N unsolved mysteries of Ethereum Layer 2 and potential solutions

N unsolved mysteries of Ethereum Layer 2 and potential solutions

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Sort out common Ethereum Layer 2 problems and potential solutions.

Written by: Pan Zhixiong

Ethereum Layer 2 is about to enter a new phase this month. The Optimism network based on Rollup technology will be officially launched on the mainnet. Offchain Labs’ Arbitrum solution will also be launched this month or next month at the earliest.

Layer 2 is a hot topic in the Ethereum community, but there are also many ” unsolved mysteries “. In fact, there are already potential solutions for many of the doubts and problems of Layer 2. Of course, there are some questions that have no clear answers.

Based on our observations and the public discussion of Layer 2 in the community, Lianwen has compiled a list of common Layer 2 problems and potential solutions:

Does Layer 2 have a worse user experience?

This possibility does exist. After all, the wallets, applications, and supporting tools of the early Layer 2 network are very imperfect, just like the early Ethereum network. Especially the conceptual understanding and learning of Layer 2 (Layer 2 network) increases the cognitive burden.

Fortunately, this problem can be solved gradually with the popularization of Layer 2 networks and the improvement of facilities. And in the long run, the second layer network can increase the user experience. For example, when users enter the Ethereum ecosystem , the wallet can help users solve the problem of multiple Layer 2 accounts, and the transaction speed will be faster in the Layer 2 network. Transaction fees are also lower.

So from the perspective of wallets and applications, the best strategy may be that users do not need to perceive what Layer 2 is. After all, this is a technical term, not something most end users should learn and understand.

Does it take a week for the asset to exit from Layer 2 to Layer 1?

Some expansion schemes based on fraud proof or game theory mechanisms (such as Optimism) set an exit period of up to one week. This experience is indeed unfriendly for users who need instant transactions and transfers.

This may also become one of the biggest concerns that hinder users from entering these Layer 2 networks. If users need to withdraw to Layer 1 or other Layer 2 networks quickly, they must provide users with some solutions to quickly exit Layer 2.

In fact, in the long run, this shouldn’t be a big problem, because Layer 1 is likely to become a more expensive settlement layer. Most users don’t even need to go directly to Layer 1, wallets, apps, exchanges, OTC. Channels can be completed on Layer 2. In addition, if there is only one single layer 2 network in the future, users will not have cross-Layer 2 requirements.

However, if the future is a multi-Layer 2 network, users will have more cross-Layer 2 needs. At this time, if you need to wait 7 days, users will definitely not accept it.

Therefore, there are already some projects that provide capital bridges across Layer 2 networks. Users’ assets can be instantly cross-chained from one Layer 2 network to another Layer 2 network. At the same time, they need to pay some fees. After all, it saves 7 days of capital use costs. Specifically, for example, Maker is providing a financial bridge for DAI, and Connext, Celer’s cBridge, DeGate, and Hop Protocol are also trying to provide such a general solution.

Reference link: ” Avoid the Rollup battlefield, Connext chooses to use the status channel to get through the Layer 2 “island”

(DeFi) Does the application need to develop a dedicated version for Layer 2? Is the migration cost high?

Yes, for most Layer 2, application developers have additional development costs , and may need to learn the specific development environment of the network, such as Zinc of zkSync, Cairo of StarkWare, of course, the official should provide some basic The tool allows developers to easily convert Layer 1 applications to Layer 2 versions.

Even for Layer 2 networks that directly support EVM, developers need to deploy a Layer 2 version, independent of Layer 1 version.

However, there are also some Layer 2 solutions that take into account the difficulty of developer migration, so the concept of “in- situ expansion ” was invented. Layer 1 applications can be used by Layer 2 networks without additional adjustments. In this scenario, Layer 2 is more like the instruction layer of funds, dedicated to the deployment of funds. The teams contributing in this field are mainly Celer’s Layer2.Finance and StarkWare’s DeFi Pooling solutions.

Reference link: ” Explain Celer’s new expansion plan Layer2.finance: “In-situ expansion” without the need to migrate DeFi applications

Will there be only one Layer 2 in the end?

Many people think that in the end, Layer 2 may also show a dominant pattern, so application developers are considering which Layer 2 network to choose for research and development. After all, applications in the same Layer 2 network have better composability.

However, considering the differences between different Layer 2 technologies, such as security , expansion efficiency and other factors, it is likely that there will not be only one final oligarch. For example, for Rollup, an increase of two orders of magnitude is already very good, but if you want to carry higher performance and lower cost transactions, Plasma technology may be more suitable, such as Polygon (Matic) built around the NFT game ecology , It can be independent of the Rollup ecosystem.

Will ZK Rollup be the ultimate solution?

When comparing ZK Rollup and Optimistic Rollup, many people think that ZK Rollup may be the final form of Rollup expansion technology because it is more secure.

However, considering that ZK Rollup Shuangjie Matter Labs and StarkWare’s mainnet launch time has not yet been confirmed, according to conservative estimates, their mainnet may be until the end of the year or next year. This year’s gap is enough for other projects to build an application ecology or even an ecological barrier on Optimistic Rollup or Plasma solutions.

In addition, ZK Rollup still has a lot of room for optimization in terms of performance. Zero-knowledge proof calculations require huge computer computing power. With the improvement of FPGA solutions or general-purpose CPU capabilities, the performance and performance will gradually improve.

