I had initially written this for r/ethereum, but it didn’t pan out too well, presumably ending up in the moderator queue forever. So, I’ll republish it here, even though I have covered all of this on the blog previously.
Ethereum has pivoted to a rollup-centric vision. This means Ethereum’s focus is no longer being a smart contract platform, but rather, a platform for smart contract platforms (rollups).
Users will use rollups. Rollups will settle on Ethereum. This is the new vision.
So, why rollups? Until now, we were in a monolithic blockchain paradigm where an L1 blockchain must do it all — execution, data availability and consensus. Unfortunately, building a new consensus mechanism from scratch is extremely difficult, to the extent that only Bitcoin and Ethereum has been able to do it successfully. The moment you build a highly secure consensus mechanism, though, you end up with very limited scalability and upgradability is very difficult. Every other L1 has extremely centralized token distributions and have to resort to delegations, which in turn result in highly insecure and centralized consensus.
But what if a blockchain can focus on doing on thing, and only one thing best: very fast and cheap transactions; while leaving the impossibly challenging work of security, decentralization and network effects to a different chain that has already achieved all of that? That’s a rollup. A rather silly but apt analogy is that rollups are the farmers that buy tractors and fertilizers from others who have figured that stuff out, while L1s are farmers that are stubborn about doing everything themselves and end up with misshaped sickles and using horseshit for fertilizers. The modern farmer will always be 100x more efficient than the 18th century one.
So, it’s abundantly clear that rollups are far superior to monolithic blockchains. So why is Ethereum unique? Why does Ethereum have no competitors? I’ve already alluded to the answers above. Rollups will always choose to deploy to chains with the highest security, decentralization, network effects and data availability. That leaves us with two options — Bitcoin and Ethereum. Since Bitcoin does not support rollups, we’ve now narrowed down to only one option — Ethereum.
Now, some would say that perhaps a rollup doesn’t care about security, and just wants to deploy on one with the greatest data availability. Currently, there are indeed EVM-compatible chains that offer greater data availability, at the cost of security and decentralization, but long term, even this dynamic will flip on its head.
Ethereum is focusing on offering not just security, but also massive data availability in the future. There are 210,000 validators on the beacon chain already, well before the Merge. Long term, it’s quite possible there will be 1,000,000 active validators.
The astute among you may have observed that the rollup-centric vision is somewhat similar to Polkadot. There are significant differences between rollups and execution shards, but I won’t get into that now. What I’ll point out that Polkadot has a maximum cap of 1,000 validators, with 100 shards. Theoretically, Polkadot is best placed to pivot to a rollup-centric roadmap like Ethereum. However, this is where Ethereum’s singularity enters.
With 1,000,000 active validators, Ethereum is uniquely positioned to offer massive data availability across 1,024 data shards long-term, a feat that a more centralized consensus mechanism can simply not achieve. With this, all rollups leveraging Ethereum, on aggregate, will scale to 100,000 TPS in a couple of years, increasing to several million over the years, and speculatively 15 million TPS by the end of the decade.
It is simply impossible to achieve this sort of scale any other way than the combination of rollups (specifically zkRollups) and data shards long-term, and only Ethereum can offer massive data availability in a massively decentralized fashion.
The final question is — why can’t other L1s achieve Ethereum’s massive decentralization? They can, but they’ll need to go through 6 years of high-inflation distributive proof-of-work mining, intense activity for several years, and only then can they achieve a wide token distribution. Most L1s have committed to delegated-type proof-of-stake right from inception with highly centralized token distributions, and it’s nearly impossible they’ll achieve Ethereum’s decentralization. Of course, decentralization is much more than just token distribution and consensus mechanisms — it’s infrastructure, multi-client development approaches, etc.
I regret this greatly, though, and I do wish there would be somecompetition, any competition. Realistically, Bitcoin could make it happen, but I highly doubt they will. The other possibility is a conglomerate powered by big tech that does a massive airdrop on billions of people. Or, it could be some revolutionary new technology that’ll displace rollups, just like rollups have displaced monolithic blockchains. Of these, I consider the last the most realistic possibility.
In the here and now, though, I only see one eventuality. 90+% of all transactions in the blockchain industry will happen on zkRollups, and a majority of those will be settled on Ethereum. Do note that I expect this to take several years to materialize.
