Vitalik Buterin (Ethereum Co-founder) – “Scaling Ethereum in 2020 and Beyond” (Oct 2020)
Chapters
Abstract
Abstract
The expansion and scaling of Ethereum have become paramount in the cryptocurrency space. This article delves into various technological advancements and proposals that aim to address Ethereum’s scalability challenges. Key technologies discussed include roll-ups (like zk-sync, Loopring, StarkEx, and Optimism), the OMG Network, and the phased development of Ethereum 2.0 (ETH2).
_ZK Rollups_: Rollups are a type of Layer 2 scaling solution that allows for fast and cheap transactions on Ethereum. Loopring is a decentralized exchange that uses ZK rollups to facilitate fast and cheap trading. StarkWare is a company that develops Stark-based Layer 2 scaling solutions. StarkEx is a decentralized exchange that uses Stark-based technology. Plasma is a type of Layer 2 scaling solution that uses fraud proofs to verify transactions off-chain. OMG Network is a company that is developing Plasma-based scaling solutions. Optimism is a company that is developing optimistic rollup-based scaling solutions.
_Network Synchrony Assumptions_: The current approach for scalable execution in Ethereum 2.0 does not rely on network synchrony assumptions or fraud proofs. Instead, it involves sending a series of requests and waiting for responses, ensuring robustness even in slow or disrupted network conditions.
Vitalik Buterin, a co-founder of Ethereum, underscores the importance of roll-ups and Layer 2 solutions in Ethereum’s scaling roadmap, emphasizing their potential to increase transaction throughput significantly. The article also explores the integration of Ethereum Name Service (ENS) with Layer 2 solutions, the challenges and potentials of rollups in terms of scalability, privacy, and Turing completeness, and the necessity of user-friendly wallets and interfaces to enhance the user experience in Layer 2 protocols.
_Layer 2 Support in Wallets_: Wallets like MetaMask, Status, and IAM Token need to incorporate native support for Optimistic Rollups, ZK Rollups, and Plasma.
_ENS Integration with Layer 2_: ENS should function not only on layer one but also on layer two. Users will primarily reside in layer two, making it necessary for ENS name resolution to work even for names registered, transferred, renewed, and administered entirely within rollups.
Buterin emphasizes the crucial role of roll-ups in handling payments and decentralized exchange (DEX) activities on Ethereum. Optimism, an optimistic rollup project with a testnet already in operation, is an example of this advancement. Starkware’s Cairo project, enabling the compilation of Solidity contracts into Stark, marks another significant step forward.
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Introduction
As Ethereum continues to grow in popularity and usage, the need for efficient and scalable solutions has never been more urgent. This article examines the various technologies and proposals that aim to address these scalability challenges, focusing on the insights and visions of Ethereum co-founder Vitalik Buterin. Key areas of discussion include the role of roll-ups and Layer 2 solutions in enhancing Ethereum’s transaction throughput, the phased development of Ethereum 2.0, and the integration of these technologies into user interfaces and wallets for improved user experience.
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Roll-ups and Layer 2 Solutions: A Scalability Panacea
Roll-ups, particularly zk-sync and Loopring, have emerged as vital solutions for Ethereum’s scalability issues. These technologies offer low transaction fees and fast processing times, allowing users to conduct payments and receive funds without congesting the main blockchain. StarkEx, another significant player, operates as a Stark-based decentralized exchange with a trusted setup and has seen substantial usage. Similarly, the OMG Network, based on plasma technology, provides a crypto-economically secure scaling solution with a user-friendly wallet.
_Fraud Proofs and Latency_: Vitalik highlights that fraud proofs are necessary for verifying computation in a scalable and robust manner. However, fraud proofs depend on a strict latency assumption, which could lead to potential issues if the network experiences significant delays.
_Stability of Ethereum 2 Blockchain_: Leaving scalable execution entirely up to layer 2 solutions could potentially enhance the stability of the Ethereum 2 blockchain. This approach would limit the blockchain’s functionality, making it a more focused and reliable tool.
_Compromise Approach_: A compromise proposal suggests having a limited number of execution charts (e.g., four or eight) instead of the current proposal of 64. This middle ground would allow for some base layer applications, provide more room for error, and reduce pressure on various aspects of the system.
