Behind the criticism of multi-signature lies the challenging issue of decentralization for layer2 technology?

The Complex Problem of Decentralization in Layer 2 Technology Shrouded by Criticism of Multi-Signature

Source: Chain Observer

Blast’s multiple signature security risks are still being criticized, even the joke that all five multiple signatures belong to Tie Shun has gone viral. However, this has not affected the continuous increase in Blast’s Total Value Locked (TVL). Rational understanding drives everyone to criticize Blast, but the instinct to seek profits cannot resist embracing Blast.

Next, let’s put aside the specific multiple signature security issues of Blast and discuss why it is so difficult for layer2 technology to be decentralized from the perspective of the layer2 industry.

First, it is necessary to clarify the decentralization of the so-called layer2 technology components, including: Sequencer, Prover, Validator, mainnet Rollup Contract, and other key components distributed across the mainnet and layer2. Among them, ZK-Rollup has a Prover system that OP-Rollup lacks. Basically, everyone focuses on the operation of the Sequencer. In addition, the differences lie in the degree of reliance on Ethereum mainnet for Data Availability implementation and the equivalence to EVM mainnet.

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The current situation of decentralization for each core layer2 technology component:

– Arbitrum is collaborating with Espresso System to explore the possibility of decentralizing the Sequencer, but it is still in the exploration stage;

– The Prover system of Starknet has achieved permissionless decentralization, but there is no clear news of decentralizing the Sequencer;

– Optimism has even rationalized the centralization of the Sequencer and launched the OP Stack strategy, attempting to decentralize the governance authority through a new shared Sequencer Security Governance Council to compensate for the deficiencies in technical consensus using a curve-based social consensus;

– zkSync has shown no signs of open sourcing and decentralization of its core components for a long time. It has launched the ZK Stack multi-application chain strategy. According to the official statement, zkSync retreating to become a model application chain under the Stack strategy is also to evade the sense of powerlessness in decentralized technology.

It is not difficult to see that the four major layer2 solutions have different considerations regarding the decentralization of core technology components. Some are still telling stories about technical decentralization, while others have tried to compensate for the shortcomings of purely technical decentralization through the Stack strategy. In short, achieving pure technical decentralization in layer2 is very difficult. Why?

1) Layer2 Sequencers generally use centralized externally owned accounts (EOAs). This can save costs when interacting with the mainnet. Optimism and zkSync, for example, both use EOA addresses controlled directly by private keys, which are more flexible in operation and have a smaller attack surface compared to the complex logic and functionality of smart contracts.

Most importantly, these EOA addresses can reduce costs when interacting with mainnet contracts. However, the most effective way to manage private keys is through strong centralization. To achieve decentralized management of private keys would actually increase the system’s vulnerability to attacks.

2) Sequencers are responsible for collecting fees from layer2 revenue. The fees collected by Sequencers, after deducting the costs required for batching transactions on the mainnet, constitute layer2’s gross income.

This makes the controlling party of the Sequencer unwilling to easily decentralize its power. Once it becomes too decentralized, it will inevitably create new problems in the core incentive mechanism and fee distribution.

3) The technical threshold for Prover system to generate and verify Proof is high. Currently, there are few innovations in the ZK-Rollup ecosystem, and a major reason for this is the high level of adaptation required in the data structure and the significant threshold associated with ZK circuit. This is especially challenging for decentralized validators. Once the validators’ nodes are too dispersed, there will also be stability issues in the process of handling and verifying Proof.

4) OP-Rollup rarely experiences actual battle-tested challenges, precisely because the centralized Sequencer naturally tends towards optimistic zero challenges in layer 2. To some extent, the seemingly centralized Sequencer appears to be a weakness, but it actually becomes another security mechanism.

5) If a layer 2 experiences a security failure, the Sequencer can forcibly freeze and control the outflow of assets. At worst, a low-cost hard fork can take place in layer 2. But what if the Sequencer itself is attacked? A large amount of funds will flow back to the mainnet, and the Rollup contract on the mainnet with the implementation of upgradeable multisignature governance serves as another layer of insurance. Because layer 2 cannot rely on hard forks at the mainnet level.

To put it bluntly, the mainnet implements multisignature governance only to provide insurance against attacks on layer 2 Sequencers. It is meaningless to discuss the names or reputations on the multisignature list.

That’s all.

The reason why we rarely hear about rug pulls due to excessive centralization in layer 2 is mainly due to the overall high technical threshold of layer 2. The reputation of the founding team, endorsement from investment institutions, and built-in special security mechanisms (challenge mechanisms, DA), etc., all contribute to the sustainable long-term business of operating layer 2, especially watching the rise of various ecosystems and continuously generating revenue through fees is the end game of layer 2.

If a layer 2 project does not mention the ecosystem, does not discuss the technology, and only focuses on airdrop expectations in the name of “everyone is the same,” apart from the rug risks, the first question should be whether it is really a layer 2?

The current development of decentralized technology in layer 2 is not ideal. Perhaps the dogmatic decentralization simply does not exist in the layer 2 field? In this regard, a Stack strategy of eliminating excessive centralized power in layer 2 may be the only solution in the long run.

Ultimately, whether it is technical consensus or social consensus, it is ultimately a force that constrains wrongdoing.

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