Vitalik Buterin (Ethereum Co-founder) – Scalable Blockchains As Data Layers (Mar 2019)
Chapters
00:00:35 Layer 2 Protocols in Blockchain Evolution
Mastercoin: Mastercoin is a protocol that uses the Bitcoin blockchain as a data store. It creates a meta-protocol on top of the Bitcoin blockchain. Mastercoin transactions are sent as Bitcoin transactions and verified by Bitcoin miners. Mastercoin defines a different set of rules for interpreting these transactions. It allows for financial transactions, primitive smart contracts, and more.
Drawbacks of Mastercoin: It is not client-friendly. It requires the entire Bitcoin blockchain to verify the state of the Mastercoin system. It cannot influence any state outside of the Mastercoin metaprotocol.
ZK Rollup: ZK Rollup is a layer 2 protocol that uses the blockchain as a data store. It addresses the drawbacks of Mastercoin. It allows for efficient verification of state transitions. It enables interoperability with other protocols.
Differences between ZK Rollup and Plasma: ZK Rollup significantly increases scalability (currently 30x, potentially more in the future) by using a technique called zk-SNARKs to prove the validity of transactions off-chain. Plasma requires complex mechanisms like exit games and double straw periods to address the data availability problem, whereas ZK Rollup avoids this issue by publishing all transactions on-chain.
Key Characteristics of ZK Rollup: The contract stores only the Merkle root of a Merkle tree, which contains pairs of public keys and balances. Users send transactions consisting of 13 bytes (account from, account to, fee, nonce, and signature). Relayers gather transactions, create zk-SNARKs, and publish R1, R2, and the transaction set to the chain. The contract verifies the zk-SNARK and updates its state by replacing the old Merkle root (R1) with the new one (R2).
Advantages of ZK Rollup: Improved Efficiency: ZK Rollup reduces gas costs by moving transaction signature verification and storage off-chain, resulting in significant savings. Avoidance of Centralized Relayers: Unlike Plasma, ZK Rollup does not rely on a central relayer because the data is published on-chain, allowing anyone to become a new operator if the original one disappears.
Enhancements to ZK Rollup: Nonces can be excluded from transactions since they are only used for verification, further reducing the transaction size to 11 bytes. Instant Deposits and Withdrawals: Unlike Plasma, ZK Rollup enables instant deposits and withdrawals without the need for complex mechanisms or a central operator.
00:12:13 ZKZK Rollup for Privacy-Preserving Scalability
Scalability Improvements with Rollup: Rollup technology has the potential to significantly increase the scalability of the Ethereum blockchain for simple payments, boosting transaction throughput from 15 transactions per second to 500 or even 1,000 transactions per second. Reducing the gas cost for data on the blockchain, currently set at 68 gas per byte, would further enhance scalability by allowing more data to be processed without overburdening the network.
Expanding Rollup Capabilities: Rollup technology can support complex state transition functions beyond simple money transfers, enabling a wide range of applications such as high-performance exchanges, multi-token systems, privacy-preserving computations, and more.
Introducing ZKZK Roll-Up: ZKZK Roll-Up is a proposed approach that combines rollup techniques with a mini version of Zcash for privacy preservation. Users publish transactions containing SNARKs (Succinct Non-Interactive Arguments of Knowledge) that prove the validity of spent certificates and coin hashes, ensuring that each coin can only be spent once.
Privacy-Preserving Transactions with ZKZK Roll-Up: In ZKZK Roll-Up, transactions are replaced with receipts that contain minimal information necessary to update the state, such as spent certificates, new coin values, and fees. This approach reduces the amount of data published on the blockchain, minimizing the cost and preserving user privacy. The total cost per transaction using ZKZK Roll-Up is approximately 7,100 gas, which is still more efficient than standard Ethereum transactions while providing full privacy.
Ethereum 2.0 Scalability: Ethereum 2.0’s phase one introduces data sharding, allowing for 1,024 shards with a block size of 16 kilobytes every six seconds. The data in these shards can be utilized for various purposes, such as ZK rollups, enabling privacy-preserving transactions.
ZKZK Rollups on Ethereum 2.0: ZKZK rollups on Ethereum 2.0 can potentially process 27,000 privacy-preserving transactions per second, and without privacy concerns, this number can increase tenfold. However, these systems rely on a computation layer to verify SNARKs, which Ethereum 2.0 phase one lacks.
ETH2 Lite Clients: ETH2 Lite clients can be integrated within ETH1 to bridge the gap between Ethereum 1.0’s computation capabilities and Ethereum 2.0’s data availability. The Ethereum 2.0 protocol is designed to be Lite client friendly, allowing for efficient verification of blocks and state transitions.