_Verification by Individual Users_: With a limited number of execution shards, individual users running nodes could still personally verify all computations happening in the network. This level of verification would be impossible with a large number of execution shards.
_Layer 2 Solutions for Secure and Efficient Transactions_: Vitalik Buterin emphasizes the need for secure default settings in layer 2 solutions to prevent accidental exposure of sensitive information and financial loss. Integration of layer 2 protocols with wallets and applications should be direct, avoiding insecure application interfaces that compromise user funds.
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ETH2: A Multi-Phase Scalability Strategy
The transition to ETH2 is a cornerstone of Ethereum’s scalability roadmap. Phase zero, on the cusp of being realized, has shown promise with successful testnets and live tests. It focuses on efficiency improvements and bug fixes, paving the way for increased scalability. The high demand for Ethereum usage, reflected in soaring gas prices, underscores the urgency of these developments.
_ETH2 Phase Two and Scalability_: ETH2 Phase Two introduces the concept of allowing shards to have not only data but also execution, enabling applications to live inside ETH2.
_Scalability Concerns_: ETH2 Phase Two offers 25,000 to 100,000 TPS due to sharding and rollup, but layer 1 of ETH2 has inferior scalability with only sharding.
_Roll-up Adoption and Ecosystem Acclimation_: The ecosystem has become accustomed to roll-ups, which provide juicy features like sequencer pre-confirmations and full account abstraction.
_Why Migrate Back to the Main Chain?_ Applications may not see the incentive to migrate back to the main chain given the inferior scalability and the convenience of roll-ups.
_Risks of Allowing Computation on Every Shard_: Verifying data availability with polynomial commitments or zero-knowledge proofs is not as resource-intensive as verifying computations.
_Potential Solutions_: One approach is to use a system where nodes only verify computations on shards they are responsible for, reducing the computational burden.
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Enhancing User Experience and Wallet Integration
A critical aspect of adopting Layer 2 solutions is the user experience. Wallets like MetaMask, Status, and IAM Token need native support for various rollups and plasma technologies. Buterin proposes a comprehensive ecosystem effort to enhance security and usability, including simplifying user interfaces and providing educational resources.
_The Need for a Comprehensive Ecosystem-Level Push to Improve User Experience_: Buterin highlights the importance of improving user experience, including security, for layer two protocols.
_Wallets as a Critical Component of User Experience_: He points out that the user experience of zk-sync inside Gitcoin is not optimal because it is instantiated within the Gitcoin web page. This setup creates a security risk, as Gitcoin could create a fake zk-sync sign-out page and steal users’ assets.
ENS integration is another vital component. Buterin suggests a solution for ENS to function entirely within Layer 2, emphasizing its importance in a future dominated by these solutions. He also highlights the need for wallets and infrastructure to natively integrate Layer 2 solutions, eliminating the need for separate application support.
_Cross-rollup Exchange and Interoperability_: Cross-rollup exchange is crucial for a scalable Ethereum ecosystem, enabling seamless movement of assets between different layer 2 rollups.
The challenges of cross-rollup exchange are similar to those of cross-shard exchange, regardless of whether the scaling approach involves rollups or sharding.
Vitalik encourages developers to explore cross-domain exchange solutions, such as creating a decentralized exchange (DEX) that operates between different layer 2 platforms.
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Scalability, Privacy, and the Future of Ethereum
Rollups, while scalable, face limitations due to the need for fraud proofs. However, they offer Turing completeness, allowing for a wide range of applications. The potential dominance of a few rollups raises concerns about centralization and extractive behavior, which the Ethereum ecosystem might address by integrating dominant rollup code into the main chain.
_Proactive Thinking and Ecosystem Adoption_: The Ethereum community needs to proactively consider how to leverage layer 2 solutions and ETH2 to achieve scalability.
Migration to layer 2s and their integration with ETH2 will require careful planning and coordination.
_Rollups as the Only Viable Solution for Ethereum Scaling_: Vitalik Buterin emphasizes that rollups are the only technology currently available that can scale Ethereum applications from their current level to 100 times greater without compromising on security. Side chains with two-way bridges require trust in the committee running the side chain, which is eliminated with rollups.
