Layer2 will eventually become a highly modular market that integrates ZK technology, OP framework, various DA solutions, various Sequencer services, various Gas fee models, and more. This article is sourced from Haotian and compiled, translated, and written by Blockbeats.
Headline:
Ethereum Layer2 is too comfortable: Please stop underestimating non-EVM!
Background:
In the era of Layer2, how to save the fragmented liquidity?
Table of Contents:
The Ethereum Cancun upgrade EIP4844 Proto-Danksharding proposal will bring “quality” boost to Layer2 Rollup projects
After the Cancun upgrade, the internal competition in the Layer2 market intensifies, and new players challenge the existing OP+ZK pattern
Layer2 gradually evolves into a modular form, and the orthodoxy will be broken, and narrow Layer2 will be replaced by broad Layer2
Today, the native token METIS of the Ethereum Layer2 network Metis reached $76, with a 7-day increase of 191.3%. In addition, the prices of tokens such as $OP and $ARB have also risen consecutively. The silence of Layer 2 for several days has finally been broken. At the same time, with the upcoming Cancun upgrade, how will the Layer 2 landscape change?
Recently, Layer2 finally broke the silence and showed its strength. Tokens such as $OP, $ARB, and $METIS shone brightly, just like the Show Time on the eve of the Cancun upgrade.
Read more:
Ethereum Layer2 strikes back: OP hits a new high of $3.5; ARB rises by more than 15%, smart money whales increase holdings by 2.91 million
Why did the “competition internalization” of Layer2 start after the Cancun upgrade, and how will the market pattern of Layer2 evolve? Next, let me share my views:
By introducing the Blob space new data structure, the limitations of relying on calldata to store data in the past have been iterated, while improving the data availability capability of the Ethereum mainnet.
Compared with the full-node storage structure of calldata, Blob is designed as temporary storage for partial nodes, which can significantly increase the data submission limit of Layer2 to the mainnet, expand its TPS, and improve data storage efficiency and reduce data storage costs. The improvement in DA capability is due to the one-month temporary storage to cope with the 7-day fraud proof time window of OP-Rollup, which is more than enough.
Read more:
Ethereum Cancun upgrade core: Why can Blob reduce costs by 100 times?
As a result, the transaction volume submitted by Layer2 to the mainnet will increase significantly, and the cost borne by individual users will also decrease significantly. Before the Cancun upgrade, Layer2 boasted about its TPS in the test environment, but users intuitively felt the poor gas fee experience, which made everyone feel that Layer2 was not as good as its name.
After the Cancun upgrade, Layer2 players no longer have the performance bottleneck of the mainnet, and can no longer use the restriction of the mainnet as an excuse. TPS, Gas, and other hard indicators will directly become the test and reshape the competition pattern of Layer2.
This is why I have repeatedly emphasized that the competition in the Layer2 market truly begins after the Cancun upgrade.
The decentralization problem of Sequencer has always been a market focus. As a result, it was found that in the strong OP-Rollup in the Layer2 track, the decentralized Sequencer has become a “soft decentralization” of the Stack Alliance consensus.
Whatsoever, everyone criticized Optimism for its lack of decentralization, but Optimism’s market success brought by OP-Stack seems to be able to reverse the situation. But can you say that OP-Rollup is everything about Rollup? Obviously not. The more reasonable market trend is that the success of OP-Stack will be further amplified, and there will naturally be other relay players in the blank space of OP-Stack.
These days, the provider of decentralized Sequencer solution in Layer2, MetisDAO, has performed extraordinarily in the secondary market, with a 7-day increase of over 100% and a locked value (TVL) of $540 million, which is approaching zkSync. Why?
The core business logic is simple. Since OP-Rollup has not made progress on the decentralization problem of Sequencer, as a relay player, proposing a reasonable decentralized Sequencer solution is its market space.
Because the decentralization problem of Sequencer is related to the credibility of submitting transactions in Layer2 and the security of the interaction between Layer2 transactions and the mainnet. If we ignore the “foundation” issue, the TPS and Gas fees after the Cancun upgrade seem to be “castles in the air”. I don’t deny Optimism’s success in the Stack strategy, but there will always be other breakthroughs to solve the decentralization problem of Sequencer.
Metis implements multiple Sequencer candidate nodes through POS staking, and the nodes compete for block rewards through the election mechanism. At the same time, misconduct will be punished with slash. This POS consensus binds each Sequencer as a stakeholder into an interest community. The Metis Foundation uses token incentives and invests 4.6 million METIS tokens to incentivize Sequencer mining, new project deployment, and other subsequent ecosystems.
Compared with Optimism, Metis has a relatively low market value, does not directly compete with OP, and only focuses on decentralized Sequencer, but it can also open up a broad market.
Metis is just a recent eye-catching example. In my opinion, after the Cancun upgrade, the market size of Layer2 will further expand, and new Layer2 suppliers will have to compete with the two major giants OP and ZK and use various tricks to create a new horizon for the Layer2 track. Of course, more opportunities will also be on the new Layer2.
I have mentioned in multiple articles before that the core of Layer2 is Ethereum’s DA capability. If the full nodes of the mainnet do not participate in the verification of Layer2 data security, the mainnet actually becomes a “bulletin board”, and Layer2 cannot inherit the security of the mainnet. Therefore, the narrow definition of Layer2 relies on Ethereum’s DA, and those that escape the scope of Ethereum’s DA are broad Layer2 (radical point can also not recognize it as Layer2).
But when the Layer2 market reaches a certain scale, the orthodoxy of pure Ethereum Layer2 may be broken. Just like the fraud proof of OP-Rollup, which has not been practically challenged, can also be selectively ignored by the market. Technology is only part of the business logic, and the market and ecology have the final say, just like Optimism can always work miracles in the name of optimism.
This means that third-party DA solutions will invade Layer2 after the Cancun upgrade, including third-party DA solutions from @CelestiaOrg, shared Sequencer solutions from @EspressoSys, etc. Although everyone is unwilling, the business logic of modular evolution will gradually break the defense that the Ethereum mainnet can hold.
The focus of the OP-Stack stack promotion is to achieve a shared Sequencer. In the future, the more OP strategic alliances, the larger the interests that can be captured through Sequencer, and the larger the multiple interests involved, this social consensus will become a new constraint beyond technology, making Optimism solidify its position as a leader.
The focus of the ZK-Stack stack is to achieve a shared Prover system. Its own DA capability and third-party DA capabilities such as Celestia, and of course, the limited DA capability of the mainnet, will belong to the strategic domain of ZK. Its development focus is the new multi-chain ZK interface of Layer3 Hyperchains, and who provides the DA is not crucial.
Their profit orientation determines that they actually don’t care where the DA is, and only Ethereum itself cares about the DA. So in the face of Celestia’s continuous grabbing of the DA market, Vitalik shouted for Plasma+ZK, but OP+ZK, which is busy with strategic expansion, doesn’t care about these. They only care about how large the Layer2 camp covered by their Stack strategy is, after all, RaaS is the ultimate goal of Layer2.
In conclusion, the Layer2 track after the Cancun upgrade will be extremely exciting. Whether it is the frequent appearance of new emerging players or the expansion of the boundaries of Layer2 strategies, it will stimulate the “diversification” and prosperity of the Layer2 market.
Layer2 will eventually become a highly modular market that integrates ZK technology, OP framework, various DA solutions, various Sequencer services, various Gas fee models, and more.