Layer 2 is definitely one of the puzzle pieces that the community is paying close attention to after the launch of Optimism or Arbitrum. Recently, a series of big companies have also jumped into Layer 2 such as Coinbase, Binance, A16Z, Consensys, Paradigm,… this makes the community even more confident that Layer 2 will become the next trend of the market. Crypto school.
However, whether Layer 2 is really and perfect as everyone thinks or not, let’s find out together in the article below. To better understand this article, people can refer to some of the following documents:
- What is Layer 2? Complete Guide to Layer 2 Solutions
- What is Sequencer, Prover? The Role Of Sequencer & Prover In Layer 2
- What is Data Availability (DA)? The Importance of DA in Blockchain
- What is the Consensus Algorithm? How Blockchains Became Decentralized
Correct But Not Enough Knowledge About Layer 2
Sequencer & Things users don’t know
In Layer 2, there is one thing that almost everyone knows: “Layer 2 in general and Rollup in particular inherit security and decentralization from Layer 1“. This is a very general statement. It is true and not enough. Surely no one will tell everyone where it is decentralized and where it is secure, right? To understand this we need to consider a number of factors about the activities surrounding a transaction and the mechanism of how Rollups work.
Some of the factors surrounding a transaction include:
- Enforcement
- Consensus
- Data availability
The basic working mechanism of both zkRollup and Optimistic Rollup is as follows:
- Step 1: Sequencers will arrange transactions from Mempool into Block which is the Ordering process.
- Step 2: Provers will create transaction proof for the Block created by Sequencer. Depending on, Optimistic Rollup or zkRollup uses different transaction proofs.
- Step 3: Sequencer sends Block as Call Data to Ethereum to act as Layer 1 and reach consensus on DA.
- Step 4: Block will be permanently added to Ethereum as Call Data.
Looking at the factors surrounding a transaction and the basic operating mechanism of zkRollup, the Consensus and Data Availability process takes place at Layer 1 with its huge number of Validators. Ethereum has made Layer 2 Decentralization and security at this stage. But in the previous stage, Implementation, not really.
At the present time, Layer 2 platforms have their own set of Sequencers. In order for the network to operate stably in the first stage, Layer 2 platforms must use a limited number of Sequencers and must KYC with the project. This is what makes Layer 2 currently not decentralized, but we still think.
Data Availability – A burning problem of Layer 2
In the transaction fee structure on Layer 2, data storage accounts for about 30% of the total transaction fee, which causes developers a headache about how to improve this fee. However, the ambition to improve Data Availability fees is actually a bit of a dream. In fact, it shows that Data Availability tends to increase and is unlikely to decrease.
Therefore, developers began to find solutions to indirectly improve the Data Availability problem such as:
- Valadium: Put most of the data stored off-chain on some of the project’s own nodes.
- Rollup As a Service: Rollups can be consensus on Ethereum but data can be stored on Celestia. Storing data in Celestia is much cheaper than Ethereum.
Obviously having better scalability also comes with trade-offs in terms of decentralization and security. Therefore, when you see that one Layer 2 solution has better scalability than another Layer 2 solution, it is highly likely that the Layer 2 solution with better scalability is trading off security and reliability. decentralization of the network.
Some actual parameters of Layer 2
Regarding the number of Sequencers of Layer 2 platforms, we have:
|
Layer 2 |
Number of Sequencers |
|---|---|
|
Arbitrum |
1. Operated directly by Offchain Labs |
|
Optimism |
1. Operated directly by Optimism |
Not only stopping at the number of Sequencers, in terms of TPS, the average TPS of Layer 2 platforms currently only falls around 40, which is very low compared to theoretical numbers, even zkRollup cannot reach the number 4 – 6,000. TPS. Current numbers show that Layer 2 still has a lot of work to do to reach its goals.
Some Solutions to Help Layer 2 Become Decentralized
In essence Decentralization is not a top concern for Layer 2 platforms at the present time. The most important thing for Layer 2 platforms at the present time is continuing to improve and upgrade the network to increase scalability because Layer 2 is not meeting user needs. It can be simply understood that Layer 2 platforms are not developing in time with market demand.
And if not upgraded and changed promptly, it will be difficult for Layer 2 platforms to receive a huge number of users and large cash flows in the near future. That is the reason why the Ethereum Foundation is very busy with EIP 4488, EIP 4844 or Danksharding. Layer 2s themselves are also very busy with their own plans such as:
- Optimism with OP Stack, OP Chain & Superchain.
- Arbitrum vs. Arbitrum Orbit.
- zkSync with ZK Stack, Hyperchains, Hyperbridges & ZK Credo.
- StarkNet with StarkNet Stack & StarkNet L3.
However, in my opinion, Layer 2 platforms still tend to decentralize their networks in the long term with a number of solutions such as:
- Launching Native Token to decentralize Sequencer similar to Validators at Layer 1.
- Rent Sequencers from projects in the Crypto market.
There are also a number of other solutions proposed but not really feasible. But in my opinion, the first solution is considered the most complete for Layer 2 platforms when most Layer 2s will have to launch their own Native Tokens and in the usual context Layer 2s will use them. ETH as transaction fee, the only Use Case for Native Tokens is in that solution.
As I shared above, decentralizing the Layer 2 network is not a priority at the present time when Layer 2 platforms are facing an immediate growth cycle that could take place in 2024. Therefore, decentralization of the network may take place during this period or it may be delayed until the upcoming downtrend.
Summary
Like the early Layer 1 Blockchain platforms like Polygon PoS or BNB Chain, most people were not too concerned about the level of decentralization of the network until the downtrend and I thought there was a high possibility that this story would repeat itself. with Layer 2 platforms. What do you think about this “Is Layer 2 Really Decentralized” issue?