Of course, there is another possibility that Optimistic Rollup can provide the most direct expansion effect for expansion this year or in the past two years. They can also cooperate or merge with the ZK Rollup solution to achieve expansion in a safer way.

Are the applications within Layer 2 composable?

Yes, the applications in the Layer 2 network are composable, and each application and smart contract can call each other. Or you can use some third-party tools to realize the interaction between applications. For example, Furucombo on Layer 1 provides similar functions, and these tools may also appear on Layer 2.

Of course, not all applications have composability requirements. For example, most DeFi applications and NFTs do not need to be combined.

Is there composability of applications between different Layer 2?

Applications between different Layer 2 are not composable. At least some of the current Layer 2 solutions have not considered the ability to call applications across the network.

But if there is a need for cross-Layer 2 asset migration, some teams have already implemented it, such as Connext, Celer’s cBridge, DeGate, Hop Protocol, etc.

How to coordinate between multiple Layer 2 nodes? Is there a need for consensus?

There are also some special nodes in the Layer 2 network to help maintain the operation and security of the network. These nodes may need to periodically publish the data of the second layer to the first layer, may need to monitor all the layer 2 data to prevent someone from cheating, or may need to provide zero-knowledge proof computing power, and so on.

At present, many Layer 2 projects do not disclose how multiple nodes coordinate with each other, that is, what consensus is reached between nodes in the second layer network. Therefore, many expanded networks will operate in a single-node or single-operator manner in the early days. After all, this is safe and controllable.

In fact, some teams have put forward a relatively simple consensus, such as the Proof of Donation proposed by Hermez. All nodes obtain the right to package through bidding. The higher bidder pays the protocol native token HEZ and can be paid from the transfer fee paid by the user. Earn income.

In the long run, the Layer 2 network should implement its own set of consensus solutions to meet the characteristics of decentralization and permissionlessness.

Reference link: “A quick look at the expansion plan of Ethereum ZK Rollup Hermez, which will focus on high-frequency transfer scenarios

Will all Layer 2 networks issue tokens?

At present, many Rollup scheme networks have not yet indicated whether they will issue tokens, but the possibility of issuing tokens is not low.

This question is related to the previous question. If a consensus is needed to expand the network, then native tokens are naturally needed. Otherwise, in what way can consensus be achieved? Of course, maybe ETH can also be used.

For example, Hermez’s way to achieve consensus is through the protocol token HEZ, and Matter Labs has also publicly stated that it will issue tokens for the zkSync network. There are also several Layer 2 solutions that have issued tokens before, such as Loopring Protocol, Celer, Polygon (Matic), etc.

Reference link: ” Matter Labs will launch a native token for zkSync to achieve consensus and speed up transaction confirmation

At present, Offchain Labs (Arbitrum), Optimism, StarkWare, Fuel Labs, Aztec have not stated whether they will issue tokens, and they are unwilling to mention this aspect of thinking. Perhaps they are also improving the design in this area to provide a game-balanced token economics program.

Can private transactions or asset anonymization be achieved in Layer 2?

Some teams are adding private transaction functions to Ethereum through an independent Layer 2 network to enhance the anonymization effect of assets for users, similar to the currency mixing tool Tornado.Cash.

Aztec is currently one of the teams focusing on this field. They have just launched version 2.0 on the mainnet (unstable version, not recommended for users), and can implement private transactions in their Ethereum Layer 2 Rollup network.

Reference link: ” Ethereum privacy technology solution Aztec launched Aztec 2.0 Rollup, has enabled ETH privacy Rollup service

Although the “ZK” of the second-tier expansion plan ZK Rollup refers to zero-knowledge proof, this ZK is not used for private transactions, but uses the “succinctness” of zk-SNARKs technology to improve scalability. So Aztec named their technology ZK² Rollup or ZK ZK Rollup, and added zero-knowledge proofs for privacy to ZK Rollup.

Considering that Tornado.Cash, the most important anonymous product in the Ethereum community, consumes a lot of gas, a privacy operation for 1 ETH may need to consume at least an additional 20% of the gas (conservative estimate), which largely hinders the project’s Adoption. So, maybe Tornado.Cash will also consider Layer 2 solutions eventually.

Can preemptive transactions or MEV be avoided on Layer 2?

Some Layer 2 protocols (such as Offchain Labs, Optimism, and Matter Labs) have begun to research and launch solutions for this topic, but there should be some time before they are finally launched.

Since the generalization and complication of the Ethereum Layer 1 mainnet, the value ingestion behavior for transaction sorting has gradually increased. Generally, this type of behavior can be called front-running or MEV (Maximal Extractable Value).

Previously, Offchain Labs has stated that they have published research papers and will explore new consensus algorithms to make transaction sequencing more decentralized, and ultimately achieve the possibility of reducing MEV. And Matter Labs is considering implementing it through zero-knowledge proof and VDF (verifiable delay function).

Reference link: “The top Ethereum expansion team Matter Labs and Offchain Labs talk about Rollup’s future prospects

At the same time, some teams try to provide MEV solutions on Layer 1, such as the research team Flashbots. However, compared to the Layer 1 consensus at the bottom of the blockchain that requires high security, solving this problem on Layer 2 may be more flexible and efficient.