Understanding Ethereum’s rollup-centric roadmap

Preface: Since I often post about rollups in this blog, I thought pinning this older article will be helpful. Originally posted here.

It feels to me like there’s a lot of confusion around Ethereum’s roadmap, with a common perception being “Ethereum 2.0 is the next version of Ethereum that’ll replace the current version”. This is not true. Indeed, Ethereum has pivoted to a rollup-centric roadmap, which I don’t see nearly enough people talking about. So here’s my attempt at adding to that conversation with a brief overview of where things are headed, and why it’s very much unlike you may expect.

I’m not going to talk much about rollups here (you can see my profile for many posts about the topic) but they are essentially a new class of blockchains that focus on doing one thing very well — very fast transactions at a low cost — while “contracting out” the hard stuff like security and decentralization to a different blockchain (L1). As a result, rollups can effectively offer high scalability without sacrificing security and decentralization — for the first time in the industry. I often joke that “rollups are 4th gen blockchains” but this is actually true — this marks a paradigm shift to the blockchain industry as we know it.

Some Ethereum researchers foresaw the incoming rollup revolution as far back as April 2019, but it was formalized in October 2020 as the rollup-centric roadmap.

The previous plan under the old “Ethereum 2.0” roadmap was: Ethereum will be the blockchain that does it all, achieving scalability through shards. End users will make transactions on the 64 shards.

The current plan under the latest rollup-centric roadmap: Actually, rollups will scale, and transactions by end users will happen on rollups, not Ethereum. Instead, Ethereum will focus on being the best L1 chain for rollups. Proof-of-stake will make it the most secure and decentralized consensus layer for rollups, while the 64 shards will offer massive data availability for rollups.

Why make this pivot? It’s quite simple: rollups are simply better than traditional blockchains. Ethereum’s focus is to retain high security and decentralization. With the old roadmap, we would achieve ~3,000 TPS with sharding. Rollups have been offering this type of scalability since early 2020, and at this point are proven tech, while there are many unknowns on how well transactions on shards will work. By comparison, it’s easier for shards for offer data availability. With rollups + data sharding we’ll get to 100,000 TPS. All the while, this can be achieved much sooner with less technical and security risks, by late 2022. It’s quite simply the pragmatic option.

The implication here is that in the medium term, the next couple of years, Ethereum is all in on rollups, and expects a majority of users to transact directly on rollups. A side-effect of this is that Ethereum L1 will continue to remain constrained and as act as a settlement layer for rollups rather than end users, but it wouldn’t really matter as most users will be on rollups. As such, older traditional blockchains like Cardano, EOS, Tron are no longer competing with Ethereum — they are competing with smart contract rollup chains like Arbitrum, zkSync 2.0 etc.

In the long term, we do expect L1 scalability through executable shards, statelessness + state expiry, ZK-Ethereum, but with the rollup revolution happening right now, this is a low priority. The top priority for the blockchain industry as a whole should be to develop and mature the rollup ecosystem.

Tl;dr: Rollups mark a paradigm shift for the blockchain industry, offering high TPS without materially sacrificing decentralization and security for the first time ever. A vast majority of end user activity will be on rollups. In response, Ethereum is no longer just a smart contract platform, but focused on being the best settlement layer for smart contract platforms (rollups).

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