Privacy-scalability trade-offs are evident in private rollups like zero-knowledge (ZK) rollups. Achieving perfect privacy in complex smart contracts remains challenging, but ongoing research is pushing these boundaries. Ethereum’s base layer is expected to stabilize, with continuous improvements in efficiency and security.
_ENS Resolution and Static Calls in Layer 2s_: Vitalik Buterin proposes a general-purpose proposal enabling ENS name resolution and static calls within arbitrary Layer 2s. This allows ENS and various applications to seamlessly exist within different Layer 2s without standardizing on a single one.
_Common Intermediate Compilation Target_: Buterin emphasizes the need for a common intermediate compilation target, making it easy to compile to and from different languages. The goal is to facilitate interoperability between high-level and low-level languages in the Ethereum ecosystem.
_Economic Benefits of Layer 2 Projects_: Buterin identifies the public goods funding problem and the challenge of attracting researchers and developers to contribute to Ethereum’s scaling process. Layer 2 projects have more leeway in terms of building their own systems and experimenting with different options. Layer 2 projects can monetize through MEV auctions, transaction fees, and tokenized models, potentially aligning their economic interests with the Ethereum ecosystem.
_Short-Term Focus on Scaling with Rollups_: Buterin acknowledges the immediate need for scaling solutions, highlighting rollups as the most viable technology to achieve this goal. He emphasizes the extensive research and exploration conducted in the scaling space, leading to the conclusion that rollups are best suited for applications beyond simple payments.
_Long-Term Proposal: Using ETH2 Shard Data for Rollups_: Buterin presents a long-term proposal to utilize ETH2 shard data for rollups. This would involve moving rollup data onto ETH2 shards, increasing transaction throughput significantly. A bridge would be necessary to verify the legitimacy of ETH2 blocks by the ETH1 chain.
_Awkward Inconsistency in ETH2 and Scaling Roadmap_: Buterin points out an inconsistency in the ETH2 and scaling roadmap. He highlights the transition from no Layer 2 to rollups without sharding, then to sharding with rollups, leaving an unexplained gap in the progression.
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Conclusion
Buterin’s vision for Ethereum’s future is a Layer 2-centric ecosystem, capable of scaling to accommodate billions of users while maintaining security and user-friendliness. The integration of advanced features like multi-sigs and self-cancellable transaction vaults into Layer 2 platforms can significantly enhance user experience and security. As Ethereum continues to evolve, the focus on scalability, user experience, and privacy will be crucial in realizing its full potential as a global blockchain platform.
_Scalability and Turing Completeness of Rollups_: Rollups offer the ability to run arbitrary state machines, enabling Turing completeness and the potential for diverse applications.
The scalability of rollups is limited, but they provide the flexibility to run complex smart contracts.
Practical examples of rollups include decentralized exchanges, checkouts for Gitcoin donations, and EVM support.
_Confidence in Rollups and Their Advantages_: Vitalik acknowledges past disappointments in layer 2 solutions, particularly channels and plasma.
He argues that rollups are a different class of scaling solution that addresses the limitations of channels and plasma by providing data availability on-chain.
Rollups achieve scalability by performing computation off-chain while publishing a small amount of data on-chain, ensuring security and transparency.
_Network Effects and Anti-Network Effects in Rollups_: Multiple rollups are expected to dominate due to both network effects and anti-network effects.
The increasing transactions per second within a single rollup can hinder the usability of running a full node.
Different technical families of rollups, such as optimistic EVM, zero-knowledge proof using elliptic curves, and zero-knowledge proof using Stark’s, are being explored.
_Downsides of a Winner-Take-All Dynamic in Rollups_: If a single rollup gains dominance and becomes extractive, the Ethereum ecosystem may respond by nationalizing it.
The nationalization process would involve enshrining the code of the dominant rollup into the main chain and making it part of Ethereum’s scaling solution.
_Private Rollups and Trade-offs_: Zero-knowledge rollups (ZK rollups) offer both privacy and scalability.
