Vitalik Buterin (Ethereum Co-founder) – Scalable Blockchains As Data Layers (Mar 2019)


Chapters

00:00:35 Layer 2 Protocols in Blockchain Evolution
00:04:36 Zk Rollup Scalability Solution
00:12:13 ZKZK Rollup for Privacy-Preserving Scalability
00:18:55 Scalability in the Ethereum Network
00:23:12 Integrating Ethereum 2.0 for Scalability and Enhanced Availability
00:26:05 Layer 2 Techniques for Faster Cross-Shard Transactions
00:33:19 Layer Two Computation as a Paradigm for Scalability, Privacy, and Usability
00:37:37 Blockchain Application Layer Decentralization
00:40:53 Layer 2 Scaling Solutions for Ethereum: Data Availability and Centralization Trade-offs

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.



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.


Notes by: Flaneur