-up volume of the second layer of Ethereum has reached 9.32 billion US dollars, and its rapid development momentum is evident. This article will briefly review the development history of Ethereum Layer 2 and the development status of existing projects, and briefly analyze the competitiveness and development prospects of each Layer 2 project from the technical, ecological and other dimensions.
Layer2 technology iteration
status channel
The earliest second-layer solution of Ethereum was not Roll-up, but a state channel. Analogous to Bitcoin's Lightning Network, both are based on state channels to solve the scalability of the blockchain by completing transaction data and operations off-chain and then summarizing them to Layer 1.
As a solution that has existed for a long time, here we use the most classic example to briefly introduce what a state channel is:
Xiao Ming is an avid coffee lover. Every day, he goes to Xiaohong's cafe to buy coffee, which costs $2 per cup. However, each transaction on the Ethereum main chain requires expensive transaction fees and waiting time for confirmation, which makes them inconvenient. To this end, they decided to use a state channel: Xiao Ming locked 100 US dollars in the Ethereum smart contract as the initial capital of the state channel. This contract (smart contract) runs on the Ethereum main chain and contains the signatures of Xiao Ming and Xiao Hong. Each time you purchase coffee, you only need to sign a message and do not need to conduct main chain transactions, which greatly saves transaction fees and shortens waiting time. At settlement, the contract will verify all previously signed messages, pay the corresponding amount to Xiaohong based on the total purchase amount, and the remaining funds will be returned to Xiaoming.
State channels are highly restrictive. Transactions can only be conducted between state channel members, and a large amount of locked funds need to be paid in advance. A project applying state channel solutions on Ethereum is Layer2 Finance. As of now, its total locked position is only $207,300 (data source: app.l2.finance). It is not difficult to see from the official data that the status channel has not developed into a mainstream solution for Ethereum Layer 2. In addition, it is worth noting that Layer2.Finance currently also supports other Layer2 solutions: OP Roll-up and zk-proof.
Plasma
Compared with state channels, the advantage of Plasma is that it does not need to lock funds on Layer 1 in advance, which releases liquidity to a certain extent. Plasma operators replace Ethereum, aggregate customers' transaction information, and submit the aggregated information to Ethereum within a certain period.
Still taking the previous purchase of coffee as an example, Xiao Ming does not need to prepay funds to Layer1 in advance. Plasma will summarize the information over a period of time and summarize Xiao Ming's transaction information to the main chain of Ethereum in each cycle. This means that the transaction information that occurs during this period cannot be processed in time. If this period is one hour, Xiao Ming will not be able to complete the transaction of buying coffee within an hour. In addition to this, Plasma has a 7-day fraud certificate.
Similar to state channels, Plasma also runs the risk of being too centralized, as each Plasma chain requires an operator to publish Merkle root commitments to the main chain. This requires us to rely on a third party to accurately publish the Merkle root commitment to the chain. Herein lies the problem of operator evildoing. Operators can perform so-called "data availability attacks" and refuse to publish certain transactions to the main chain. In addition, when users want to transfer assets from the Plasma contract back to Ethereum, they have to wait 7 days for fraud verification.
Polygon (side chain)
Polygon is an Ethereum Layer 2 solution that is more than just a stand-alone scaling solution, but more of a multifunctional framework and protocol that can be used to create Ethereum-compatible blockchain networks.
On Polygon, there are two types of blockchains that can be deployed: independent chains and secure chains. An independent chain refers to a blockchain that does not rely on Ethereum's consensus mechanism to ensure security. It is usually suitable for projects that already have their own verification nodes or are looking for other scalability solutions. These independent chains are typically used by enterprise networks or mature chains that want to integrate with the Polygon-Ethereum ecosystem.
Security Chain relies on the Polygon Security Layer chain to achieve a high level of security and allows developers to choose between various security solutions. These security chains are designed to support startups and projects, allowing them to build reliable and secure systems. Among them, the Polygon PoS (Proof-of-Stake) chain is one of the most typical security chains. The chain uses a proof-of-stake consensus mechanism and periodically submits snapshots of the chain to the Ethereum blockchain, which are submitted by Polygon’s 100 validators. This method overcomes the problem of low throughput of Ethereum and provides faster transaction processing speed, thereby reducing gas fees and improving user experience. The total locked-up volume of the Polygon ecosystem has so far reached 787 million U.S. dollars (DeFilama data). The ecosystem is extremely prosperous and there are many high-quality DeFi projects such as AAVE, QuickSwap, and Compound. At the same time, Polygon is currently working on full-stack solutions, and Polygon Zkevm has also been launched on the mainnet recently.
