โ›“๏ธMetis Network Basics

ETHEREUM LAYER 2 SOLUTIONS

A Layer 2 (L2) protocol is a network that sits on top of a Layer 1 (L1) blockchain network such as Ethereum. In simple terms, Layer 2 protocols are designed to both enhance the speed and reduce the cost of performing transactions on the Layer 1 blockchain.

Due to being the first blockchain platform to introduce smart contracts and enable decentralized applications, Ethereum has enjoyed its spot as the top destination for blockchain developers and most decentralized apps (dApps). While this has proved to be extremely bullish for the ecosystem, this evergrowing wave of popularity has led to severe congestion issues on the Ethereum blockchain, resulting in high gas fees and slow transaction times. While blockchain congestion has long been one of Etheruemโ€™s main critiques, Layer 2 networks have and will continue to play a huge role in helping Ethereum tackle its scaling challenges.

Overall, Ethereum Layer 2 networks are different protocols running on top of the Ethereum Mainnet (layer 1) and help scale applications by handling transactions off the mainchain (layer 1) all while taking advantage of the robust decentralized security model of the Layer 1 blockchain.

Rollups

Rollups are an emerging layer 2 solution that bundles up transaction data and transfers it off the main chain (Layer 1) where transactions are then bundled up and performed off-chain while assets are held in an on-chain smart contract. Once completed, the transaction data is then sent back to the main blockchain.

In simpler terms, rollups โ€œroll upโ€ transactions off the main chain (Layer 1) and then fits them all back into a single block of the Layer 1 chain, thus reducing the overall congestion on the main chain.

There are currently two types of rollups:

1) Optimistic rollups are protocols that increase transaction throughput by grouping multiple transactions into batches and processing them off-chain. Optimistic rollups work in a way where it recognizes transactions are true by default to improve efficiency. To prevent fraudulent transactions, Optimistic rollups utilize a โ€˜challenge-periodโ€™ fraud-proving scheme where fraudulent activities can be disputed. In the event a fraudulent transaction occurs, the roll-up protocol will re-execute the wrong transaction(s), update the block, and penalize the parties responsible for approving the incorrect transactions.

Optimistic rollups ProsOptimistic rollups Cons

Fraud proving guarantees trustless finality.

Delays in tx finality due to potential fraud challenges.

Tx data is stored on the layer 1 chain improving security, decentralization, etc.

Users must wait until the one-week challenge period expires before withdrawing funds back to Ethereum.

Compatibility for EVM and Solidity makes porting native Ethereum smart contracts to rollups easy.

Rollups must post all tx data on-chain, which may increase costs.

2) Zero-knowledge rollups Often referred to as ZK rollups or ZKRUs, these scaling solutions group up multiple transactions off-chain into batches and generate a cryptographic proof known as a SNARK for each batch. All validity proofs are posted on the layer 1 chain where they can be quickly verified. Any invalid batches are rejected straightaway. Because these proofs are significantly smaller than transaction data, verifying them is quick and cheap.

ZK rollups ProsZK rollups Cons

Validity proofs ensure correctness of off-chain transactions.

high fees for computing/submitting validity proofs.

Faster transaction finality.

Specialized hardware is required.

Relies on trustless cryptographic mechanisms for security.

Proving systems require a trusted setup.

Hybrid Rollups By Metis

In March 2022, the Metis network announced its plans to build a first-of-its-kind hybrid roll-up protocol that combines Optimistic rollup architecture with zero-knowledge proofs. This new take on layer 2 scalability will leverage the easy-to-code pro-EVM dynamics and scalability of Optimism along with the benefits of security, finality, and decentralization of Zero-Knowledge Rollups.

Some of the benefits this new hybrid architecture can provide are:

  • EVM Compatibility: By conserving the Optimistic Rollup architecture, Metis can offer Ethereum developers an easy-to-code-in blockchain.

  • Faster transaction finality: By implementing zero-knowledge proofs to our optimistic rollup architecture, transaction finality time will be reduced from 7 days to approximately 4 hours.

  • Enhanced Security: Validity proofs ensure the correctness of off-chain transactions and prevent operators from executing invalid state transitions. Additionally, the implementation of trustless cryptographic mechanisms helps to further maximize security.

  • Increased Throughput: Zero-knowledge proofs remove the need for extra data as each transaction holds only the minimum required. As this feature greatly increases throughput, congestion of the Ethereum blockchain can be greatly reduced.

  • Capital Efficiency: Users benefit from greater capital efficiency and can withdraw funds from L2 without delays.

  • Decentralization: All transactions are processed in parallel, encouraging decentralization.

Itโ€™s not news that both ZK and Optimistic rollups have long been regarded as the top developments looking to mitigate Ethereumโ€™s scalability crises. While both technologies have their pros and cons, merging the best aspects of both technologies could be a revolutionary breakthrough in the crypto space.

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Bridges

One of the most common critiques of the blockchain space is the lack of interoperability between blockchains. As it currently stands, blockchain ecosystems largely exist completely independent from each otherโ€™s ecosystems, much like islands at sea. This issue has commonly been referred to as โ€˜blockchain fragmentation'.

With the onset of new users every day, the need for blockchain interoperability has become ever-increasing as scalability issues become more severe. blockchain fragmentation also hinders the overall development in the space as it isolates capital, Dapps, projects, and innovations from synergizing with each other thus preventing blockchain technology from reaching its fullest potential.

Fortunately, projects have begun tackling this issue through the use of cross-chain bridges. Cross-chain bridges work by connecting different blockchains to each other. With this technology, users and projects can transfer assets and information between separate blockchain ecosystems. While this innovation in scalability and interoperability carries massive potential, it, unfortunately, doesn't come without its growing pains. Because it is a newer technology, cross-chain bridges have been susceptible to hacks and exploits ranging in the hundreds of millions. While there's no guarantee of safety when transacting through cross-chain bridges in this day and age, users should only consider bridges that focus on and have a high degree of security, transparency, and decentralization to minimize risk.


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