Introduction
In the ever-evolving realm of blockchain technology, the concept of Layer2 scalability has emerged as a beacon of hope for overcoming the limitations of Layer1 networks.
This blog post will take you on a journey through the groundbreaking report on Layer2 Evolution, exploring key insights, innovations, and the future landscape of blockchain scalability thanks to the report “The Layer-2 Evolution: Superchains, L3s, and More” by Binance.
Let’s delve into the transformative world of Layer2 solutions and the path towards achieving infinite scalability.
The Rise of Layer2 Solutions
Layer2 solutions are like helpers for the blockchain, which help it work faster and cheaper. They handle transactions without bogging down the main blockchain (Layer1). Optimistic rollup is a special trick used by some projects like Optimism and Arbitrum to process lots of transactions reliably and quickly. Thanks to these solutions, blockchain could one day easily support millions of users at the same time.
Optimism and the OP Stack
Optimism is a prominent player in the realm of Ethereum Layer 2 (L2) solutions, known for its OP Mainnet, an Ethereum Virtual Machine (EVM)-equivalent optimistic rollup that went live in December 2021.
In October 2022, Optimism introduced the OP Stack, a modular and open-source blueprint designed to facilitate the development of highly scalable and interoperable blockchains across various applications.
The OP Stack serves as a foundation for creating a network of integrated and unified L2 blockchains, paving the way for the concept of the Superchain, which envisions a decentralized network of L2 chains built on the OP Stack.
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The latest milestone in Optimism’s journey has been the migration of their flagship L2 rollup to Bedrock. Bedrock represents the first official release of the OP Stack and brings a host of operational and user enhancements to Optimism’s product offerings. This upgrade signifies a significant step forward in Optimism’s quest to streamline and enhance the scalability and interoperability of Ethereum L2 solutions.
Superchain
The Superchain concept introduced by Optimism envisions a decentralized network of Layer2 chains, known as OP Chains, that share security, a communication layer, and an open-source technology stack
These OP Chains are designed to be standardized and interchangeable resources, allowing developers to create applications that target the Superchain as a whole rather than individual chains.
In the context of the Superchain, any deviations from the standardized modules are considered “Hacks” in the OP world. While these hacks allow developers to experiment and create novel applications, they may introduce security vulnerabilities and render the chains ineligible to join the Superchain.
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Looking ahead, Optimism’s L2 rollup chain, post the Bedrock upgrade, serves as the inaugural member of the Superchain. Other projects like Coinbase’s Base L2, Worldcoin, Conduit, and Zora Network are also aligning with the OP Stack to potentially become part of the Superchain. These developments signify the growing adoption and integration of the OP Stack across various projects in the crypto ecosystem, setting the stage for increased interoperability and scalability within the Superchain framework.
Arbitrium Orbit Layer2
Arbitrum Orbit is a development framework introduced by Offchain Labs as part of the Arbitrum ecosystem, which is a popular EVM-equivalent optimistic rollup solution in the Layer2 space. Since its launch in August 2021, Arbitrum has emerged as the largest and most dominant L2 network in terms of Total Value Locked (TVL), exceeding US$5 and capturing over 60% of the market share.
The Arbitrum ecosystem comprises several key products, including:
- Arbitrum One: This is the primary mainnet rollup within the Arbitrum ecosystem. Arbitrum One is designed to be fully trustless and inherits the security guarantees of Ethereum Layer1 without introducing additional trust assumptions.
- Arbitrum Nova: Serving as an AnyTrust solution, Arbitrum Nova is the second mainnet rollup in the Arbitrum ecosystem tailored for projects with cost-sensitive requirements and high transaction volume expectations.
- Arbitrum Nitro: This component represents the technical software stack powering the Arbitrum L2 network. It enables the rollup to operate faster, cheaper, and with enhanced compatibility with the Ethereum Virtual Machine (EVM). Arbitrum Nitro introduces interactive proofs that run on the WebAssembly (WASM) code utilized by Arbitrum.
- Arbitrum Orbit: Positioned as the development framework for creating and deploying Layer 3 (L3) solutions on top of the Arbitrum mainnet. L3 rollups play a crucial role in settling transactions to Arbitrum’s chains and are fundamental to the scaling journey and vision of Arbitrum.
A key aspect of Arbitrum’s strategic vision involves the implementation of L3 rollups that facilitate transaction settlements on Arbitrum’s chains. This strategic direction is encapsulated in the concept of Arbitrum Orbit, which represents the next phase of Arbitrum’s scaling journey and the realization of its overarching vision.
What is a Layer3?
Layer-3 (L3) networks, also known as app-chains, are dedicated networks built on top of Layer2 (L2) solutions. These networks host smart contracts that support specific decentralized applications and leverage the security provided by L2 networks, which, in turn, rely on the security assurances of foundational Layer 1 (L1) networks like Ethereum. While L2 solutions are typically used for general-purpose scaling, L3 networks are designed to cater to specific-purpose applications.
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An easy way to conceptualize L3 networks is to consider them as the rollup for an L2. Instead of settling transactions directly on an L1 network, L3 networks settle on an L2 network. L3 networks offer significantly increased scalability, making them an ideal solution for high-throughput applications, particularly in sectors like decentralized finance (DeFi) and crypto gaming. For example, dYdX, one of the early DeFi applications, migrated from an L1 network to its own app-chain (L3) to enhance scalability.
In terms of throughput enhancement, if an L3 network boosts throughput by 10 times compared to an L2, and an L2 enhances throughput by 10 times relative to an L1, then the L3 network provides a throughput that is 100 times greater than L1. Additionally, L3 networks play a crucial role in improving interoperability and communication among protocols by connecting various aspects of the blockchain and Web3 ecosystems.