Polygon TVL data (DeFilama)
Roll-up
Regarding Rollup, Web3CN has introduced it in detail many times before. The following content will briefly summarize the technical features of Rollup. The essence of Rollup is a technology that packages a large amount of transaction information into a single transaction for processing. The most widely used underlying technology on the market currently is OP-Rollup (Optimistic Rollup). It achieves capacity expansion through Fraud proofs. In Op-Rollup, the transaction data is optimistically believed to be correct by the system, without real-time verification and directly enters a waiting period. During the waiting period, if a node raises an objection and provides evidence to prove that there is a malicious transaction, the transaction will be canceled; if there is no objection, after the waiting period is over, the transaction will be automatically completed and the transaction will be verified on the main chain. At this point Above, Plasma's fraud verification mechanism is used. By default, users will not commit fraud, but in order to ensure optimistic security, a seven-day verification period is required. ZK-Rollup mainly relies on zero-knowledge proof technology. By separating the calculation and verification processes, the verification of contract execution is completed off-chain, and then the verification results are submitted to the Ethereum main network. The calculation process is performed off-chain, and the verification result is only submitted to Ethereum as a proof. Therefore, this method provides the highest level of security and user privacy protection. Since Zkrollup uses cryptographic zero-knowledge proof technology, which includes mathematical operations and is largely based on mathematical operations, it is more difficult to be compatible with eth. Ethereum founder Vitalik once put forward his own opinions on the relationship between Op-Rollup and Zk-Rollup: In the short term, Op-Rollup will be accepted faster, but with the familiarity and continuous exploration of zero-knowledge, In the long run, Zk-Rollup will be more promising.
All in all, Rollup in either form provides Ethereum with moderate scalability without sacrificing decentralization, security, and versatility. However, compared with other second-layer solutions that store data off-chain, Rollup's scalability is subject to certain constraints. In addition, Rollup relies more on centralized sorters in the short term and has certain centralization risks. However, with the continuous development of decentralization, Zk-rollup, which represents the core stack of Starknet, has been fully open sourced on September 6, which has played a huge role in promoting the complete decentralization process of Rollup. Therefore, the security of Rollup relying on a centralized sequencer is only a short-term issue. Over time, Rollup’s decentralized sequencer has made it a superior technology to Plasma, sidechains, and state channels.
Starknet full stack open source
Validium
Most people may not know about Validium. In fact, Validium has been proposed by Stakeware as early as June 2020. Vaidium combines Plasma and zero-knowledge proof. It can be understood as a hybrid that combines the advantages of plasma and zkrollup. This allows Validum to process operations faster and in larger quantities. The most important feature of Validum compared to Zkrollup is that it also stores transaction data off-chain, further reducing costs and improving performance. Currently, ZK rollup has a strict usage limit of 2,000 transactions per second (TPS) on the current Ethereum mainnet, while StarkEx using Validium has an astonishing 9,000 transactions per second. In addition, it combines the advantages of zkrollup and verifies validity faster than plasma. Validum zero-knowledge proof reduces dependence on operators and thereby reduces the risk of centralization. Its usage scenarios are mainly concentrated in DEX. Validium only relies on the mainnet for settlement and consensus. Currently, the projects that are better developed and utilize Validum are Immutable, ApeX, Sorare and other DEXs supported by technology provided by Starkware.
Volition — your data, your choices
Volition combines zk-rollup and Validium to provide users with richer combination solutions. In Voliiton, Zk-rollup and Validium share a state root, which makes the funds on Zk-rollup safe even if Validium is attacked. Institutions and retail investors can therefore choose different solutions based on different needs: DEXs that provide hundreds of millions of dollars in liquidity will choose the high-fee Zk-rollup in exchange for the highest level of security, while retail investors will choose the more cost-effective Validium. Flexibility in data availability models will once again provide greater freedom for Starknet developers and users to cost-effectively choose the security level that best suits their specific needs. According to the official roadmap, Volition will be implemented on the test network in the fourth quarter of 2023. Web3CN will also introduce Volition in detail in subsequent articles.
Judging from the process of Layer 2 technology iteration, it is not difficult to find that there is no perfect solution. Among the many solutions at Layer 2, many have been gradually eliminated due to asset security issues, such as state channels and Plasma. Solutions like Rollup, especially OP-Rollup, are the easiest to implement under the current technical background. However, they do not fundamentally solve the problem of asset security. Therefore, with the advancement of zero-knowledge proof technology, ZK Rollup is more likely to become the final Layer 2 solution, and the Starkware technical team will also become the pioneer of Ethereum's Layer 2 expansion.
