As is well known, blockchain has the concept of an impossible triangle, and it cannot simultaneously balance scalability, security, and decentralization. For any blockchain, it is possible to satisfy at most two dimensions simultaneously

As is well known, blockchain has the concept of an impossible triangle, and it cannot simultaneously balance scalability, security, and decentralization. For any blockchain, it is possible to satisfy at most two dimensions simultaneously. Since its inception, Ethereum has been undoubtedly secure and decentralized, but its poor scalability (throughput of 15 transactions per second) has often led to network congestion and high transaction fees, which are often criticized. The emergence of Layer2 on Ethereum is to address ETH scalability issues, in short, to improve Ethereum's transaction speed. Ethereum co founder Vitalik announced the launch of ETH2.0, and the development process has been very slow so far. During this period, some developers have sought a compromise and a second best solution, which has led to the emergence of a Layer2 solution - attempting to migrate transaction data processed by Ethereum's first layer to outside Ethereum to improve transaction speed and load.

At present, there is also a common view that Layer2 will be the most effective expansion plan before the arrival of ETH2.0. Although as a compromise measure, it must be said that Layer2 has developed rapidly. As of the publication, according to L2Beat data, the overall lockdown volume of Ethereum's second tier has reached 9.32 billion US dollars, indicating its rapid development momentum. This article will briefly review the development history and current project development status of Ethereum Layer2, and analyze the competitiveness and development prospects of each Layer2 project from technical, ecological and other dimensions.

Layer2 Technology Iteration

Status Channel

Roll upStatus ChannelStatus ChannelLayer1

Status Channel

2Status Channel100Status Channel

Status ChannelStatus ChannelStatus ChannelLayer2 Finance$207,300app.l2.financeStatus ChannelLayer2Layer2.FinanceLayer2OP Roll upzk-proof

Plasma

Status ChannelPlasmaLayer1Plasma

Taking the previous purchase of coffee as an example, Xiaoming does not need to prepay funds to Layer1 in advance. Plasma will summarize information over a period of time and summarize Xiaoming's transaction information to the main chain of Ethereum within each cycle. This means that the transaction information that occurred during this cycle cannot be processed in a timely manner. If this cycle is one hour, Xiaoming will be unable to complete the purchase of coffee within one hour. In addition, Plasma has a 7-day fraud proof.

Status ChannelPlasmaPlasma Merkle Merkle Plasma7

Polygon (side chain)

Polygon is an Ethereum Layer2 solution that is not only an independent extension solution, but also a multifunctional framework and protocol that can be used to create blockchain networks compatible with Ethereum.

On Polygon, there are two types of blockchains that can be deployed: independent chains and secure chains. Independent chain refers to a blockchain that does not rely on Ethereum's consensus mechanism to ensure security, and is usually suitable for projects that already have their own verification nodes or seek other scalability solutions. These independent chains are typically used by enterprise networks or mature chains that wish to integrate with the Polygon Ethereum ecosystem.

The security chain relies on the chain of the Polygon security layer to achieve a high level of security and allow developers to choose between various security solutions. These security chains are designed to support startups and projects, enabling them to build reliable and secure systems. Among them, PolygonPoS (Proof of Stack) chain is one of the most typical security chains. The chain adopts a proof of equity consensus mechanism and regularly submits snapshots of the chain to the Ethereum blockchain, which are submitted by Polygon's 100 validators. This method overcomes the problem of low Ethereum throughput and provides faster transaction processing speed, thereby reducing gas fees and improving user experience. The total ecological lockdown volume of Polygon is currently 787 million US dollars (according to DeFilama data), with extremely high ecological prosperity, including high-quality DeFi projects such as AAVE, QuickSwap, and Compound. At the same time, Polygon is currently working on a full stack solution, and PolygonZkevm has recently launched its main network.

PolygonTVL data (DeFilama)

Roll up

Regarding Rollup, Web3CN has previously introduced it in detail several times. The following content will briefly summarize the technical features of Rollup. Rollup is essentially a technology that packages a large amount of transaction information into a single transaction for processing. The most widely used underlying technology in the current market is OP Rollup (Optimistic Rollup). It achieves expansion through fraud proofs. In Op Rollup, transaction data is optimistically believed to be correct by the system, without real-time verification and directly entering a waiting period. During the waiting period, if a node raises objections and provides evidence to prove the existence of malicious transactions, the transaction will be cancelled; If there are no objections, after the waiting period ends, the transaction will automatically complete and be verified on the main chain. In this regard, Plasma's fraud verification mechanism is used, and the default user will not engage in fraud. However, to ensure optimistic security, a seven day verification period is necessary. ZK Rollup mainly relies on zero knowledge proof technology, which separates the calculation and verification processes, completes the verification of contract execution offline, and then submits the verification results to the Ethereum main network. The calculation process is conducted offline, and the verification results are only submitted to Ethereum as proof, thus providing the highest level of security and user privacy protection. Due to the use of zero knowledge proof technology in cryptography by Zkrollup, which includes mathematical operations and is heavily based on mathematical operations, it is more difficult to achieve compatibility with ETH. Ethereum founder V Shen once proposed his own opinion on the relationship between Op Rollup and Zk Rollup: in the short term, Op Rollup will be accepted faster, but with familiarity and continuous exploration of zero knowledge, Zk Rollup will be more optimistic in the long run.

