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Why should we focus on Layer 2?
The reason why we pay attention to Layer 2 is that the current Ethereum is almost at a point where it may be killed without expansion, but ETH2. thirsty. In general, we pay attention to Layer 2 for the following reasons.
1) ETH's competing projects are developing rapidly
At present, Ethereum is facing two situations:
First of all, the Polkadot parachain will be launched in March. At that time, Polkadot parachains like Plasm, which are compatible with Ethereum, are very likely to become a direct competitor of Ethereum.
Secondly, many heavyweight projects on Ethereum plan or are migrating to the exchange public chain, which is the most direct threat to Ethereum.
2) However, we must have a basic judgment: Although other competitive chains are developing rapidly, I firmly believe that Ethereum will eventually win this war, which is the premise.
Because no one can ignore the network effect of Ethereum, once Layer 2 proves its strength, these projects will return to Ethereum. For example, the most well-known leading DeFi projects Synthetix, Uniswap, Bancor, Augur, etc. have begun to support Ethereum Layer 2.
3) Optimism is really coming soon, Rollup that is fully compatible with EVM will be launched at the end of March
According to news from Cointelegraph on March 10, Ethereum co-founder V God said on a recent podcast that Eth2 developers are working on Ethereum chain mergers and believe that the second-layer solution will be implemented before the development of shards is completed. Can support Ethereum network. "Rollup will be there soon. We have full confidence that by the time we need more scaling performance, sharding will be ready for a long time," he said.
In this live broadcast, V God predicts that "in about a month," Rollup will be fully compatible with the Ethereum Virtual Machine (EVM). Vitalik also said that the Ethereum network is about to expand 100 times, and predicted that Optimism will release its second-layer solution in the next few weeks. In fact, as early as February 25th, the Ethereum expansion program Optimism officially announced that it will launch the mainnet in March. Check out this detailed report:https://t.co/IKdf64rTPh?amp=1
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The introduction of the current key Layer2 technology
1) First, let's focus on the two most representative technologies of Layer 2.
Compared with Layer 1 (Ethereum itself), Layer 2 of Ethereum is a blockchain network that runs outside the main chain of Ethereum, and at the same time maintains links and interactions with Ethereum. On Layer 2, various DeFi and DApps can be run application.
Layer 2 technologies are mainly divided into four categories: state channels, side chains, Plasma, and Rollup. At present, the first three have gradually withered, and only Rollup technology is thriving, which has become the key to solve the congestion situation of Ethereum. Rollup technology can be divided into Optimistic Rollup and ZK Rollup.
Optimistic Rollup was proposed by Consensys researcher John Adler at the Ethereum Foundation Research Forum in July 2019. It can increase Tps to 3000. Ethereum Layer 1 is better compatible with DeFi applications based on Optimistic Rollup. Optimistic means "optimistic". The blockchain based on Optimistic Rollup tends to believe that nodes will not do evil, so the trust cost of Optimistic Rollup technology is relatively high. It takes 2 weeks for assets to return from Layer 2 to Layer 1 (ZK Rollup only takes a few minutes).
Teams currently working on Optimistic Rollup include Optimism (formerly Plasma Group), Fuel Labs, Arbitrum, etc.
ZK Rollup was originally proposed by Barry WhiteHat, a senior researcher at the Ethereum Foundation, in 2018. It uses zero-knowledge proof to ensure the security of node verification. Its security is almost the same as that of Layer 1 (Ethereum). Blocks can be produced within one minute and The throughput has been increased to 2000Tps. The disadvantage is that the current Layer 1 smart contract system has very little support for ZK Rollup. DeFi application developers who use ZK Rollup technology need to develop special smart contracts to match Layer 1, and different The ZK Rollup smart contract developed by the DeFi team is not universal.
Projects implemented by ZK Rollup include Matter Labs and Starkware, among others.
2) Secondly, let's pay attention to the most powerful team in Layer 2 technology.
The team dedicated to ZK Rollup:
Matter Labs: using the zkSync solution (zk-SNARK) to develop ZR; StarkWare: using the StarkNet solution (zk-STARK) to develop ZR.
The team dedicated to Optimistic Rollup:
Optimism: adopt the OVM scheme to develop OR; Offchain Labs: adopt the Arbitrum Rollup scheme to develop OR.
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What are the problems of Layer 2
So the appearance of Layer2 can solve the congestion problem? No, Layer 2 has its own problems. If ETH insists on developing in the direction of ETH2.0, then Layer 2 can only be regarded as an excessive solution for Ethereum. In addition, in my opinion, the technology of Layer 2 itself has the following three problems.