00:23:12 Integrating Ethereum 2.0 for Scalability and Enhanced Availability
Data complexity of authenticating a validator set: Every nine days, a new validator set needs to be authenticated, requiring approximately 80 kilobytes of data. The data can be amortized over the nine days, and only about 500 bytes are needed to authenticate a new header. This process can be done on the Ethereum 1.0 chain with a recompile for BLS12381, which is expected in the next fork.
Using Ethereum 1.0 as the computation layer for Ethereum 2.0 rollups: The Ethereum 1.0 chain can be used as the computation layer for Ethereum 2.0 rollups. The data for these roll-up schemes can be stored on the Ethereum 2.0 chain. This approach can lead to significant scalability gains for Ethereum.
Other applications of availability engines: Plasma chains with more frequent commitments: Plasma chains can be created with blocks every minute instead of every day. dApps that store messages on the chain. Blockchain protocols with independent state transition functions, similar to MasterPoint-style protocols. Data for these protocols can be stored on shards, with the Ethereum chain used for data availability.
00:26:05 Layer 2 Techniques for Faster Cross-Shard Transactions
Layer 2 Techniques for Cross-Shard Transactions: Vitalik introduces a layer 2 technique to expedite cross-shard transactions by enabling faster transfer of funds and operations between shards.
Mechanism for Root Verification: A mechanism allows one shard to view the roots of another shard, ensuring its validity through security deposits.
Conditional Balances: Bob’s balance is represented as a conditional object, reflecting his balance in either shard based on the state root.
Quantum Superposition in Smart Contracts: The smart contract stores both possibilities of Bob’s balance, allowing for conditional transactions and updates.
User Interface Perspective: From a user’s perspective, Bob and Charlie receive and spend their coins almost instantly despite the underlying complexities.
General-Purpose Privacy in Layer 2: Layer 2 can provide general-purpose privacy using frameworks like Zexia, enabling privacy-preserving smart contracts.
UTXO-Based Architecture: The Zexia framework utilizes a UTXO-based architecture for smart contracts, ensuring privacy and usability.
Implementation of Computational Layer 2: Computational Layer 2 is implemented through smart contracts that handle cross-shard transactions and privacy-preserving operations.
00:33:19 Layer Two Computation as a Paradigm for Scalability, Privacy, and Usability
Ethereum 2.0 Layer 1: Vitalik believes that Ethereum 2.0 Phase 3, with scalable data availability and basic state transitions, is sufficient for long-term scalability and privacy needs. Ethereum 2.0 Layer 1 does not need to be overly complex to optimize properties like block time, cross-shard communication, or privacy. Layer 1 upgrades should focus on increasing shard count and cryptographic improvements.
Layer Two Computation: Layer two computation involves programming in a different environment from the basic Ethereum 2.0 blockchain. Benefits of layer two computation include increased flexibility, innovation, and usability. Layer two computation can handle upgrades and innovations without requiring major changes to Layer 1.
Long-Term Roadmap: Over time, Ethereum Layer 1 may become harder to change, but this is acceptable if layer two computation can provide the necessary scalability and privacy. Layer two computational solutions become more accessible and easier to build on top of a scalable base layer with data availability. Ethereum can continue to evolve and innovate through layer two solutions without the need for major Layer 1 upgrades.
Turing Completeness: The mathematical definition of Turing completeness differs from the crypto community’s understanding. In mathematics, Turing completeness refers to computational languages that cannot be determined to halt. With zk-SNARKs, the number of steps must be known in advance, which limits Turing completeness in the mathematical sense.
Expressive Power of Crypto: “Terrain-complete” refers to the ability of a cryptocurrency to support complex applications with internal states, such as plasma, Uniswap, and Layer 2 verification engines. Bitcoin lacks this expressiveness, while Ethereum and Zexy possess it.
Proof-of-Work Security in Bear Markets: Reducing hash power during bear markets can raise security concerns. Ethereum’s current hash power is still well above the level where security becomes an issue, as demonstrated by the Ethereum Classic Chain attack.
Phase Zero’s Impact on Proof-of-Work Security: Modifying proof-of-work clients to treat the phase zero proof of stake as a finality mechanism can reduce the risk of 51% attacks. This modification would prevent 51% attacks from reverting finalized blocks, limiting their impact to censoring blocks.
Centralization of Application Layer: Decentralization discussions often involve trade-offs between the production layer and the application layer. Lightweight production layers require standardized data providers, potentially leading to centralization of applications.
