Optimistic rollups are brilliant (and the state of blockchains)

Monolithic L1s are (still) cripplingly inefficient

  • Binance Smart Chain’s (no, renaming your chain doesn’t make it decentralized) system requirements ballooned due to state bloat. As a result, nodes started desyncing, leading to many issues. The mistake here was they specified very low requirements when they started — they failed to inform everyone that system requirements grow exponentially with state bloat. Now they are making reckless changes without adequate auditing or testing. Sure, switching to Erigon and having multiple chains will offer incremental benefits, but there’ll always be crippling limitations.
  • Solana didn’t make that mistake — they were very open about very high system requirements from the beginning. Now, I definitely will not give Solana a hard time about their various failures and issues, as a lot of it is down to it being an early beta product. Bugs and issues due to missing features are always on the cards with beta projects — whether rollups, dapps or monolithic L1s — and I only have the best wishes for developers so they fix these. But the problem is, years down the line when it does mature, it’s battle-tested and there are no bugs and has a fee market implemented, it’s going to only offer an incremental increase in throughput, and at a steep cost to technical & economic sustainability. Solana is inherently unscalable. Optimistic rollups are far superior solutions to Solana, and will mature much sooner.
  • Arguably, Polygon PoS has been the chain that has seen most adoption, after Ethereum. Now, it’s true Polygon PoS is a “commitchain”, and not an alt-L1, but it’s still very much a monolithic chain and is bound by all of the same crippling inefficiencies as L1s. Polygon PoS reached its limits, suffered from spam, raised their minimum gas floor. But even after that, it’s been spammed by projects, raising gas prices >$0.10. To be clear, this is a far better outcome than Solana or Cardano where during congestion a 99% transactions would simply fail, and only micro-MEV bots will win. To their credit, unlike other monolithic projects, the Polygon team has very openly acknowledged the limitations, and have acted upon it by going all in on ZK rollups — that’ll actually enable high scalability. Actions speak larger than words, and a $1B action is worth commending.
  • Speaking of Cardano, they too are a very early beta product, and like Solana, also have to implement fee markets. Cardano’s system requirements are still quite low. Lately, I have seen growing interest in the Cardano community around rollups, so that’s great to see! Nevertheless, until Cardano itself doesn’t implement data availability sampling, all of this would be for nothing.
  • There are many other projects we have seen fail to live up to the hype. We have seen Avalanche C-Chain’s fees spiking whenever the block space is saturated — I mean, this is a fundamental feature of monolithic chains. Subnets will either fragment security or decentralization, and will be bounded by the same crippling limitations. Regarding “online pruning”: let’s wait and see, but this seems to implement Geth’s offline pruning and makes it so the pruning happens at a higher frequency. This could be a nice addition to Geth, but it absolutely does not solve the fundamental limitation of state bloat. We’ve seen Harmony fail etc. But I also wanted to highlight projects that are building for the next-generation with actually scalable solutions: Ethereum, Tezos, Celestia and Polygon Avail with data availability sampling; Mina & Aleo with validity proofs; and of course, the dozens of rollups — there seems to be a new one popping up every week now! It’s pretty obvious we’ve entered the era of modular architectures — few are building new monolithic L1s anymore with any degree of seriousness. At a pinch, “proto-modular” projects like Polkadot & NEAR are interim solutions that while don’t solve for a lot of the above issues, do retain sustainability & security. If you don’t care about sustainability & security, Dfinity/ICP is building interesting stuff, though.
  • I also want to be very clear that monolithic L1s have a path forward, and indeed this is actually my only goal: to get the entire industry upgraded to the next-generation tech. For example, Avalanche can implement a “data availability sampling subnet” at the base layer validated by the full validator set, and invite modular execution layers to build on top or build their own. But until this is a clear priority on their roadmap, I’ll continue to push the narrative till the change is ubiquitous across the industry.
  • Now, not every chain must be a rollup or a modular design of some sort. Sovereign L1s still have their place in situations where security is not important, and you want to accomplish some novel feature difficult or not possible with rollups. Of course, this is very much a niche, but it’s real. The Cosmos ecosystem is doing splendid work on this front (also, Polygon Edge is building compelling solutions), though I’d like to see these chains be validity proven, and IBC evolve to verify validity proofs. That’s about as good as multi-L1 bridging is going to get barring some breakthrough. But even the perfect validity proven bridge — like =nil; Foundation are building for the Mina <> Ethereum bridge— still assume that the weaker chain is not compromised. Rollup bridges give you full security guarantees where even if the weaker chain is compromised you can still inherit the stronger chain’s security.
  • Finally, it’s important to discuss timing. Optimistic rollups are not ready yet, so using a non-beta monolithic L1 still makes sense. It should be noted that in both cases — optimistic rollups, or monolithic chains — there’s a varying degree of maturity/instability, so you have to evaluate on a case-by-case basis. But I don’t write about the here and now — my only interest is to see how blockchains can scale massively and sustainably in the long term. But optimistic rollups are maturing rapidly, with clear paths to becoming sustainable solutions. Just need the engineering work to get there — it’s quite possible at least one smart contract optimistic rollup will be fully decentralized, implement data compression, have high liquidity bridges, and scale up within a year’s time. Once optimistic rollups are ready for prime time, it’s game over for almost all monolithic L1s.

OR vs. ZKR

Transaction fees

Finality

Throughput

Side-note: delays for rollup bridges

Concluding

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Rants and musings on blockchain tech. All content here in the public domain, please feel free to share/adapt/republish.

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Polynya

Polynya

Rants and musings on blockchain tech. All content here in the public domain, please feel free to share/adapt/republish.

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