Ethereum’s future hinges on interoperable layer-2s

    10 Jul 2024

    It’s almost universally agreed within the cryptosphere that the Ethereum blockchain is good – but not perfect. The vast majority of Ethereum Virtual Machine (EVM) developers agree that if the layer-1’s (L1) execution layer were fast and scalable, there would be less of a need for layer-2 (L2) solutions. Yet, we know that Ethereum’s future depends on L2 solutions.

    The double-edged sword of L2s

    While L2s have demonstrated their ability to speed transactions, dramatically lower gas fees, and exponentially scale transaction volumes, those gains come with a significant trade-off — multiple L2 blockchains operating in isolation, also known as “fragmentation.”

    CoinGecko currently ranks 46 different L2 solutions on its list of offchain vertical scaling protocols, many of which run on Ethereum to boost its scalability while maintaining security standards and decentralized functionality.

    However, such an array of L2 options can create interoperability issues; innovation siloes; as well as sub-par user experiences. The original L1s had similar fragmentation issues when they launched including: different consensus methods, unique architectures, and performance constraints.

    Ethereum may implement enshrined ZK-EVM in the future

    Having lived through the fragmentation challenges of the L1s, it’s not a surprise that Ethereum’s co-founder Vitalik Buterin said in December that he supports the idea of installing an “enshrined ZK-EVM” upgrade for his blockchain.

    Even though zero-knowledge proofs (ZKPs) have been around for decades, they’ve really become popular within the blockchain and cryptocurrency space during the past few years. Using cryptography, ZK tech enables two parties to agree that a claim is valid without exchanging details of the claim.

    In theory, the idea has a lot of merit with a whole lot of new complexity as well. For example, one rule change he proposes would require adding a pre-state root and post-state root to each block that enters the consensus layer.

    This means that each block gets a special type of cryptographic proof showing that the transactions in the block are valid and then correctly updates the blockchain’s state. This proof doesn’t give any extra information about the transactions themselves; it just shows they are correct. Also, there could be an option to use multiple such proofs for even greater security.

    However in practical execution, a single rule change could create challenges for hundreds of Layer-2 developers and programmers on the EVM when it comes to compatibility, upgradability, and adaptability within their existing systems. An Ethereum with enshrined ZK-EVM is probably not right around the corner.

    Interoperable L2 ecosystems are the solution for now

    To address the issue of fragmentation, end-users and developers need to be able to exchange crypto-assets information between L2s in a cheap and fast way, without having to make a stop on the Ethereum L1.

    Fortunately, a few L2 ecosystems are focused on delivering just that, most notably ZKsync’s ZK Stack and Polygon’s CDK. When a new blockchain network is deployed using one of these frameworks, it shares a common bridge to Ethereum with the other chains that leverage the same framework.

    Additionally, as all the chains that use the same framework also share a common proof system, it should be possible to send cross-chain messages in an increasingly cheap and fast way, while still relying on the security of the underlying Ethereum L1.

    For the time being, these ecosystems are not interoperable with each other. For example, ZK Stack chains are only interoperable with other ZK Stack chains. Besides, even within a single ecosystem, the technology implementations, wallet integrations and user interfaces are still at a very early stage.

    Nevertheless, these L2 solutions already represent a step-change toward a new era in blockchain technology. They can be used by developers to explore the use cases and user experiences made possible by cross-chain communication secured by Ethereum.

    For example, with this new approach, it would be possible for a user to lock one crypto-asset as collateral on one L2 chain while borrow another crypto-asset on another L2 chain.

    The bottom line is that, while Ethereum has laid the foundational groundwork for decentralized applications, it is clear that the mantle of progress now firmly rests on the shoulders of L2 solutions.


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