Rollup RollupRollupZk-rollupStarknet96RollupRollupRollup PlasmaStatus Channel

Starknet Full Stack Open Source

Validium

Most people may not be familiar with Validium, but in fact, it was proposed by Stackeware as early as June 2020. Vaidium combines Plasma and zero knowledge proof, which can be understood as a hybrid that combines the advantages of Plasma and zkrolup. This allows Validium to process calculations faster and more extensively. Compared to Zkrolup, Validium's most important feature is to store transaction data offline, Further reduce costs and improve performance. Currently, ZKrollup has a strict usage limit of 2000 transactions (TPS) on the current Ethereum main network, while StarkEx using Validium has an astonishing 9000 transactions per second. In addition, it combines the advantages of zkrollup, verifying its effectiveness faster than plasma, and Validum zero knowledge proof reduces dependence on operators and thus reduces the risk of centralization. Its usage scenarios mainly focus on DEX. Validium only relies on the main network for settlement and consensus. Currently, the projects that are developing well to utilize Validium include Immutable, ApeX, and Sorare, which are supported by Starkware's technology, such as DEX.

Volition - Your data, your choices

Volition combines zk roll up and Validium, providing users with a richer combination of solutions. In Voliiton, Zk roll up and Validium share a state root, which makes the funds on Zk roll up secure even when Validium is attacked. Institutions and retail investors can therefore choose different solutions based on their different needs: DEX, which provides billions of dollars in liquidity, will choose the high cost Zk roll up in exchange for the highest level of security protection, while retail investors will choose the more cost-effective Validium. The flexibility in data availability patterns will once again provide greater freedom for Starknet developers and users to choose the security level that best suits their specific needs in a cost-effective manner. According to the official roadmap, the Volition will be implemented on the testing network in the fourth quarter of 2023. Web3CN will also provide a detailed introduction to Volition in future articles.

Layer2 Technology IterationLayer 2Status Channel PlasmaRollupOP-Rollup ZK Rollup Layer 2 StarkwareLayer2

Layer2 Ecological Status

VISATPS17004000Validium9000TPSLayer2TPSgasLayer2 Ecological StatusTVLTVLLayer2Layer2

At the beginning of the article, it was mentioned that the total TVL lockup volume of Layer2 track is 9.32 billion US dollars. From the following figure, we can find a more specific and detailed ranking situation:

From the above figure, it can be seen that the dominant player is still the ArbitrumOne, with its TVL occupying half of the entire Ethereum Layer2 track -54.16%. OPMainnet followed closely, with a TVL of 2.37 billion US dollars, accounting for 25.59% of the entire Layer2 track. The TVL of the top ten layer2 projects is 8.99 billion US dollars, accounting for 96.5% of the total TVL of layer2; Layer2, which utilizes ZkRollup technology, occupies 6 seats, but the total TVL is only $787 million; OP Rollup occupies four seats, but the total TVL is as high as 8.2 billion, which is more than ten times the difference between the two.

In short, Layer2, which is mainly based on OP-Rollup technology, occupies the vast majority of the current second tier ecosystem. Due to the issuance of coins on the OP-Rollup track's Arbitrum and OPMainnet, as well as Zk's Starknet and Zksync's coin issuance expectations, it attracts a large number of users who interact with airdrop expectations, resulting in a certain phenomenon of false prosperity, further establishing the dominant position of OP-Rollup. It is worth noting that the single derivative protocol GMX on Arbitrum has a TVL of $417 million, which is $17 million more than ZKsyncEra, which ranks first in TVL on the Zk track.

Layer2 Development Prospects

Superchain

Taking OPStack as an example, OPStack is an open-source development tool maintained by OptimismCollective to support Optimism blockchain. It aims to provide standardized and shared software components to simplify the process of creating new Layer2 blockchains. The core goal of OPStack is to support the creation of new L2 blockchains. It provides a set of shared standards to prevent different projects from repeatedly building the same software in isolated environments. OPStack is the engine of Optimism blockchain, including OptimismMainnet and the future OptimismSuperchain. Superchain is a set of interoperable Layer2 blockchains that share security, communication layers, and development tools. Currently, there are 19 OPStack based projects supporting OPSuperchain, including exchanges, public chains, clients, NFT, and many other fields. Among them, BaseTVL, which officially opened its main network on August 9th, has reached as high as $385 million.

Currently, the full stack Layer2 with shared security, communication layer, and development tools will be the future development trend, and OP will take the lead in this field; Other Layer2 is also actively deploying their own unique "Superchain": Starknet announced on July 19th that Starknet is committed to one of the most high-performance and innovative expansion platforms, and Paradix has also planned to feature as the first Appchain on Starknet. ZkSync introduces the concept of hyperchains, a customizable and trustless chain blockchain network that achieves ultra-high scalability, improved composability, and enhanced security. Polygon2.0 aims to unify a set of L2 solutions including PolygonPoS, Supernets, and zkEVM through cross chain coordination protocols, creating the "value layer of the Internet".

In terms of technology, ZK Rollup will be the future development trend, but in terms of ecology, currently the Layer2 ecosystem is still dominated by OP Rollup. It has to be said that currently Layer2 has its own advantages, such as Starknet's technology, Arbitrium's ecology, and the OP full stack track. Although each Layer2 has different ideas and is in different states, they are all based on a common goal of achieving infinite scalability that cannot be achieved on Ethereum networks. This means that Ethereum Laye2 needs to create a Web3 world similar to Web2 that can be infinitely expanded, providing the best environment for developers and users. We also look forward to an Ethereum Layer2 network that is more mature in technology, more prosperous in ecology, and more friendly in development environment.