L3 Is the Future of Ethereum's Rollups Scene
Written by William Peaster
It’s rollup time ...
The Ethereum community is in wartime mode when it comes to scaling. The gas fees are simply too damn high!
Toward this end, excellent work is being done right now around layer-two (L2) scaling solutions like optimistic rollups (ORUs) and zk-rollups (ZRUs). Here, I say L2 scaling solutions in the strictest sense, i.e. projects whose security is directly underpinned by the Ethereum’s.
Sure, sidechains like xDai and more centralized Ethereum Virtual Machine-compatible smart contract platforms like Binance Smart Chain can handle overflow activity from Ethereum. Such systems have their place, but these projects are ultimately separate chains that rely on their own centralized security structures. They’re vulnerable in this way.
That’s why rollups are key for decentralized scaling. They offer Ethereum users cheaper and more rapid transactions without having to compromise on the benefits of decentralization, which is what makes Ethereum magical in the first place: it’s opt-out, open, and permissionless infrastructure for anyone. So rollups are going to be big going forward.
“Rollups are all the rage in the Ethereum community, and are poised to be the key scalability solution for Ethereum for the foreseeable future,” as Vitalik Buterin wrote in a blog post earlier this year.
But there’s a catch ...
Rollups are really powerful and hold great promise, but while the rollups ecosystem is still so primitive, it’s facing a bit of an unsolved problem: composability.
What’s composability, you ask? Well if you’ve ever heard anyone mention Ethereum’s “money legos,” they’re referring to how powerful and innovative it is that all these Ethereum dapps can easily plug into each other, interact, and be combined in endless combinations toward new use cases and products.
This is composability then, namely the ability for Ethereum’s dapps to readily and openly interact with each other on the reigning smart contract network’s layer-one (L1) mainnet.
But as well all know, L1 transactions are getting increasingly expensive. This is leading to some Ethereum dapps embracing optimistic rollups and others embracing zk-rollups.
The problem here? ORUs and ZRUs have distinct designs. The former rely on what’s called fraud proofs, while the latter rely on what’s called validity proofs.
Accordingly, the risk is that we get a bunch of L2 “silos” pop up that can’t communicate directly with each other, a dynamic that frankly would suck for users. This could break composability around Ethereum if all its money legos split off into separate L2s and can no longer easily interact.
The good news is that this is more about how early the L2 space is rather than a fundamental flaw. Why? Because an early L3 project is already here, Connext’s Vector, and it’s all about making L2s and beyond readily interoperable!
Connext, a state channels project (sort of like Bitcoin’s Lightning Network), released a testnet verison of Vector last fall and then published the protocol’s v0.1 mainnet release in Jan. 2021. In the team’s own words:
“At Connext, our goal is to build the cross-chain routing and micropayment layer of the decentralized web. Vector sits on top of Ethereum, EVM-compatible L2 blockchains, and other turing-complete chains, and enables instant, near free transfers that can be routed across chains and over liquidity in any asset.”
This means Vector, which is already live, will increasingly serve as a hub for “ultra-simple” interoperability between ORUs, ZRUs, and more. So L2 silos may be a concern while the L2 scene is young, but it won’t matter in the years ahead as Vector and other L3 hubs allow money legos to connect wherever they need to.
So I say all this as alpha. Some people debate whether Ethereum’s L2 scene will end up working. Not only will it end up working, then, but it will end up thriving through L3 solutions like Vector. Mark my words!
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