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The future challenge of Layer 2 is not only to expand, but also to implement it in a way that protects the core attributes of Ethereum.
Original title: “Placeholder Partner: Ethereum Layer 2 competition, zkSync 2.0 will stand out”
Written by: Chris Burniske, co-founder of Placeholder Translation: Overnight Congee Source: Babbitt
Since the birth of the Ethereum protocol, the topic of capacity expansion has always attracted attention, and the popularity of DeFi and NFT has made capacity expansion an urgent issue. An excellent financial system needs to maintain accessibility and low cost. When Ethereum 2.0 has a long way to go to achieve this goal, and its roadmap is still unfolding, the time for a layer 2 (L2) solution has arrived. .
The winning L2 solution should be able to inherit all the successful attributes of Ethereum-including permissionless, safe, and community-owned, while being able to reduce costs. So far, the mixture of maturity and trade-offs found in competitive design has brought a problem to the community: whether we choose ZK Rollup (ZKR) for superior safety, throughput and capital efficiency, or choose safety relative Poor fraud proof EVM compatibility system (such as Optimistic Rollup). The risk we face is that some teams choose the former, while others choose the latter. They prioritize different trade-offs, which causes dispersion of liquidity and undermines composability.
If we can have the security, high throughput and efficiency of ZKR, as well as EVM compatibility, so that it is easier to converge to a common standard, then everyone does not need to be forced to make a choice. This is what zkSync 2.0 and zkEVM do. Yes, zkSync 2.0 is compatible with EVM and will be released in the fourth quarter of 2021.
For those who can’t wait, we now have zkSync 1.x, which provides a list of ERC-20 tokens without permission and support for NFT. Since its launch in June 2020, the actual transaction cost of the initial version of zkSync among all existing and planned Rollup protocols is the lowest, which makes Gitcoin, Argent and Index Coop and other teams choose to trust zkSync to meet their expansion needs .
zkSync best retains the features that have made Ethereum successful so far: decentralization, security, composability, capital efficiency, and instant withdrawals. At the same time, it minimizes the interruption faced by contract developers who are accustomed to EVM. Therefore, we believe that zkSync paves the way for the expansion of DeFi, NFT and all other innovations taking place on Ethereum.
Before we discuss the specifics, it is worth reviewing how we got here. The conclusion of the discussion is that the future challenge is not only to expand, but also to do so in a way that protects the core attributes of Ethereum.
Ethereum’s expansion history
In 2013, long before the first block of Ethereum was born, Vitalik released the Ethereum white paper. In this white paper, he envisioned some smart contract protocol applications: stablecoins, derivatives, oracles, prediction markets, and DAO.
From the very beginning, Ethereum’s critics quickly pointed out that the initial design was unlikely to support such applications on a global scale, but for Ethereum, scalability is the smallest problem it faces. At the time, no one knew who would build these things, let alone whether anyone would use them.
Soon after, faster and cheaper smart contract agreements appeared. By selling large amounts of tokens to industry insiders, these project parties accumulated huge risk funds. Despite the success of Ethereum in 2017, these projects still claim that the technology of Ethereum is outdated. In the gloom of the bear market in 2018 and 2019, the Ethereum hackathon was packed. Although every Layer 1 competitor claimed that they were destined to eat Ethereum’s lunch, the developers of Ethereum did not leave.
An ecosystem composed of interconnected protocols and applications has gradually appeared on Ethereum, many of which are financial applications (today, we call it “DeFi”), which is one of the most dynamic and fun corners on the Internet one. In 2020, almost all the applications that Vitalik dreamed of in the Ethereum white paper were running on Ethereum, and there were dozens of applications that were unimaginable when Ethereum was born. Not only do they exist, but users pay millions of dollars every day to use them, and these apps have stored tens of billions of dollars in value.
It turns out that the basic features of DeFi on Ethereum are more important than scalability. DeFi developers refuse to sacrifice decentralization for scalability. Instead, they use the composability and capital efficiency that Ethereum provides them to overcome scalability limitations. Since these applications have now attracted millions of users, scalability has again become a top priority.
Here, there is good news and bad news. The good news is that the Ethereum community has been preparing for this moment for many years and has made many efforts at the same time, many of which are already live today. In addition to the Proof of Stake (PoS) consensus mechanism and sharding in Ethereum 2.0, the independent team also seeks various proposals such as sidechains, Rollup, plasma, and state channels. The “bad” news is that the mature first layer (L1) expansion is a multi-year process, and developers will be overwhelmed by various L2 options.
