Ethereum co-founder Vitalik Buterin pens an analysis of Ethereum’s layer-2 ecosystem, highlighting diverse approaches to scaling the smart contract blockchain.
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The Ethereum layer-2 ecosystem is likely to continue evolving with diverse technological approaches, according to co-founder Vitalik Buterin.
The co-founder of the smart contract blockchain unpacked the current landscape of Ethereum’s scaling ecosystem on his personal blog, with several layer-2 protocols differing in their approaches to bring greater scaling capacity, lower costs and increased security.
As Buterin highlighted, Ethereum Virtual Machine (EVM) rollups pioneered by Arbitrum, Optimism, Scroll and more recently, Kakarot and Taiko, have drastically improved the respective security of their solutions.
Different types of layer 2shttps://t.co/ry4VTtWhJ1
— vitalik.eth (@VitalikButerin) October 31, 2023
Meanwhile, “sidechain projects” like Polygon have also developed their own rollup solutions. Buterin also highlights “almost-EVMs” like zkSync, extensions like Arbitrum Stylus and zero-knowledge proof pioneers Starknet as important players driving scaling technology for the ecosystem:
“One of the inevitable consequences of this is that we are seeing a trend of layer 2 projects becoming more heterogeneous. I expect this trend to continue, for a few key reasons.”
Buterin notes that some projects currently existing as independent layer 1s are looking to bring themselves closer to the Ethereum ecosystem and potentially become ecosystem layer 2s.
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This type of transition remains difficult, as an “all at once” approach would cause a decrease in usability given that technology is not at a stage where it can be completely included in rollup technology. Meanwhile, postponing such a transition runs the risk of “sacrificing momentum and being too late to be meaningful.”
Buterin also notes that some centralized, non-Ethereum projects want to give users greater security assurances and are looking to blockchain-based solutions. Historically, these types of projects would have looked to “permissioned consortium chains” to achieve this:
“Realistically, they probably only need a “halfway-house” level of decentralization. Additionally, their often very high level of throughput makes them unsuitable even for rollups, at least in the short term.”
Lastly, Buterin considers non-financial applications like games and social media platforms that want to be decentralized but do not need high levels of security. Highlighting a social media use case, Buterin notes that different parts of the app would require separate functionality:
“Rare and high-value activity like username registration and account recovery should be done on a rollup, but frequent and low-value activity like posts and votes need less security.“
He adds that a chain failure leading to a user’s post disappearing would be an “acceptable cost,” while a similar failure leading to the loss of an account would be far more serious.
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Buterin also notes that the costs associated with paying for rollup fees might not be acceptable for non-blockchain users, while previous blockchain users are used to paying far higher prices for on-chain interactions.
The Ethereum co-founder then delves into the trade-offs between different rollup solutions and systems that offer varying scaling capabilities to the ecosystem. The “connectedness” to Ethereum hinges on the security of withdrawing to Ethereum from layer 2s and the security of reading data from the Ethereum blockchain.
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Buterin notes that high security and tight connectedness are important for some applications, while others require something looser in exchange for greater scalability:
“In many cases, starting with something looser today, and moving to a tighter coupling over the next decade as technology improves, may well be optimal.”
Ethereum’s next scheduled hard fork is set to introduce EIP-4844, commonly referred to as “proto-dank sharding.” The EIP is expected to drastically increase the amount of data availability of the network. Buterin also notes that improvements in data compression enable greater functionality.
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