00:40:53 Layer 2 Scaling Solutions for Ethereum: Data Availability and Centralization Trade-offs
Layer 2 Solutions and Centralization: Layer 2 solutions, like Rollup, reduce the level of application layer centralization compared to solutions like Plasma. In Rollup, a malicious relayer can cause less harm due to the absence of data availability issues.
Contract Yanking: Contract yanking is a method for addressing trade-in hotel problems. It involves moving an object from one shard to another, allowing for synchronous interaction with two objects on the same shard.
Synchronous Cross-Shard Activity: The Ethereum blockchain currently does not support synchronous cross-shard activity at layer one. Introducing such a feature would increase complexity and break the invariant of state transitions being a function of data in the shard and the beacon chain. However, it is possible to create a layer two solution that supports synchronous cross-shard calls.
Third-Party Layer Distributions: Third-party layer distributions, such as Seller, are part of a larger group of Layer 2 solutions. These solutions handle data availability issues themselves by storing data off-chain.
Trade-Offs Between Layer 2 Solutions: Layer 2 solutions that handle data availability on-chain, like those discussed in the presentation, have different trade-offs compared to solutions that handle data availability off-chain, like state channels and Plasma.
Abstract
Article “Revolutionizing Ethereum: Vitalik Buterin’s Comprehensive Strategy for Scalability and Efficiency”
In recent advancements, Vitalik Buterin, the visionary behind Ethereum, has proposed a series of innovative solutions targeting the blockchain’s scalability and efficiency. Central to these advancements are the concepts of Layer 2 scaling, Ethereum 2.0, and advanced cryptographic techniques like ZK Rollup and ZKZK Roll-Up. This article delves into Buterin’s strategies, examining the technical intricacies of ZK Rollup, the potential of Ethereum 2.0 in conjunction with Layer 2 solutions, and the broader implications for the future of Ethereum.
Mastercoin and Its Limitations
The journey begins with Mastercoin, introduced in 2013 as a meta-protocol on the Bitcoin blockchain. While innovative, Mastercoin faced limitations, particularly in user-friendliness and functionality, unable to influence state beyond its meta-protocol. This limitation set the stage for the development of more advanced solutions like ZK Rollup.
Emergence of ZK Rollup
ZK Rollup, proposed by Buterin, emerged as a groundbreaking scheme to overcome these limitations. By bundling transactions into batches and utilizing zk-SNARKs, ZK Rollup enhances scalability and reduces gas fees on the Ethereum blockchain. The relayers in this system play a crucial role, ensuring transaction validity while maintaining privacy and security.
In contrast to Plasma, a previous layer 2 solution, ZK Rollup significantly increases scalability by using a technique called zk-SNARKs to prove the validity of transactions off-chain, resulting in 30x more scalability currently and potentially more in the future. Unlike Plasma, which requires complex mechanisms and periods for data availability, ZK Rollup avoids this issue by publishing all transactions on-chain.
Advantages and Capabilities of ZK Rollup
ZK Rollup’s benefits extend beyond mere scalability. It supports complex state transitions, high-performance exchanges, and privacy-preserving computations. The introduction of ZKZK Roll-Up within this framework furthers these advantages, incorporating elements of Zcash to bolster privacy and security. Additionally, by excluding nonces from transactions, the transaction size is further reduced from 13 bytes to 11 bytes, saving costs and enabling instant deposits and withdrawals without the need for complex mechanisms or central operators.
Ethereum 2.0 and Layer 2 Scaling
Buterin’s vision expands with Ethereum 2.0 (Eth2), introducing sharding to distribute data and increase throughput. Layer 2 scaling solutions, such as the implementation of SNARKs and STARKs, complement Eth2’s architecture, addressing the critical challenge of Ethereum’s scalability. The integration of Layer 2 solutions, like rollup technology, has the potential to significantly increase the scalability of Ethereum, potentially boosting transaction throughput from 15 transactions per second to 500 or even 1,000 transactions per second. Furthermore, reducing the gas cost for data on the blockchain would enhance scalability by allowing more data to be processed without burdening the network. Rollup technology can also support complex state transition functions beyond simple money transfers, enabling a wide range of applications such as high-performance exchanges, multi-token systems, privacy-preserving computations, and more.
Ethereum 2.0 Scalability:
* Ethereum 2.0’s phase one introduces data sharding, allowing for 1,024 shards with a block size of 16 kilobytes every six seconds.
* The data in these shards can be utilized for various purposes, such as ZK rollups, enabling privacy-preserving transactions.