We can expect various L2 solutions to be a useful part of solving the scalability problem. But when it comes to expanding complex, open participation smart contracts, there is a set of solutions that stand out. As Vitalik pointed out in his “Rollup-centric Ethereum Roadmap” post, the Ethereum community may focus on Rollup as a core expansion strategy in the short to medium term.
This makes sense: it will take several years to achieve the scalability of the base layer through Ethereum 2.0, but in the early stages of Ethereum 2.0, by providing a high-performance, low-cost data availability layer, it can greatly help Rollup.
How did we explore the Rollup solution?
Rollup is born out of Plasma. In Plasma, the L1 contract holds funds and tracks the cryptographic commitment to a sidechain state. The actual side chain status is maintained by operators outside the chain, which has a small data footprint on L1. As an iteration of Plasma, Rollup aims to solve the challenge of data availability by publishing some data about each transaction on L1. These transactions can then be “aggregated” into a single side chain block.
This design “split” the work between L1 and L2. L1 handles data availability, while L2 (Rollup in this case) handles calculations. Although the number of transactions processed by Rollup per second is not as good as Plasma, they are not affected by data withholding attacks: that is, network participants can always reconstruct the latest L2 state from the data released to L1. Although certain types of contracts may benefit from the Plasma approach, DeFi contracts cannot tolerate liveness failures. At the same time, the cost of using Rollup is several orders of magnitude cheaper than L1.
There are currently two main types of Rollup: OR and ZKR. Both use L1 to achieve data availability, but each has a different way of handling state transitions. OR uses fraud proof: if an incorrect state transition is issued to the side chain, someone needs to detect the fraud and successfully issue the proof to the main network contract to prevent the loss of funds. In contrast, ZKR issued a cryptographic certificate (proving that every state transition is calculated correctly). Fraudulent transactions will be excluded in advance: fraud proofs will be automatically rejected, just like regular Ethereum transactions with invalid signatures will not be processed by the network. In our opinion, ZKR is objectively better and may be a long-term winning architecture, while OR is an intermediate solution.
As the zkSync team said, trust the mathematics, not the verifier. The key is that security in ZKR relies on cryptography, not game theory. Most L2 technologies, including Plasma and OR, rely on a cat-and-mouse game between the attacker and the honest party. This type of security relies on assumptions about the behavior of different participants. This assumption may prove to be flawed because the behavior of participants is complex and difficult to predict in advance. In addition to unforeseen failure modes, game theory also adds complexity to the design. By extracting security from pure cryptography, ZKR provides higher reliability and simplicity, so we position it as the only L2 solution that can escort Ethereum.
The architecture based on validity proof also makes ZKR more capital efficient than L2 based on fraud proof. The state channel needs to be fully mortgaged. In order to prevent problems, the OR requires users to lock in about two weeks when withdrawing funds. For ZKR, the lock time is only a few minutes. If we expect hundreds of billions of capital to survive through L2 contracts, then the difference in efficiency is decisive. Allowing capital to flow seamlessly to the most valuable places is the core of DeFi’s success. When we migrate to L2, ZKR is our best choice to keep this property.
Finally, the bottleneck of all Rollup will inevitably become the cost of storing data on L1. For those who want lower costs, zkPorter will provide off-chain data availability (see below), it has 20,000+ available TPS, and common transactions like “swap” may only cost a few cents. It is reported that zkPorter will be released together with zkSync 2.0 in the fourth quarter of 2021.
At the same time, ZK proofs will become more effective, and zero knowledge proofs that the speed of development and innovation in the community is amazing. The ZK architecture is quickly becoming the future. The first way to improve efficiency is through better software: In the past few years, there has been an explosion of new proof systems, and improvements have been made in key parameters of proof time and proof size. This trend shows no signs of abating, which will inevitably lead to further improvements in efficiency.
Another (independent) improvement vector is hardware: many teams are building specialized hardware (FPGA and ASIC) for ZK proofs, and these efforts are expected to significantly increase the efficiency of generating encrypted proofs. In other words, unlike other L2 architectures, ZKR benefits from the development of major software and hardware. If we are willing to bet on Moore’s Law, we can expect ZKR’s efficiency advantage will only expand over time.
Until recently, supporting universal smart contracts has been considered a major challenge for ZKR, and it may take several years to resolve. The zkSync community will bring the solution to the market through zkSync 2.0 in 2021, which is much faster than expected. Considering the rapid development of zkSync and its ability to continue to meet its tight deadlines, we consider it as a priority L2 protocol.