This post originally appeared on ZeMing M. Gao’s website, and we have republished it with the author’s permission. Read the full piece here.
With the rollout of the Ethereum merger, the cryptoverse is excited. I tried pouring cold water in this article: Layer 2 Solutions
I doubt many will pay attention to it. But I always feel compelled to shout when I see a train going in the wrong direction.
As stated in the previous article Layer 2 solutions, rollups are not layer 1 solutions. They are layer 2. And they ultimately won’t work on a non-scalable blockchain at L1, because they inevitably reintroduce all the problems unlocking mechanisms such as intermediation and centralization in the system, then do even more harm that does not even exist in conventional systems.
The full circle creates no new value for the economy as a whole. It only absorbs values from other parts of the economy.
Layer 2 solutions are not useless in principle. Rollups themselves can be useful when used with a blockchain capable of serving as a scalable global base layer (L1) blockchain.
The keywords here are “scalable”, “global”, and “L1”. For a rollup to be useful, its base blockchain must have these characteristics.
But if the blockchain is L1-level scalable, why do you need rollups or sidechains in the first place?
You do it, for special purposes. Just like the internet, it is scalable, but you still need overlay networks like VPN for special purposes.
So the question is why rollups are problematic with a non-scalable blockchain. We have already explained about this in this article about Layer 2 solutions, but we will say more about it here.
Rollups bootstrap security on the L1 blockchain?
Here is a counter-argument from those who do rollups:
Rollups prime security on the L1 blockchain. Each state transition is checked on L1. Also, a rollup itself can be blockchain-based.
The above is a common misunderstanding among developers working on rollups.
That’s right, with rollups, every state transition is checked on L1. But one State is not a transaction. A state is a summary of thousands or even more transactions in the form of, say, a Merkle tree index. A non-scalable L1 blockchain cannot verify individual transactions, because if it could, it would be scalable and wouldn’t need these kinds of L2 solutions in the first place.
But you say, what’s wrong with that? Why do you want the L1 blockchain to verify each individual transaction? This defeats the very purpose of having stacks.
This is precisely the problem with an unscalable L1 blockchain.
With a non-scalable L1 blockchain like Ethereum, you have no choice. Batching a large number of transactions on L2 and having only collective state transitions checked on L1 is the only way to go, because the very purpose of using rollups on Ethereum is to solve the problem of scalability. It doesn’t matter if these individual transactions themselves really need L1 level security or not, because there is no choice and L2 transactions will have to sacrifice.
But it’s different with a scalable L1 blockchain. You have options. You can do L2 batch processing if the individual transactions don’t need high-level security, auditable records, accounting compatibility, etc. Nanopayments and micropayments are such examples.
But with individual transactions that do need such features, you have other options. You can perform some special preprocessing in the rollup before L1 verification, but optionally have all preprocessed transactions verified on L1, or you can perform other functions such as virtualization and encapsulation.
Again, if you don’t realize we’re talking about a globally scalable L1 blockchain, you might think that this doesn’t ease the transaction burden on L1, it’s no use. But it is. L2 preprocessing can serve many purposes as shown in Layer 2 solutions. For example, specialized efficiency, virtualization, encapsulation, etc.
Now, in your view, there is no sacrifice on security with rollups because a rollup can itself be blockchain-based, so those individual transactions within the rollup benefit from the same blockchain security.
But the key word here is “same”. “Blockchain” is not a magic word. Just because something is a blockchain doesn’t mean it has full L1 blockchain security. If the rollup can do it with equal security to Ethereum, why do we need Ethereum in the first place? If not, why don’t you build an L1 blockchain to replace Ethereum? Everything goes in a circular logic.
It’s not just a question of technicality. Even though a rollup is technically as strong as the L1 blockchain, having an additional blockchain layer itself is not ideal as it is enough to have a blockchain based layer (but one should realize that a blockchain based solution on one would require a scalable L1 blockchain), not only because of introducing an additional point of attack or failure, but also because of the added complexity and diversion of resources.