The Evolution of Rollup Technologies
Zero-knowledge rollups, exemplified by projects like Starknet and zkSync Era, have gained momentum in the market by providing enhanced privacy and scalability. The introduction of Recursive STARKs by StarkWare has opened new horizons for hyperscaling and advanced applications, optimizing cost, latency, and computational resources.
These advancements are propelling the industry towards the development of Layer3 solutions on top of existing networks.
zkSync and Hyperscaling for Layer2
zkSync, developed by Matter Labs, is a Layer2 scaling solution for the Ethereum network that leverages zk-rollup technology. The latest iteration of zkSync, known as zkSync Era, is Matter Labs’ implementation of a zkEVM rollup. Since its launch on the mainnet, zkSync Era has gained significant traction and adoption, with a Total Value Locked (TVL) exceeding US$625 million, making it one of the most widely used L2 and zkEVM solutions in the ecosystem.
Hyperscalability is at the core of zkSync Era’s vision, aiming to handle an infinite number of transactions while maintaining high levels of security and decentralization. To address the increasing demands of Web3 applications, zkSync has developed a long-term solution centered around the concept of hyperchains. The architecture of zkSync is designed to integrate a network of hyperchains, all connected to a central basechain.
Hyperchains in the zkSync ecosystem represent an extensive network of trustless and customizable interconnected blockchains. These hyperchains operate in parallel, resembling a fractal structure, and can be created or deployed by any entity in a permissionless manner. The modular approach of implementing hyperchains includes a software development kit (SDK) framework that allows developers to choose different components for their blockchains or develop custom solutions tailored to their specific needs.
By anchoring these hyperchains to a central basechain, zkSync aims to achieve a scalable and versatile infrastructure that can support a wide range of decentralized applications while ensuring security and decentralization. This approach not only enhances the throughput and efficiency of the network but also fosters innovation and customization within the zkSync ecosystem.
StarkWare and Fractal
StarkWare, the organization behind the Ethereum Layer2 ZK rollup solution Starknet, has been a pioneer in introducing the concept of fractal scaling and multi-layer architectures within the blockchain space. In their blog post titled “Fractal Scaling: From L2 to L3” published in December 2021, StarkWare outlined their perspective on Layer3 (L3) solutions, highlighting the functional use cases and benefits that such architectures could offer.
The multi-layer network thesis proposed by StarkWare suggests that while L2 solutions primarily focus on general-purpose scaling, L3 solutions should be utilized for more customized scaling approaches. This strategic direction aligns with the evolving needs of the blockchain ecosystem, where tailored solutions are required to address specific use cases and optimize performance.
StarkWare’s initial concept of fractal scaling and multi-layer architectures has influenced other L2 projects to explore similar avenues for advancing Ethereum’s scalability. The visual representation of StarkWare’s proposed multi-layer architecture framework illustrates the hierarchical structure envisioned for efficient scaling and customization within the ecosystem.
Recursive STARKs
Furthermore, StarkWare’s announcement of Recursive STARKs in August of the previous year introduced an innovative solution that significantly enhances the scalability of blockchain systems. Recursive STARKs enable the aggregation of multiple transaction proofs into a single proof, thereby increasing the throughput of L2 scaling solutions. This technology relies on the Cairo programming language for complex proof generation tasks and SHARP for aggregating transactions from various applications into a unified STARK proof.
The implementation of Recursive STARKs aims to optimize costs, reduce latency, and enhance computational efficiency, paving the way for the development of L3 solutions on the public Starknet network. As StarkWare continues to refine the Recursive Verifier and enhance performance and cost-effectiveness, Recursive STARKs are poised to drive Starknet’s evolution towards L3 networks.
The ongoing advancements in StarkWare’s ecosystem, including the development of zkVM L3s on top of Starknet by Slush, indicate a growing interest in leveraging fractal scaling and multi-layer architectures to achieve enhanced scalability and customization within the blockchain space. Observing Starknet’s progression and strategic updates will provide valuable insights into the future of Ethereum scaling and the adoption of advanced blockchain applications.
Challenges and Solutions in Blockchain Scalability
The current scalability paradigm poses challenges for blockchain networks like Ethereum, which must operate at Internet-scale.
The emergence of Layer2 solutions offers a promising path to address these challenges, providing a platform for developers to deploy rollups of various types with reduced technical complexities. The goal is to create a seamless, secure, and highly interoperable environment that can deliver the next level of scalability.
The Future Landscape of Blockchain Scalability
As we stand on the brink of a new phase in blockchain scalability, the industry is abuzz with discussions about the next evolution of Layer2 solutions.
The potential for L3 networks, Superchains, and hyperscalability is immense, with various projects vying to define the future of blockchain technology. While differing viewpoints exist, the shared objective remains infinite scalability, paving the way for a Web3 world that rivals its Web2 counterpart in seamless functionality and user experience.
Conclusion
In conclusion, the Layer2 Evolution report sheds light on the transformative potential of blockchain scalability through innovative rollup technologies and solutions.
From the success of Optimistic and Zero-knowledge rollups to the emergence of Recursive STARKs and the vision for Layer-3 networks, the future of blockchain scalability is bright and promising.
As the industry continues to evolve, the focus on simplifying deployment processes, enhancing interoperability, and achieving infinite scalability will drive the next phase of blockchain innovation. The journey towards a seamless, secure, and highly scalable blockchain ecosystem is well underway, and the possibilities are endless.
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