Ethernet on-chain expansion is not a new problem, it has been talked about for many years, and now it has come to the time when we have to face the challenge directly: exchange public chains such as BSC and Heco are in full swing; new public chains such as Polkadot, Solana and Near are ambitious; the pace of migration to Layer2 is still “loud thunder but little rain” ……
At the crossroads of Layer2, there will be a new public chain war, a war that Ether can’t afford to lose.
V-God has always been fond of Rollup, and ZK rollup and Optimistic rollup have become the most popular Layer2 duo.
Optimistic rollup, like its name, tends to believe that honest people will submit honest data and will be punished if they are dishonest.
In terms of architecture design, Optimistic Rollup borrows heavily from Plasma and ZK Rollup, and is generally a middle-of-the-road idea that doesn’t strive for extreme scalability, but rather weighs compatibility and allows for completely generic smart contracts to run in Layer 2.
This is the biggest advantage of Optimistic Rollup, being seamlessly compatible with smart contracts on Ether, making the developer workload much less.
The corresponding disadvantage is that the TPS improvement is limited, the exit network may be calculated in days, and the data security is doubtful.
Another rollup is ZK rollup, which is currently favored by V God.
The advantages and disadvantages of ZK rollup are exactly the opposite of Optimistic Rollup.
The biggest advantage of ZK rollup is that it is fast. ZK rollup uses zero-knowledge proof to achieve data security, and when Layer1 interacts with Layer2, Layer1 can easily believe the data from zk rollup and complete the verification directly in Layer1, thus completing the transfer quickly.
In contrast, the disadvantage of ZK rollup is that it is difficult to support universal smart contracts, and therefore, not developer friendly. ZK rollup developers need to develop smart contract modules independently, which is not only difficult and labor intensive, but also difficult to replicate and migrate, but this also brings an advantage that when a team really develops and uses zk rollup, it proves that they have real skills.
To summarize, the comparison of the two solutions, zk rollup is fast and secure, but not compatible with smart contracts, not developer-friendly; Optimistic Rollup is compatible with smart contracts, beneficial to developers, but low TPS, not efficient.
Who is the better of the two solutions?
In the short term, Optimistic Rollup has a lower threshold, and the universal EVM allows developers to get started quickly, so it is more suitable for the current stage of development; ZK rollup has a higher development threshold, and is more suitable for areas that require fast payment.
However, the answer to this question needs to be left to the project side to write, not who has great technology, who will definitely win, Layer2 itself is fragmented, when an L2 ecological project is more and more, also because of the network effect will lead to the strongest stronger.
Currently, various projects have started to stand in line and migrate.
For example, Synthetix and Uniswap have decided to adopt the Optimistic Rollup solution.
To incentivize users to migrate to Layer2, Synthetix has introduced an incentive program where users who pledge into Synthetix L2 are rewarded with SNX tokens.
The much-anticipated Uniswap V3 release may also migrate to Layer2, with Uniswap founder Hayden Adams tweeting that V3 will “solve all the problems”.
As early as October 2019, Uniswap released a demo (example) of Uniswap + Layer2, which described Unipig with an Optimistic Rollup solution as being able to achieve essentially no Gas handling fees, with throughput scaling to 200 tx/s, equivalent to 10 times the efficiency of the main network.
Tether is considering migrating ERC-20 USDT to Layer2 of ZK Rollup; the derivatives trading platform dYdX is using Starkware’s solution ……
A key question, will Optimistic and the ZK line of development teams issue coins?
Of course, it’s only a matter of time, as Matter Labs founder Alex Gluchowski has made it clear that he will release a governance token based on ZK Rollup’s Layer 2 scaling solution zkSync, and Offchain labs and Starkware will follow suit with a coin offering.
The latest news is that crypto venture capital fund Andreessen Horowitz (a16z) has announced that it is leading a $25 million Series A round of funding for Optimism and will launch a public-facing mainnet in March.
There is no doubt that these ace projects have been underwritten by the head institutions and the opportunities for the common man still lie in the secondary market.
