Rollups are wonderful. But they still leave some gaps unfilled in the short term. Fees on rollups for DeFi transactions will be in the 90%-99% cheaper than Ethereum. With optimizations by rollup chains and applications deployed on them, this will tend towards the 99% mark, but even this may not be enough. We could have complex DeFi transactions costing ~$1. Of course, data shards are going to lower costs significantly, but they’re probably 18 months away.
Till then, high-TPS sidechains or alternate L1s will continue to offer lower fees. I have argued in the past how these chains are economically and technically unsustainable over the years. But in the short term, they have their place for usecases dealing with lesser amounts of money. The security and decentralization compromises will be acceptable to many users and usecases under those circumstances, as the other option would be not using a smart contract chain at all. Indeed, we can see this already with Binance Smart Chain, Polygon PoS and Solana getting decent adoption.
However, we should not settle for compromises, and strive to make everything better. The era of the monolithic blockchain is ending, and the new paradigm of modular blockchain legos is upon us. I’ve covered this concept in my previous article: Beyond L1 and L2: a new paradigm of blockchain construction. I’m assuming you’re familiar with rollups, and understand why it’ll always be 100x more efficient than L1 execution. Here, I’ll dive deep into volitions specifically.
Volitions are that magical solution. Like a zkRollup, volitions commit state roots and proofs to Ethereum (or whatever’s the most secure L1). Unlike a zkR which also posts transaction calldata exclusively to the same L1, a volition lets users choose their alternate data availability solution (validium). The important innovation here is that despite the data availability solution used, all users and smart contracts in the volition will share the same state root!
Today, we have users and usecases who may choose Polygon PoS over Ethereum because they can’t afford Ethereum or don’t care about security as much. Unfortunately, by doing so, Polygon PoS will never be able to access Ethereum smart contracts or interact with Ethereum users. This changes with volitions.
The first two volitions will be Immutable X and zkSync 2.0. Immutable X is an application-specific volition that’ll let users choose between Ethereum (rollup) and a data availability committee (validium). Let’s consider the example of zkSync 2.0 to further illustrate why volitions are so special:
Source: Matter Labs blog, linked below.
In the case of zkSync 2.0, the zkSync common state root will always be committed to Ethereum. However, users get a choice to be either zkRollup accounts or zkPorter accounts. zkRollup users will experience full Ethereum-like security. zkPorter users will effectively replicates the low-fee sidechain model, but with three massive improvements:
1) zkPorter accounts have full access to all smart contracts and users on the zkRollup side, because they share the same state! For example, if there’s a Uniswap deployed on zkSync 2.0, zkRollup and zkPorter users will seamlessly interact with it. This is very different from a sidechain where you’d have to deal with a clone like QuickSwap or PancakeSwap or whatever, which do not share liquidity with Uniswap V3, neither the latest features due to Uniswap’s licensing.
2) Crucially, zkPorter has significantly higher security compared to a sidechain or alternate L1. Because a common state root is committed and proven on Ethereum, even if the transaction data is held by a sidechain, security is still enforced by Ethereum to an extent. In a sidechain (or commitchain) the validator sets are typically very centralized, and malicious validators can corrupt, steal, and reorg as they please, especially as these chains tend to not have any culture of users. In a validium like zkPorter, malicious validators are powerless to corrupt, steal, reorg etc, because this will lead to an invalid state transition that’ll be rejected by Ethereum. Malicious validators can, however, freeze the validium state, but thereby also freezing their own — the incentives are simply not there. Importantly, the zkRollup side is completely unaffected and can continue operating (and exit from L1 directly) even if the validium (zkPorter) is frozen. So, yes, clearly zkRollup is more secure to zkPorter, but zkPorter is also far more secure than alternate L1s and sidechains.
3) Forward compatibility. Some people are using Polygon PoS because they don’t have an option, as covered above. But things change. We may see Polygon PoS’ fees rise as it becomes more congested, as we have seen with BSC; and on the flipside, we may see rollups’ fees fall post-data sharding. It could be that in a couple of years’ time rollups are actually cheaper than even the most centralized sidechain. Or, a user could change their mind and realize security is crucial. Or they are just doing higher value transactions where it makes sense to pay more for the higher security. The good news is with a volition setup a user can simply migrate to a higher or lower security tier. While zkPorter will be very relevant today, after Ethereum data shards are integrated into zkSync 2.0, it’s quite likely that the zkRollup’s transaction fees will be much closer to zkPorter’s. You can do all of this while continuing to use the same dApps you’ve grown to love.
In this example, I’ve cited zkSync 2.0. But this is just the beginning, and the most basic of volitions. There will be tremendous innovation with data availability over the years to come, with multiple options. It’s clear that Ethereum is going to dominate the data availability consensus space with data availability sampled data shards. Given the scale of data availability is directly linked to the number of validators (effectively flipping the trilemma on its head) — only Ethereum is positioned to offer massive data availability, unless Bitcoin gets into the space. Still, there’ll be alternative data availability solutions that will make sense.
For example, StarkWare has proposed Adamantium — an intriguing solution where the user (or entity) is responsible for their own data availability. This could make a lot of sense for financial institutions or frontend-centric applications like games. It’ll effectively be a centralized sidechain but one whose state root is still enforced by Ethereum. The centralized entity here can deny you service, but they can never steal your funds or corrupt the state.
Or, we could have non-consensus data solutions start to make sense. For example, the likes of Arweave, Filecoin or Swarm do not offer any consensus or data availability guarantees, but are much cheaper than consensus data availability. For some usecases and users consensus may not be a requirement. It’s not just users who can freely opt for these data availability solutions — these can be baked in at smart contract level too, which can granularly commit different data to different solutions.
So does this mean L1s are obsolete? Pretty much. The era of the monolithic blockchain is ending. A new era began with the first rollups in 2020 and will continue to proliferate over the coming years. We need a new name for this era. Initially, I called this blockchain departmentalization but this is a terrible term that I now recant (I do prefer “monolithic blockchain” to “traditional blockchain”, though). Since then, Celestia calls it “modular blockchains” and Protolamba calls it “composable protocol legos”. I’m sure someone will conjure a better meme that will stick!
There will always be niche use cases where L1 execution still makes sense, but 90+% of all blockchain activity will happen on validiums, volitions and rollups. It’s going to be a bumpy ride, though, and will several years. Be rest assured L1s and sidechains will fight tooth and nail — no one likes being obsoleted. The pragmatic ones will make the pivot to becoming a volition or rollup. Though I’ll admit, I’m baffled that thus far Polygon is the only L1 to have made this pivot. Perhaps the incredible adoption Arbitrum One has seen, or Optimistic Ethereum’s rate limits being quickly saturated, will motivate some towards pragmatism over hubris and egomania that generally pervades this space.
Tl;dr: Volitions obsolete all L1s except the ones it leverages for security and data availability.