Rollups to the Rescue: How Layer 2 Solutions Are Saving Ethereum from Congestion
Published Date: 19 Sep 2024
Just how far have we come on the blockchain scalability wheel? Scaling is a hotly debated topic in the blockchain community. If you’ve been hanging around the crypto community, terms like “rollups” and “L2” would have popped up on your screen(s) at one point or the other.
The value proposition of Layer 2 scaling solutions is simple: solving Ethereum's throughput and latency issues. For the non-technical audience, Layer 2 solutions aim to reduce the cost and time of transacting on the Ethereum blockchain.
Over time, the scaling landscape had grown rapidly, attracting billions of dollars in VC funding. As the landscape evolved further, we saw the emergence of numerous L2s. While there is no singular Layer 2 solution that reigns supreme, as they all take different approaches, and are all in various stages of development. The dominance of L2s is quite remarkable
Solving The Blockchain Trilemma
How did we get here? It's about time we asked that question. Why is everyone talking about L2s and rollups all of a sudden? The answer is not far-fetched, let's take a quick trip down memory lane.
Historically, blockchains have struggled to compete with traditional computing systems in terms of speed and cost, without compromising on decentralization — a fundamental ethos that makes blockchain what it is. This explains why scalability is at the forefront of blockchain research and development.
For a blockchain to remain decentralized, it is crucial to reduce hardware requirements, to allow regular users to be able to run a node — this is key to achieving trustlessness. However, decentralization also limits the speed of blockchains. This dynamic is described by the “scalability trilemma" which states that a blockchain can only have two out of the three properties: scalability, decentralization, and security.
As time passed, different innovative strategies to address this trilemma head-on came into light. As the landscape evolved further, we saw the emergence of numerous L2s. While there is no singular solution that reigns supreme, L2s and rollups (enshrined, classic, and sovereign) are dominating the landscape and have also attracted criticisms from "Ethereum L1 faithful", questioning the ability of L2s to scale Ethereum, and pointing out different tradeoffs associated with them.
Truth is, it's the world of Ethereum and L2s, and we are living in it. In this piece, we'll explore some of the prominent layer 2 solutions.
The Optimism Stack
In October 2022, Optimism Labs introduced the OP Stack — also known as optimism stack, a standardized, shared, and open-source development stack that powers the Optimism network and its ecosystem (i.e. a set of software). The Optimism collective describes it as a “modular, open-source blueprint for highly scalable, highly interoperable blockchains of all kinds.” The OP Stack is an evolving concept, designed to grow to suit the needs of the evolving Optimism ecosystem.
Primarily, the OP Stack is focused around the creation of a shared, high-quality, and fully open-source system for creating new L2 blockchains. The main idea is to simplify the process of creating L2 blockchains. As such, the Optimism team has adopted a plug-and-play approach that allows the modification of components of the OP Stack to build novel L2 systems. Essentially, the OP Stack splits all of the different components that go into building an L2 and packages them as distinct components. This flexibility enables developers to combine the most suitable modules to construct their own custom L2 that cater for either general-purpose or application-specific needs.
The current iteration of the OP Stack is Bedrock. Bedrock is the first deployment of the OP stack, which provides the tools for launching optimistic rollup networks. It is a set of free and open-source modular components that work together to power Optimism. The Bedrock introduced several enhancements to the network and cleared the path to the OP Superchain. The prime advantages of Bedrock over its predecessor include lower transaction fees (over 77% cheaper per transaction on average), shorter deposit times, improved proof of modularity, and improved node performance.
The “Superchain” Thesis
The Superchain concept was born out of a battle-tested scalability vision, premised on Optimism’s alignment with Ethereum’s values of decentralization and unification of all rollup architectures. With a clear picture of "how to architect a truly scalable blockchain," the OP team embarked on the journey of creating the Superchain. The ultimate goal is not merely to construct a single blockchain but to foster a comprehensive Digital Society that thrives on seamless and efficient interaction between different Op-chains.
Base Layer-2
Base is a layer-2 chain incubated by the centralized exchange Coinbase. The base is being developed on Optimism as an optimistic rollup chain.
The Base Mainnet functions as a different network from Optimism. However, the decision to build via the OP Stack is in line with Optimism’s superchain vision, with the core purpose of fostering a high level of interoperability among L2s.
Polygon 2.0: From PoS to ZK Layer-2
Ethereum scaling layer, Polygon in a bid to maintain its competitive edge in the race to scale Ethereum is transitioning into “Polygon 2.0.”
Driven by the ever-growing demand for blockchain scalability, Polygon 2.0 will introduce a multitude of enhancements to its core architecture. Notably, the team aims to seamlessly connect multiple scaling layers within the Polygon ecosystem, fostering greater interoperability. This transition also saw the phasing out of the MATIC token, replaced by the new POL token as the network's base token.
Dubbed the "value layer of the internet," Polygon 2.0 promises a substantial leap in scalability, exceeding the capabilities of its predecessor by orders of magnitude. This upgrade moves Polygon beyond its proof-of-stake roots, opening up exciting new possibilities for the network.
The Path Ahead
The race to scale Ethereum is wide open. L2 rollups continue to show consistent growth, with adoption rising and activity hitting an all-time high. Indeed, Vitalik’s vision of a rollup-centric Ethereum roadmap is now in full swing. As the L2 market continues to mature toward its next phase, to unlock the next phase of growth, L2 rollups are beginning to map out their visions to assert supremacy in the rollup-dominated future.
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