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Blockchains are usually referred to as a Layer 1 or Layer 2 solution. Layer 1s are the base layer of an ecosystem such as Ethereum, Cardano, or Solana. Layer 2 solutions are anchored to Layer 1 blockchains and provide scalability.

Layers 3 can also exist; However, you cannot stack another layer on top of layer 2 to add even more scalability, Ethereum founder Vitalik Buterin wrote in a blog post on September 17.

There are several challenges to stacking two layers of similar design on top of each other, Buterin wrote. For example, data availability limitations and reliance on Layer 1 bandwidth for emergency pulldowns can impede stacking two layers.

Buterin said rollups on top of rollups cannot provide higher scalability than Layer 2 solutions. Rollups compress the amount of data a transaction must store on the Layer 1 blockchain to ensure that the transaction can be viewed and verified.

In the case of a simple token transfer, the data is reduced from 100 to 16 bytes. For privacy-preserving ZK-SNARK transactions, transaction data is compressed from 600 bytes to 80 bytes, Buterin said.

But the data can only be compressed once, Buterin wrote. If further compression is possible, logic from the second compressor can be integrated into the first so that the data can be compressed only once with the same results. This is why rollups on top of rollups cannot “provide significant scalability gains,” he wrote.

Three visions of L3 use cases

StarkWare, which operates StarkNet, a ZK-rollup that serves as an Ethereum Layer 2 scaling solution, presented three different visions for how Layer 3s could be used. Buterin considers the three visions to be “fundamentally reasonable”.

In the first scenario, Layers 3 can be used for custom functions such as privacy. The intent would not be to provide additional scalability in such a case. Layer 2 would provide scalability to applications, and a Layer 3 would serve the custom functionality needed for different use cases.

In the second view, Layer 2 provides general-purpose scaling and Layer 3 provides custom scaling through specialized applications. Layer 3 would compute data by means other than EVM or rollups, whose data compression is optimized based on specific data formats.

In the third view, Layers 3 can provide unreliable scaling via Validiums, which use SNARKs to verify the computation. Data availability here is the responsibility of a trusted third party. Buterin said that although Validiums offer a lower level of security than rollups, they are “very underrated” and “much cheaper”.

Layers 3 can fix confirmation time against fixed cost trade-offs of rollups

Although rollup transactions are cheap, rollups must pay a high fixed cost each time they submit a batch of transactions to a layer 1. For optimistic rollups that run above layer 1s, the cost fixed stacks can be as high as 21,000 Layer 1 gas per batch, while for ZK stacks the cost can be up to 400,000 gas per batch, according to Buterin.

If rollups wait longer to submit more transactions in a batch to reduce cost, it increases batch intervals. This means that users have to wait a very long time to get confirmation of their transactions.

For a ZK rollup with 5 tps processing power to submit a batch of transactions in each Ethereum block (every 12 seconds), the gas per transaction would reach 10,368. However, if the batch interval increased to 1 minute , the gas per transaction is reduced to 2,368.

In the case of a ZK rollup inside a ZK rollup, the gas per transaction comes down to 501 with batch intervals of 12 seconds. Therefore, Layers 3 can solve the time and cost trade-off for rollups.

What is a layer and what is it not?

According to Buterin, stacking the same scaling solutions on top of each other doesn’t “work well”, which is why rollup on the rollup model doesn’t make sense. However, he argues that a three-layer structure where the second and third layers are assigned different purposes and functions can work.

However, there’s an unresolved semantic debate over what can be considered a layer and what can’t, Buterin said. He provided his own definition of the properties that make up a Layer 2:

  • “Their goal is to increase the scalability
  • They follow the “blockchain within a blockchain” model: they have their own transaction processing mechanism and their own internal state.
  • They inherit the full security of the Ethereum chain”

According to B uterin’s definition, optimistic and ZK rollups are layer 2, but validia, evidence aggregation schemes, on-chain privacy systems and Solidity fall outside the definition. Although some of them might be called Layer-3, not all of them should be, he wrote.

Buterin added that “it seems premature to lay down definitions when the architecture of the multi-rollup ecosystem is far from set in stone” and most discussions of Layer 3 are still theoretical.

But as the Layer 2 scaling ecosystem matures, Buterin expects more sophisticated and simpler Layer 3 builds to play a bigger role.

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