Inventory of the Top Five Leaders in the Ethereum Layer 2 Track

Top Five Leaders in Ethereum Layer 2

Source: Bankless

Translation: LianGuaiBitpushNews Mary Liu

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It is often said that Ethereum Layer 2 solutions inherit the “security” of Ethereum, but what does this actually mean? The answer varies depending on the different types of Rollups.

Although every Rollup aspires to achieve complete trustlessness, all of Ethereum’s optimistic and zero-knowledge (ZK) scaling solutions currently rely on some form of “training wheels”.

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Vitalik has provided an excellent framework to help Rollup users understand the level of trust they have in centralized participants or transparent code. The ultimate goal of Rollup security is to reach Stage 2, which requires fully getting rid of the “training wheels” mentioned in Vitalik’s literature. The L2Beat chart below summarizes this well.

Very few Rollups have achieved Stage 2 as defined by Vitalik, but Arbitrum is moving towards becoming the first noteworthy direction. In early August, Offchain Labs (the Arbitrum development team) announced a new on-chain permissionless verification scheme called BOLD, which strengthens its controversial protocol to withstand denial-of-service attacks known as “delay attacks”.

However, each L2 is developing at a different pace. This article will explore the five largest generalized L2s on Ethereum, which are dedicated to eliminating centralization risks in Rollups and advancing towards Stage 2.

Arbitrum One

Risk Stage: 1 Type: Optimistic TVL (Total Value Locked): $5.41 billion

Arbitrum One has successfully reduced more centralization risks than any other chain mentioned in this article. If ArbitrumDAO adopts BOLD on One, the status verification section of the chain will turn green, but the entire risk chart needs to be green to enter the second stage.

To improve scalability, two changes need to be made. First, the implementation delay for governance-initiated upgrades must be extended from 12 days to 30 days. Second, no participant should upgrade Arbitrum’s code without verification unless there are no errors.

The final “training wheels” for Arbitrum is its security council, which is elected directly by the DAO and has the ability to bypass governance and implement upgrades immediately. Although Arbitrum One strives to minimize centralization risks, the security of on-chain assets still depends on the integrity of this almighty 9/12 multi-signature.

Considering the risks of operating Rollups, the security council is considered to have a positive impact on the Arbitrum ecosystem. However, to enter the second stage, Arbitrum needs to limit it to only responding to on-chain verifiable errors.

This will further protect the security of users in Arbitrum One and ensure that participants cannot publish stateRoot that covers the Rollup proof system (unless there are errors).

Optimism

Risk Stage: 0 Type: Optimistic

TVL: $2.67 billion

Crypto observers generally believe that Arbitrum and Optimism have similar security guarantees because both adopt an optimistic rollup approach. However, security-conscious users know that this is far from the truth!

In terms of optimism, fraud proofs (tools used to challenge incorrect information submitted by chain sequencers to Ethereum) cannot operate. There is no way to dispute an incorrect stateRoot, and users must blindly trust that the block proposers have submitted the correct stateRoot.

In addition, only whitelisted proposers can submit stateRoots, which means that if a proposer fails, it is not possible to exit from Optimism to Ethereum L1.

Although fraud proofs are actively being developed, there is no clear deployment schedule yet. However, they are crucial for the decentralization of any Optimistic Rollup and are necessary for Optimism to move beyond Stage 0 in the current configuration.

Alternatively, Optimism can choose to become a zero-knowledge rollup by implementing validity proofs. Just last month, the Optimism Foundation awarded contracts to two teams to develop zero-knowledge proof modules for the OP Stack.

The Optimism Foundation plans to transfer control of multisig to a council composed of community members in 2024, which will help decentralize control over the chain keys.

In addition to implementing fraud proofs, Optimism also requires a minimum of 7 days of upgradability lock-in to become a phase one rollup.

zkSync Era

Risk Stage: 0 Type: Zero-Knowledge (ZK) TVL: $399 million

Zero-knowledge proofs ensure that every stateRoot published to Ethereum is correct and allow for state verification sections to be green, but zkSync users still face the risk of sequencer or proposer failures.

zkSync establishes a queue of transactions submitted on L1, and the sequencer needs to process that queue to mitigate censorship risks. While this does not guarantee that transactions are included, it means that if the sequencer censors or shuts down a single user, everyone is shut down.

In the future, zkSync will update its system to enforce sequencers processing the L1 transaction queue, in addition to decentralizing the sequencers. These efforts will help mitigate risks associated with malicious or knocked-off sequencers.

Each update to the zero-knowledge rollup state is accompanied by a zero-knowledge proof (ZKP) to ensure the correct export of the new state; that’s the magic of ZKP. But it means that the only way to include transactions is to include them in the generated proof. The increased decentralization of zkSync will require anyone to be able to create proofs without relying on centralized rollup operators.

Similar to Arbitrum and Optimism, zkSync needs to implement upgrade time lock-in and restrictions for multisig to reduce risks associated with upgradability.

Base

Risk Stage: 0 Type: Optimistic

TVL: $246 million

Notice how similar the risk charts of Optimism and Base look?

That’s because they are both built on the same blockchain Lego set: OP Stack. Coinbase did not build a custom solution, but chose to develop L2 on top of Optimism’s modular rollup framework.

The decentralization progress will allow Coinbase to strengthen security measures for users, which means Base may follow a similar security path as Optimism, implementing OP Stack innovations such as fraud or zero-knowledge proofs (when available).

Starknet

Risk Stage: 0 Type: Zero-knowledge TVL: $110 million

Zero-knowledge rollups face a different set of challenges compared to those using optimistic rollups. While ZKP ensures that every state root published to Ethereum is correct and allows for state verification to be green, zero-knowledge rollups have their own challenges in mitigating the risk of sequencer or prover failures.

Providing an “escape hatch” is crucial to enhance the trustlessness of Starknet, and can be achieved by forcing transactions or withdrawals to L1 when sequencer or prover fails. Currently, Starknet does not have an enabled escape hatch, but enabling one would greatly reduce users’ reliance on centralized rollup operators.

If a malicious attacker forces the network to accept invalid transactions, forcing the network to accept transactions would open the door to denial-of-service attacks. Implementation requires generating proofs without relying on StarkWare provers and all transactions on Starknet can be proven.

In addition, Starknet can choose a bridging solution called “application escape hatch”. This solution can be implemented today, but it comes at the cost of network simplicity as it requires implementing an Ethereum to Starknet account registry and a mechanism to transfer control of assets in L2 to the L1 smart contract of the rollup.

Like all the chains listed above, Starknet needs to implement upgrade time locks and restrictions on multi-signature to mitigate the risks associated with upgradability.

Starknet will fully open-source its prover on August 31st, and the team states that this will help mitigate the risk of sequencer or prover failures by allowing users to submit their own proofs.

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