The trade-off with ZK rollups is the tension between privacy and composability, as well as the challenge of enabling multiple users to interact with private smart contracts.
Ongoing research and development aim to push the boundaries of privacy in smart contracts while maintaining usability.
_Stabilization of Ethereum’s Base Layer_: Vitalik Buterin envisions the basic structure of Ethereum’s roadmap to stabilize in phase 1.5, with ongoing technical improvements but no major structural changes.
Iterative technical improvements may include adding zero-knowledge proofs for enhanced security, improving efficiency, and migrating to post-quantum consensus.
_Scalability and Turing Completeness of Rollups_: Rollups offer the ability to run arbitrary state machines, enabling Turing completeness and the potential for diverse applications.
The scalability of rollups is limited, but they provide the flexibility to run complex smart contracts.
Practical examples of rollups include decentralized exchanges, checkouts for Gitcoin donations, and EVM support.
_Confidence in Rollups and Their Advantages_: Vitalik acknowledges past disappointments in layer 2 solutions, particularly channels and plasma.
He argues that rollups are a different class of scaling solution that addresses the limitations of channels and plasma by providing data availability on-chain.
Rollups achieve scalability by performing computation off-chain while publishing a small amount of data on-chain, ensuring security and transparency.
_Network Effects and Anti-Network Effects in Rollups_: Multiple rollups are expected to dominate due to both network effects and anti-network effects.
The increasing transactions per second within a single rollup can hinder the usability of running a full node.
Different technical families of rollups, such as optimistic EVM, zero-knowledge proof using elliptic curves, and zero-knowledge proof using Stark’s, are being explored.
_Downsides of a Winner-Take-All Dynamic in Rollups_: If a single rollup gains dominance and becomes extractive, the Ethereum ecosystem may respond by nationalizing it.
The nationalization process would involve enshrining the code of the dominant rollup into the main chain and making it part of Ethereum’s scaling solution.
_Private Rollups and Trade-offs_: Zero-knowledge rollups (ZK rollups) offer both privacy and scalability.
The trade-off with ZK rollups is the tension between privacy and composability, as well as the challenge of enabling multiple users to interact with private smart contracts.
Ongoing research and development aim to push the boundaries of privacy in smart contracts while maintaining usability.
_Stabilization of Ethereum’s Base Layer_: Vitalik Buterin envisions the basic structure of Ethereum’s roadmap to stabilize in phase 1.5, with ongoing technical improvements but no major structural changes.
Iterative technical improvements may include adding zero-knowledge proofs for enhanced security, improving efficiency, and migrating to post-quantum consensus.
_Hackathon Ideas for Ethereum Online_: Building tools and applications to prepare the Ethereum ecosystem for layer twos.
Developing a MetaMask fork that supports looping, DBSync, and Optimism.
Creating a decentralized exchange that operates between multiple rollups.
Designing an ENS resolver that functions within layer twos.
Exploring the potential of layer twos to facilitate smart contract wallets, multi-stakeholder social recovery, and improved security measures.
_Vitalik Buterin Discusses Scalability of Ethereum and Possible Solutions_:
Key Points:
– Vitalik Buterin emphasizes the need for scalability solutions in Ethereum to accommodate 5 billion users.
– He suggests various mechanisms to enhance security and ease of use, such as multi-sigs, self-cancellable transaction vaults, social recovery, and reduced centralization.
– Buterin highlights the limitations of the current blockchain design for supporting verification schemes beyond single elliptic curve signature verification.
– He proposes leveraging Layer 2 solutions to implement these features, which can be more easily incorporated compared to Layer 1.
– Buterin also suggests migrating applications to Layer 2 to improve scalability and reduce transaction fees.
– He presents an example of creating a bot that automatically creates and pushes tokens into Layer 2s for prediction markets, allowing users to trade with lower fees.
Conclusion:
Vitalik Buterin emphasizes the importance of scalability and proposes several solutions, including multi-sigs, self-cancellable vaults, and social recovery, to improve the security and usability of Ethereum. He suggests utilizing Layer 2 solutions to implement these features and encourages application migration to Layer 2 for enhanced scalability and reduced transaction fees.
Notes by: Simurgh