Ethereum’s L2 Wars Heat Up – Trustnodes

“This milestone marks the deployment of our end-to-end zkRollup, with all its components, to mainnet.”

So said zkSync last Friday with all the other competing projects criticizing it for claiming to be the first zkEVM on mainnet because this is a very restrictive launch.

The actual launch is expected sometime next year, maybe early next year, with that still being just the beginning as then both developers and users will have to analyze it, scrutinize it, wait to see what breaks, see them all bicker and tear each other apart in pointing out the benefits and shortfallings, and then maybe use it.

Welcome to the ruthless frontier, where the prize is… well, ethereum itself, in effectively providing broadband to the slow, clunky, and expensive current public blockchain.

Far away from these frontlines, it seems like nothing is quite happening in crypto. Bitcoiners in fact are seeing so little movement that they’ve devolved into caring about fiat stats and data, like interest rates which matter for debt, but not for BTC.

In ethereum there’s a bit more activity, but not on the surface. The activity instead is deep into whispering halls with VC teams, code armies, and their non-marketing marketers, effectively at war though politely so.

If you look at this, Arbitrum has won and its only real competitor is Optimism. The rest are so far behind that even an Optimism fork, Metis, ranks above them.

zkSync or Starknet are a very afterthought, and Polygon’s zkEVM is so low down the ranking that it does not even fit in the screenshot.

Yet, all projects mentioned know very well that the race has not even began, the real race where some sort of consensus forms on just what project best meets the requirement for permissionless open source code publishing.

This is another ranking of sorts by Mesari. Arbitrum and Optimism here are not even mentioned because they’re not zk based. Neither can quite be dismissed at this stage however, with it anyone’s guess at this point just how L2s will develop once the protocol layer is developed.

Due to network effects and since these networks are not interoperable – they all have a smart contract you have to deposit to with their smart contracts not talking to each other, even though theoretically presumably they could – you might think one of these networks will be the network, kind of like eth is the network.

However, if demand and utility reaches a certain scale, niche networks may still be… well, comparable to apps like Facebook.

Where it concerns the core functionalities of eth however and scaling them, you need a network that has the qualities of eth as much as possible.

Open source code is therefore necessary, especially in such competitive environment. Solidity support is naturally relevant for devs. EVM compatibility is something a lot more technical with ethereum’s co-founder Vitalik Buterin identifying four types. That allows us to divide the above into zkSync and Straknet, the older of the four and so with less base compatibility, and Scroll with Polygon which are ‘closer’ to the base layer.

Then finally we can have Stark or Snark. The latter requires a ceremony where trusted participants, like Buterin, have to destroy the key and as long as one of them has done it, then the network is secure, if at least one of them has not done it, then they can steal everything.

This usually comes with a video to prove it was done, and in the absence of an alternative, the network can be considered safe as long as the ceremony was done well – indicated by the more prominent the participants, then the more likely.

Stark doesn’t require this ceremony, so ruthless as it may be to simplify so much, snark is a bit of an older tech than stark.

That’s in a very fast moving crypto-graphy field that didn’t even exist a decade ago, and is now attracting huge talent, as well as money, first due to the invention of crypto and a lot more now that they might provide a solution to ethereum scaling.

And that’s a very big deal, ethereum scaling. With it, all stocks will of course be crypto in due time, all bonds, all finance because you can automate it and because you remove cheating humans blackmailing the Congress with bailouts.

To some extent that is, everything has its limits but finance in particular will look very very different two or three decades from now if ethereum scales. If it doesn’t, that will still apply but to a very small part of finance, rather than pretty much all of it, or it will apply in a far more centralized way where you have centralized interop-operators of these island networks.

Currently, they’re all island networks. A Uniswap smart contract on any of these networks, launched or not, does not have the same liquidity or pools as the current Uniswap network. Such launch instead is a return back to day 1 for any and all dapps.

That makes the user adoption cost and the developer adoption cost very high. That is why there are still base layers launching, with the battle of code and ideas still very much raging as no one can truly say right now just what public blockchain and/or solution may grab the huge finance market.

And obviously some – if not most where the public is concerned – may well think the upgrade of finance won’t happen at all, but they’re probably not coding all this stuff.

We instead might be moving towards the stage of considering it inevitable in light of the advantages – although just as paper is still used, so too old finance – and therefore foolish as it may sound, the prize in about a generation or two for scaling public blockchains is $100 trillion.

Which means what project wins here and what project is adopted, within and between blockchains, matters.

And although each project will naturally want to gain an advantage, either positively or negatively, each project has to be judged objectively for real adoption to materialize.

As it stands, the situation is far too fluid to pick any one of them at this stage, and if anyone thinks they have won, they’re probably only fooling themself.

Instead, it may be and probably is the case that there is room for more entrants, with it unlikely any team is late because at this stage and for at least a year or two there are no network effects, and there probably won’t be anytime soon.

Just in ethereum, the market cap is $200 billion for eth, plus all the other tokens that are usually 50%, so $100 billion. Then the bitcoin part, or the crypto part, and then you have the wider market.

$5 billion in that is, well just one token in market cap. At $50 billion maybe we’d be getting somewhere, but Arbitrum and Optimism still need to decentralize their sequencer. The rest still need to proper launch in a usable way, then go through all the Nakamoto tests, gradually grow preferably slowly until it is generally perceived to  be safe.

In the meantime, there probably always will be something to point to that is not perfect, with neither project for example both Stark based, Open Source and Solidity.

Polygon is maybe the closest, but there is the question of whether starks are actually more expensive, and so just how much they scale, with the projects likely to inform all of us as this progresses just what is wrong with any solution.

Any solution that wants to be taken seriously has to be forkable, and so tokenomics are an afterthought when evaluating the projects because unless they have satisfactory tokenomics, they’ll just be forked to provide them.

The most difficult part instead is evaluating design, and even more difficult than that is choosing whether to presume one project will be the project, or whether neither will be sufficiently satisfactory to be the project because the project will probably be the base layer naturally.

Making all this not rocket science, but the closest to it in crypto. Importantly however the incentive is not there to cut corners in a meaningful sense because the market has not rewarded – or crowned – those that have.

Which means a solution can be wider than crypto, and although some say centralization is the natural state, the Separation of Powers and nature’s reward of those economies that have best implemented such doctrine, very clearly shows otherwise at least when it comes to the affairs of men.

So giving real incentives to protocol coders to make the right choices, as well as dapp coders, even though arguably none of them knows the ‘right’ choice in isolation, but all of them in combination should.

That means there isn’t necessarily a race as such, more both a need and desire to hopefully have the right solution and preferably fast.

It also means there isn’t quite a ‘war,’ but this field has of course become fiercely competitive in part because it has a certain energy where we’re all trying to get somewhere with each of them thus being an important actor or contributor.

Hopefully therefore any competition is coupled with cooperation because their goals ultimately are the same.

The biggest risk for any of these projects is to be perceived as not being objective, because failure is unlikely anytime soon and therefore the only way there can be any failure is to be perceived as not working for eth, but for themself.

That’s a delicate balance, with all these projects taking significant risk in trenching the frontier, so we have to give some leeway and be understanding – up to a reasonable point – as we think they all contribute to what maybe now should be called crypto rocket science.

Best of luck explorers. May at least one of you return with gold.