Layer2 ecological status quo
Currently, the well-known VISA platform has a TPS of approximately 1,700 transactions per second, and the peak rate can reach 4,000 transactions per second. Compared with Validium’s astonishing TPS of 9,000 transactions per second, and judging from the current Layer 2 track where the blockchain is still in its early stages of development, TPS may not be the most needed indicator for the ecosystem. Generally speaking, for a good The second-level evaluation criteria may be more focused on low gas consumption, security and prospects. Regarding the current status of Layer 2 ecology, TVL is more representative than other indicators. In this part, we will analyze some representative Layer 2 projects through TVL indicator rankings to find out which Layer 2 is currently the most competitive.
It was mentioned at the beginning of the article that the current total TVL lock-up amount in the Layer 2 track is 9.32 billion US dollars. From the following figure we can find a more specific and detailed ranking situation:
As can be seen from the above figure, the current dominant player is still Arbitrum One, whose TVL accounts for half of the entire Ethereum Layer 2 track - 54.16%. OP Mainnet follows closely behind, with TVL as high as 2.37 billion US dollars, occupying 25.59% of the entire Layer 2 track. The TVL of the top ten layer2 projects is US$8.99 billion, accounting for 96.5% of the total TVL of Layer2; Layer2 using Zk Rollup technology occupies 6 seats, but the total TVL is only US$787 million; OP-Rollup occupies four seats, and the total TVL But it is as high as 8.2 billion, which is more than ten times the difference.
In short, Layer 2, which is based on OP-Rollup technology, occupies most of the current second-layer ecology. Since Arbitrum and OP Mainnet based on the OP-Rollup track have issued coins, and Starknet and Zksync on the Zk track The issuance of coins is expected to attract a large number of users who interact in anticipation of airdrops, thus causing a certain phenomenon of false prosperity, which further establishes the dominant position of OP-Rollup. It is worth noting that the TVL of a single derivatives agreement GMX on Arbitrum has reached 417 million US dollars, which is 17 million US dollars more than ZKsync Era, which ranks first in TVL on the Zk track.
Layer2 development prospects
super chain
Take OP Stack as an example. OP Stack is a set of open source development tools maintained by Optimism Collective to support the Optimism blockchain. It aims to provide standardized and shared software components to simplify the process of creating new Layer 2 blockchains. The core goal of OP Stack is to support the creation of new L2 blockchains. It provides a shared set of standards that prevents different projects from repeatedly building the same software in siled environments. OP Stack is the engine of the Optimism blockchain, including Optimism Mainnet and the future Optimism Superchain. Superchain is a set of interoperating Layer 2 blockchains that share security, communication layers and development tools. At present, there are 19 OP Stack-based projects supporting OP Superchain, including exchanges, public chains, clients, NFTs and many other fields. Among them, BaseTVL, which officially opened mainnet on August 9, has reached US$385 million.
At present, full-stack Layer 2 that shares security, communication layers and development tools will be the future development trend, and OP is the leader in this field; other Layer 2 are also actively deploying their own unique "Superchain": Starknet in On July 19, it was officially announced that Starknet is working on one of the most performant and innovative expansion platforms, and Paradex has also planned to function as the first Appchain on Starknet. zkSync introduces the concept of hyperchains, a customizable and trustless chained blockchain network that enables ultra-high scalability, improved composability, and enhanced security. Polygon 2.0 aims to unify its set of L2 solutions including Polygon PoS, Supernets, and zkEVM through a cross-chain coordination protocol to create the "value layer of the Internet."
On a technical level, ZK-Rollup will be the future development trend, but in terms of ecology, the current Layer 2 ecology is still dominated by OP-Rollup. It has to be said that the current Layer 2 has its own advantages, such as Starknet's technology, Arbitrium's ecology and OP's full-stack track. Although each Layer 2 has different ideas and is in different states, they are all based on a common goal, which is to achieve unlimited scalability that cannot be achieved on the Ethereum network. This means that Ethereum Laye2 will create an infinitely scalable Web3 world similar to Web2, providing the best environment for developers and users. We are also looking forward to an Ethereum Layer 2 network that is more technically mature, more ecologically prosperous, and has a more friendly development environment.
references
https://www.theblockbeats.info/news/44546
https://beastfin.com/news/10050
https://starkware.co/resource/volition-on-starknet-your-data-your-choice/
https://l2beat.com/scaling/summary
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