![]() Plasma was introduced in August 2017 by Vitalik Buterin and Joseph Poon. Connext Network is a representative example of a project that is currently using State Channels to help scale DApps. State Channels are typically best suited for applications where the number of participants is well defined, need to exchange many state updates over time and have strong availability guarantees to account for challenge periods. The most promising Layer 2 solutions until recently were State Channels and Plasma. While they don’t always offer the same level of security and finality guarantees as Layer 1, they could be sufficient enough for certain applications that require increased throughput, decreased costs and a better overall user experience than what Layer 1 offers currently. Layer 2 solutions are appealing because there can be multiple such solutions running on Ethereum only for specific applications that are Layer 2 aware and enabled without requiring everyone to upgrade the base layer infrastructure (which is a significant effort involving a lot of risk). They anchor their security guarantees to the base layer of Ethereum via smart contracts. They resolve transactions without always requiring interactions with the Ethereum network. Rollups: Why?īasics: Scaling solutions that are built on top of Ethereum without requiring any changes to the underlying base Layer 1 protocols are known as Layer 2 solutions. Finally, we touch upon the various initiatives at Status Network that could benefit from Layer 2 scaling and project where we may be headed in the near future. We review conceptual ideas of the two broad categories of Rollups - ZK Rollups and Optimistic Rollups - and then reference some of their leading implementations. So in this article, we dive into Rollups and summarize the why, what and who aspects. State Channels and Plasma projects dominated Layer 2 explorations in the last couple of years but the category of Rollups is lately seeing considerable excitement and gaining real traction. So while Ethereum 2.0 rolls out in phases over the next couple of years, Layer 2 solutions hope to provide the much needed scalability until then and even beyond. However, note that Layer 1 and Layer 2 scaling solutions are not mutually exclusive - they’re multiplicative. Reddit’s “ The Great Reddit Scaling Bake-Off” contest to help scale its Ethereum-based “ Community Points” program (currently implemented only on two subreddits) to all its users has seen 22 submissions across these various Layer 2 solutions. Most recently, Bitfinex’s Tether - that powers USDt, the largest stablecoin by market capitalization and consistently in the top Ethereum gas consumers - switched to OMG Network’s More Viable Plasma Layer 2 solution. Several categories of such solutions - State Channels, Sidechains, Plasma - have been explored by multiple projects for many years now and have seen considerable progress and evolution. Layer 2 solutions effectively introduce a level of indirection by resolving transactions at their layer while going to Layer 1 only when necessary. All problems in computer science can be solved by another level of indirection - David Wheeler state execution in shards with smart contracts) in Eth2 will only happen in phase 2, which is currently anticipated in 2021+. ![]() The Ethereum community foresaw this problem years ago and has been exploring numerous solutions ever since.Įthereum 2.0 with Proof-of-Stake (PoS) and sharding in Layer 1 is the biggest ongoing effort and we will soon start seeing rollout of its phase 0 in coming months. While this is encouraging news for the increased utility of the Ethereum network (at least by these metrics), one can argue that the current scalability (or lack thereof) of the base layer is considerably limiting applications and significantly hindering user experience. The transaction count hit levels of 2017 peak and the block size is also at an ATH. The block gas limit is at an ATH of 12.5 million. The network hasn’t been this congested since the ICO days of 2017 - it’s arguably much worse now. Unless we’ve been hiding under a rock, there’s a very good chance we’ve heard of the latest excitement in Ethereum Layer 2 scaling - Rollups.Įthereum gas prices hit an all-time high (ATH) of more than 477 Gwei this week, perhaps foretelling the arrival of Twei’s (szabo’s) sometime soon.
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