ZKZK Rollups on Ethereum 2.0:
* ZKZK rollups on Ethereum 2.0 can potentially process 27,000 privacy-preserving transactions per second, and without privacy concerns, this number can increase tenfold.
* However, these systems rely on a computation layer to verify SNARKs, which Ethereum 2.0 phase one lacks.
ETH2 Lite Clients:
* ETH2 Lite clients can be integrated within ETH1 to bridge the gap between Ethereum 1.0’s computation capabilities and Ethereum 2.0’s data availability.
* The Ethereum 2.0 protocol is designed to be Lite client friendly, allowing for efficient verification of blocks and state transitions.
Integration Challenges and Solutions
Despite these innovations, challenges persist, particularly in integrating the computation layer into Eth2’s design. Proposals such as running Eth2 Lite clients within Eth1 aim to bridge this gap, facilitating effective Layer 2 scaling.
The Role of Merkle Branches and Data Complexity
Merkle branches play a pivotal role in authenticating validator committees, essential for verifying block signatures. The data complexity involved in authenticating validators and headers underscores the need for efficient data storage and processing solutions.
Data complexity of authenticating a validator set:
* Every nine days, a new validator set needs to be authenticated, requiring approximately 80 kilobytes of data.
* The data can be amortized over the nine days, and only about 500 bytes are needed to authenticate a new header.
* This process can be done on the Ethereum 1.0 chain with a recompile for BLS12381, which is expected in the next fork.
Ethereum’s Long-Term Roadmap
Buterin envisions a long-term shift towards Layer 2 solutions, ensuring scalability and privacy. Layer one is envisioned to remain stable, focusing on security and data availability, while Layer two handles complex computations and fosters innovation.
Decentralization and Security Considerations
Buterin’s approach also addresses the crucial aspects of decentralization and security. The trade-offs between decentralization at the production and application layers are carefully considered, alongside strategies to mitigate security risks, especially in bear markets.
Layer 2 Solutions and Data Availability
Finally, the focus on Layer 2 solutions that mitigate data availability problems highlights Buterin’s commitment to reducing application layer centralization. Techniques like contract yanking and third-party layer distributions are part of a broad array of solutions aimed at enhancing the Ethereum ecosystem’s functionality and user experience.
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Conclusion
Vitalik Buterin’s comprehensive strategy for Ethereum’s scalability and efficiency marks a significant leap in blockchain technology. By integrating advanced cryptographic techniques, Layer 2 solutions, and the visionary Ethereum 2.0, Buterin sets the stage for a more scalable, efficient, and user-friendly blockchain ecosystem. As these technologies evolve and mature, Ethereum is poised to maintain its position as a leading platform in the blockchain space, offering robust solutions to its longstanding challenges.
Updated Information:
Ethereum 2.0 Layer 1:
* Vitalik believes Ethereum 2.0 Phase 3, with scalable data availability and basic state transitions, is sufficient for long-term scalability and privacy needs.
* Ethereum 2.0 Layer 1 does not need to be overly complex to optimize properties like block time, cross-shard communication, or privacy.
* Layer 1 upgrades should focus on increasing shard count and cryptographic improvements.
Layer Two Computation:
* Layer two computation involves programming in a different environment from the basic Ethereum 2.0 blockchain.
* Benefits of layer two computation include increased flexibility, innovation, and usability.
* Layer two computation can handle upgrades and innovations without requiring major changes to Layer 1.
Long-Term Roadmap:
* Over time, Ethereum Layer 1 may become harder to change, but this is acceptable if layer two computation can provide the necessary scalability and privacy.
* Layer two computational solutions become more accessible and easier to build on top of a scalable base layer with data availability.
* Ethereum can continue to evolve and innovate through layer two solutions without the need for major Layer 1 upgrades.
Expressive Power of Crypto:
* “Terrain-complete” refers to the ability of a cryptocurrency to support complex applications with internal states, such as plasma, Uniswap, and Layer 2 verification engines.
* Bitcoin lacks this expressiveness, while Ethereum and Zexy possess it.
Proof-of-Work Security in Bear Markets:
* Reducing hash power during bear markets can raise security concerns.
* Ethereum’s current hash power is still well above the level where security becomes an issue, as demonstrated by the Ethereum Classic Chain attack.
Layer 2 Solutions and Centralization:
* Layer 2 solutions, like Rollup, reduce the level of application layer centralization compared to solutions like Plasma.
* In Rollup, a malicious relayer can cause less harm due to the absence of data availability issues.
Centralization of Application Layer:
* Decentralization discussions often involve trade-offs between the production layer and the application layer.
* Lightweight production layers require standardized data providers, potentially leading to centralization of applications.
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