1) OR platform interoperability and composability issues
Since the Optimistic Rollup technology itself adopts a fraud proof mechanism, the degree of trust is much lower than that of zero-knowledge proof. When assets return from the OR platform to Ethereum, it takes 1-2 weeks, while ZR only takes a few minutes. Therefore, in terms of interactivity, OR is much lower than ZR.
It will cause such a dilemma: it is difficult to interoperate and combine applications based on different OR platforms. Moreover, interoperability is divided into message delivery and value transfer. Value delivery can be achieved through liquidity providers, but it is difficult to achieve instant message delivery between different OR platforms.
2) Multiple Layer 2 networks are not friendly to wallets
We know that different wallet developers must consider compatibility when developing different wallet applications, just like imToken must be compatible with ETH, Polkadot, Bitcoin and other networks. If there are multiple Layer 2 networks in the future Ethereum ecosystem, several networks based on OR, and several networks based on ZR, it means that there will be a large number of network standards, and the wallet team needs to target these networks Different standard wallets have been developed, and there are few solutions at present. The BLS signature in ETH2.0 can be introduced into ETH1.X, which can greatly reduce the workload of the wallet.
3) The problems of ZR and OR
ZR: Using zero-knowledge proof, it has good interaction ability with L1, but the development of general smart contracts is very difficult, and the technical ability of the project party is too high.
OR: Using the fraud proof mechanism, the interaction with L1 is greatly restricted, but the difficulty of development is greatly reduced.
Based on some problems above Layer 2, although Optimism comes with a new Layer 2 solution, such a solution may only alleviate temporary needs, so wait and see.
In the future, waiting for the more compatible ZR to go online may solve the compatibility problem.
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Which Layer 2 projects are worth emphasizing layout?
Which Layer 2 projects are worth focusing on? My point is that we must focus on some general-purpose Layer 2 platforms, rather than a certain Layer 2 project. Among them, Optimism and Arbitrum from overseas teams are such Layer 2 platform projects that deserve special attention.
1) Optimism: Optimistic Rollup, account model, compatible with ETH EVM, can deploy Dapp, relatively popular, launched on the mainnet in March, and more DeFi projects may be deployed one after another. Focus on it.
In fact, as early as January 15th, the Optimistic Rollup expansion plan of the Optimism team started the trial operation network of the Optimistic Ethereum main network. In the following month, the maximum number of SNX tokens pledged by Synthetix in the Optimistic Ethereum network exceeded 662 10,000, worth more than 150 million U.S. dollars, and has now fallen back to 4.13 million.
On February 25, Optimism, the Ethereum expansion program, officially announced that the main network will be open to the public in March. At that time, arbitrary contracts will be deployed on the main network instead of the public test network. This project deserves a lot of attention.
2) Arbitrum: Built by the Offchain Labs team to unlock the full potential of smart contracts. Arbitrum runs on Ethereum and achieves convenient interoperability with native Ethereum contracts and tokens. Unlike Ethereum, the cost is fixed no matter how much code, storage or computation a contract uses. No one other than the contract participants can see its code or its internal state. Only the public behavior of the contract can be seen by the world. Developers and users gain the privacy and low cost of off-chain solutions through the simplicity and security of chain solutions.
Regarding the latest progress of Arbitrum, on February 19 this year, Vitalik said in the community that the first batch of Rollups supporting EVM may be launched in March, and after the launch, transaction fees will be reduced by 99%. At the same time, V God also said that Optimism and Arbitrum are in the leading position.
Arbitrum began as an academic project at Princeton University and was patented with support from Princeton University. On March 4, Arbitrum stated that considering that the project has entered the mature stage of the community, it will abandon the patent and is currently waiting for the consent of Princeton University. In addition, Arbitrum will be launched on the main network soon.
In short, Optimism and Arbitrum are the two most noteworthy Ethereum Layer 2 projects, which may grow into an Ethereum Layer 2 network with a market value of hundreds of billions of dollars.
To sum up, the current Ethereum Layer 2 is the only innovative technology that can change the status quo of Ethereum’s high transaction fees in the short term. The blockchain projects (DeFi) running on these Layer 2 platforms feel like running on the main Ethereum platform. The same as online. In the future, the Layer 2 platform is very likely to develop into a giant in the Ethereum ecosystem.