Once you get to the last point above, people get pissed hearing it and turn 180: What, you need an L2 to be a full-fledged L1-like blockchain? This is a ridiculous request because we are talking about L2 solutions here!
But that’s the point. The logical error only exists when you assume an unscalable L1.
But with a scalable blockchain at L1, you don’t have this illogical request on your L2, because you don’t need it. It’s a nice thing when your system has components that don’t contradict each other.
It’s a shame that people are stuck with Ethereum, thinking they can’t live without it, so they have to live with it. In reality this is not the case.
At this point, we’ve touched on the basic assumption: the real controversy isn’t really about the performance of the woodwinds, but about different assumptions about the base layer blockchain. Most people automatically assume that, based on the teachings of the Trilemma Doctrine, even thinking about a scalable blockchain on a base layer is absolutely out of the question, as it sacrifices sacred “decentralization”.
For those who have such a presumption, to think from a different point of view on this fundamental point is difficult.
But that’s exactly what we hope the blockchain community would do: rethink, ensure that its presumption has not been the result of previous faulty assumptions, or even propaganda.
I fundamentally believe that the trilemma doctrine is wrong.
Unfortunately, fallacy has played a powerful role in misleading the whole field.
In addition to the Bitcoin trilemma doctrine itself, there is also the assumption that the doctrine is consistent with Satoshi’s view (or is even Satoshi’s own idea). This is completely false and misleading. But most people, including developers, have been misled into believing it, and such a belief has made matters even worse.
Satoshi’s view was and still is absolutely the opposite of the trilemma doctrine.
See: Bitcoin Trilemma is a mistake
Blockchain scalable to L1
There is a beautiful alternative, but people refuse to recognize it or even look at it.
I encourage capable-minded and less biased people, especially those familiar with L2 and application development, to think away from Ethereum.
With a scalable blockchain at the base layer, L2 solutions can be used to extend the network of a blockchain that is already largely scalable at the L1 level and provide efficient solutions for particular use cases.
Unfortunately, the whole crypto train is going in the wrong direction. All of these ultimately futile efforts are made because people don’t want to look for a much better, fundamentally better alternative, which in turn is because people have decided in advance that these non-scalable and unproductive blockchains to have to be spared in order to promote the market prices of coins and tokens that have already been created and owned.
It only serves to promote coin prices, not to create economic values, and many don’t even see the difference between the two
Please look at the alternative. Have you imagined even a possibility that the original Bitcoin blockchain (not BTC) designed by its inventor Satoshi Nakamoto has unlimited scalability and extremely low transaction cost (already below $0.0001 and going even higher low), has full smart contract and tokenization capabilities, can host any Ethereum application at tens of thousands times lower transaction cost (even with a transpiler that automatically converts Solidity scripts to Bitcoin), and can be integrated with IPv6 to form the next global Internet with IoV?
Once you do, you will honestly focus your efforts on building a much better future for the world, instead of devoting your life to a coin that finds its only justification for existence in a temporary market price. derived from a popularity vote by a speculative crowd.
See more details in the full article: Layer 2 Solutions.
Internet as an analogy
Think of the Internet itself as an analogy. There is only one Internet based on a basic TCP/IP protocol.
There are many applications, but they do not each form their own network, yet claim to have the same Internet properties.
There are also many overlay networks such as VPNs, but these overlay networks are part of the same Internet and perform Internet Protocol-based communications using encapsulation and virtualization. These are not separate networks doing “rollups” or “hops” with only occasional superficial “regulations” on the Internet.
But more importantly, these apps and networks don’t exist just to make the Internet scalable. The Internet itself is scalable. It only remains to enrich it with useful applications.
It’s the right structure and that’s why the internet has been so successful.
But look what we have with cryptocurrencies, after several billion dollars.
A new, much better Internet with IPv6 and blockchain built into the base layer is possible, in fact already exists and is growing. I just need more capable-minded people to look up and look in the right direction.
Watch the BSV Global Blockchain Convention Dubai 2022 Day 1 here:
Watch the BSV Global Blockchain Convention Dubai 2022 Day 2 here:
Watch the BSV Global Blockchain Convention Dubai 2022 Day 3 here:
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