The New Public Chain War
The concept of Layer2 is not new, but in terms of token performance, L2 concept tokens have not been able to have a sustainable big market, mostly fleeting. The main reason is that L2 mostly remains on the concept, followed by too many drawbacks of L2 itself, the most criticized one is that it will form silos and cut off the Ethernet ecology.
The power of the ethereum ecology lies in the fact that enough assets are deposited, and through contract-to-contract interaction, various different types of DeFi products can be built together like building blocks, thus stimulating innovation.
The emergence of Layer 2 has broken the composability of Ethernet, and developers are faced with the problem of choosing sides. When different projects are deployed in different Layer 2 projects according to their needs and network of contacts, then the cost of their interaction will be greatly increased, which in fact fragments the Ethernet ecology and forms silos.
Silos are inevitable in the short term after project parties make L2 migrations, but if so-and-so solution gains widespread support, then it will intensify the pace of L2 migration and keep users away from L2.
From this perspective, Layer2 is similar to rebuilding a public chain ecology by relying on Ether. The war of Layer2 is essentially a public chain war, and in general, it presents a three-way melee.
First of all, it is the war within Layer2. The Optimistic Rollup and ZK rollup we mentioned earlier, as well as Offchain labs and Starkware will be the main characters, and the focus will be on grabbing projects and encouraging migration.
To encourage migration, “liquidity incentive + L2 airdrop” will probably be the focus of the next phase.
The other camp is the exchange public chain camp led by Coin Smart Chain (BSC) and Firecoin Eco Chain (Heco), both of which benefit from Ether congestion, take over the traffic spillover from Ether, are compatible with Ether EVM, friendly to developers, and have the resources and traffic support from the exchange for coin uploading …… Nowadays, BSC and Heco have become a network ecology that cannot be underestimated, and can even be said to be second only to Ether.
The current exchange public chains can be understood as a new Layer2.
Finally, there is the new public chain camp, led by Boka, Avalanche, Near, Algorand and Solana, benefiting from the same logic. Ether is no longer a monopoly, money is spilling over, the market needs stories of new public chains, and at the same time these projects are compatible with EVM and are also grabbing developers and users.
There are three forces, both internal battles and external fights. At the moment, the Layer2 camp is not as strong as BSC and Heco, and there is a more obvious trend for projects and users to migrate to BSC and others than to L2.
So, BSC and Heco have traffic, capital and wealth effect; new public chains such as Boka have technology and ecology …… What makes you think Layer2 is the most certain opportunity this year?
The answer to this question is to believe in ethereum.
In a recent interview, the founder of Polygon (Matic) rebutted the notion that ethereum killers are taking advantage of the opportunity to replace ethereum.
Ether is the most tested and secure programmable blockchain in the world, and as the ultimate settlement layer and source of security, it’s hard to replicate the success of Ether, no matter how much money you have, just like the entire digital nation that has been formed around it.
EVM has become the global standard virtual machine, and it will take years for any competitor to get there. In addition to the technical stuff, the community and culture are uniquely competitive, something that is deeply ingrained, yet poorly described.
For example, some traders on The Defiant’s Discord channel said they are using BSC, but wait until Ether’s Layer 2 solution is more widely adopted in the DeFi dapp, and they plan to return to Ether soon.
In the meantime, both BSC and Heco are both a competition and a user education in disguise for investors making the Layer 2 migration.
For Ether, this is a losing battle.
In the years when ETH 2.0 is still being birthed and Ether is congested, Layer2 is a lifesaver, which is related to the future development of Ether ecology.
If L2 succeeds, then the valuation of the ethereum ecological projects will be boosted, and the stories of exchange public chains as well as new public chains and the logic of high valuation will be questioned, ETH TO THE MOON, L2 TO THE MOON.
If L2 fails, then the public chain dynasty dominated by Ether for a long time will disintegrate and return to the Warring States era – the multi-chain world – and the blockchain world will usher in a new wealth distribution pattern.
Some expect the former, some expect the latter, but no matter what, in 2021, you have to pay attention to Layer2.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/layer2s-crossroads-the-war-oew-public-chains/
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