Modular blockchain and extended execution layer innovation

Modular blockchain and extended execution layer innovation

Source: IOSG Summit 2021

Understanding ZK Rollups and Bullish Rollups in a Popular Way

First, let's take a look at Layer 2.In fact, since Layer 2 doesn't have an idea of ​​a block, node, or chord, you can't see the block in the Layer 2 block browser. The Layer 2 operator is solely responsible for connectivity and operations. At the heart of the second level network are market orders.

In 2021, we have seen the rise of the Layer 2 market and the emergence of more activities / plans. Currently there are over 19 goals or a second layer application of Ethereum. Among them, StarkWare and ZkSync are the leaders in ZK Rollups, complete zero-proof measurement. Arbitrum and Optimism are leaders working in the field of optimism.

ZK's main channel StarkWare TVL is worth around $ 1.2 billion and produces more than 55 million units. Currently, operations using StarkEx technology solutions include the famous and popular dYdX, ImmutableX, DeversiFi and Sorare. On the PO side, Arbitrum has produced more than 3 million advertisements in total. Now TVL is more than double the consensus and has reached $ 22.5 billion (the only good idea is to do over 200,000 businesses and TVL is $ 1.1 billion). Over time, projects moving towards cross-chain liquidity such as Celer, Hop Protocol and Connext cannot be ignored.

When determining, the differences between the two Layer 2 solutions (ZK and OP) can be classified as follows:

ZK encrypts part of the event and proof of the event and sends it to the mainnet to prove that the event is the same, and the OP also sends the same results and data to the important network. proof to be confirmed.

As the Layer 2 process becomes more mature, it can be predicted that Layer 2 will provide more richness. We anticipate that over 80% of the traffic on the Layer 1 backbone will move to Layer 2 within the next year. This is only the start of the successful Layer 2 migration.

3 layers of modular blockchain

Source: IOSG Summit 2021

The concept of modular blockchain offers a better solution to the “impossible triangle” of expansion.By separating the finished process from the security layer and the data layer (data available), the Ethereum keychain will offer a better design, and the new L2 process will offer higher TPS and lower operating costs.

In practice, the blockchain has three roles.awareness, security,yethave information.For a long time, these activities were handled by the blockchain itself, which also created scalability issues. In the concept of modular blockchain, the layer, the security layer and the data layer are independent.

Completion, security and AD are independent based on the concept of modular blockchain,Among them, the most important in 2021 is the improvement of the Agenda.Due to security concerns, this level is only limited to BTC / ETH / Polkadot. And it is not expected that BTC will compete with ETH in the near future. When it comes to DA, ETH is still in the lead, mainly due to the large data size of various links in the chain. At the same time, potential DA chains cannot be ignored. As the development of ETH2.0 brings more and more data available in the rollup, the mainchain TPS will be very good and the processing costs will also be reduced.

If you look at our diapers,From a security layer perspective, BTC and ETH are the same chains that focus on distributing their nodes. Safety procedures are the most important, because the protection control system and the level of distribution are the most important in the chain. Currently, BTC does not intend to provide more data than ETH in the near future, so Ethereum remains the top Layer 2 security provider.

in terms of available information, sufficient number of blocks can guarantee more data stored. ETH is now a leader and can provide enough information for Layer 2 thanks to its integrated connectivity plan. However, competitors like Celestia, Polygon, Zeus, and Tezos also have similar plans for ETH. The development of ETH2.0 (recently abandoned at the time by the Ethereum Foundation) provides more data for the rolling process, which makes on-line TPS more efficient and lower costs.

Finally,Marketing and smart contracts happen at the finishing stage.. All smart contracts, dApps, and users also communicate at the executive level. The management process should focus on maintaining as many processes as possible while outsourcing the security and data available for the project. Now Layer 2, like Arbitrum, Optimism, StarkWare, and ZkSync, all focus on developing process optimizations.

Now the admin level overview

Phase 2 increase in 2021

Source: IOSG Summit 2021

Although Series 2 was only online for a few months, their TVL sales reached $ 7 billion.TVL with the highest arbitrum of the 2 existing processors. Arbitrum offers EVM, which makes it easier for developers to submit EVM applications. Binance recently announced that it has started supporting Arbitrum Option 2 deposits and withdrawals. This will also be beneficial for using Arbitrum Option 2. Then the ZK (StarkWare) rollup made the subject to many trades in the past 7 days, indicating better value than the bullish bid. Additionally, most DeFi apps like Uniswap and Sushiswap are also shipped to L2.

Some process 2, such as dYdX, achieved TPS performance similar to CEX and L1 applications. In the two months since dYdX went live, there was a day that there were more trades than Coinbase and Uniswap together!From this point of view, Layer 2 has unlimited capabilities.

The inconsistency of layer 2 isthe price changes. Layer 2 exchange rate is not cheaper than Layer 1, but after network upgrade by developers, Layer 2 exchange rate should be lower than today. Phase 2 the competitive advantage in the exchange rate will gradually emerge. Currently, the Layer 2 exchange rate is more than 10 times lower than the L1 exchange rate. Going forward, each exchange rate will be less than $ 0.1. Going forward, Ethereum Layer 2 will be more commercial than Layer 1 like BSC and Polygon, with an exchange rate below 0.1.So, over the next 3-5 years, we anticipate that most applications and users will be moved to Layer 2.

Who next? Set 3 for Damon!

Source : IOSG Ventures

If you think Layer 2 is the best extension solution, you are wrong! Layer 2 can increase capacity and reduce the cost of each exchange, but some applications require even more resources to meet their needs. Layer 2 will retain its distribution advantages and other purposes, but Layer 3 will make the application more efficient.

Layer 3 is Layer 2 and Layer 2 is Layer 1. Layer 3 declares the Layer 2 validation certificate just as Layer 2 performs batch transactions on Layer 1 and publishes the validation of the certificate. If Layer 2 can support smart card users (for example, after the release of StarkWare StarkNet), this multi-volume model can support data mining. can be used. In addition to the extension, Layer 3 has several improvements, such as privacy. In this case, the certificate validation is replaced by the zero-knowledge validation.

Therefore

We have been dedicated to the development of Layer 2 circuits in recent years. We are very happy to work with many great L2 providers such as Arbitrum for bullish stacks, StarkWare for ZK stacks and Celer, our cross-chain bridge liquidity solution.

We believe that Phase 2 networks will become more competitive than Exchange Rate / GST Phase 1 in the future.

In addition to general process 2, layers 2 and 3 will continue to extend the blockchain, for example, StarkWare developers will develop SaaS services.

On the processing side, there are exciting capabilities in newer technologies such as Celestia for legacy data and Movr for embedded data lines, which are good examples.

We also hope to see large-scale application developments in the development of new technologies used in Agenda 2 technology. Layer 2 features such as expandable capabilities and privacy protection will lead to further design additions. dApp!