Research Summary
The report discusses the limitations of Ethereum’s scalability and the potential of trust-minimized and horizontally scalable systems as a solution. It explores the importance of trust minimization and horizontal scalability in blockchain applications, the risks associated with trusted off-chain services, and the potential of state-diff rollups and validiums for horizontal scaling.
Key Takeaways
Limitations of Ethereum’s Scalability
- Ethereum’s Blockspace Constraints: The report highlights that Ethereum, despite its high economic security, has limitations due to the scarcity and expense of its blockspace. Layer two (L2) scaling, particularly rollups, has been seen as a solution, but it does not allow for indefinite scaling.
- Trust Minimization and Horizontal Scalability: The report argues that trust-minimized and horizontally scalable systems are the most promising way of scaling blockchain applications. Trust-minimized systems function without requiring trust external to the base L1, while horizontally scalable systems can add instances without imposing global bottlenecks.
Risks of Trusted Off-Chain Services
- Trusted Off-Chain Services Risks: The report warns of the significant risks associated with trusted off-chain services, citing the collapse of major exchanges and services in 2022 as examples of what can happen when trusted services fail.
- Trust-Minimized Applications: Trust-minimized applications, such as Uniswap, Arbitrum, or zkSync, can write to and read from Ethereum verifiably, removing trust as they become secured by the Ethereum network. This allows for trust-minimized financial services without counterparty or custodian risks.
Horizontal Scaling and Trust-Minimized Services
- Horizontal Scaling: The report explains that horizontal scaling refers to scaling via the addition of independent or parallel instances of a system, facilitating exponential growth. However, it notes that rollups cannot horizontally scale due to data availability (DA) bottlenecks.
- Trust-Minimized Services: The report suggests that the only way to horizontally scale trust-minimized services is to obtain close to zero marginal L1 data per transaction. State-diff rollups (SDRs) and validiums are identified as the two known approaches to achieve this.
Open Directions for Trust Minimization
- Trust-Minimized Data Availability: The report identifies trust-minimized data availability in validiums as an open direction, noting that Plasma partially solves the state availability problem.
- Accountable Pre-Confirmations: Another open direction is accountable pre-confirmations in SDRs and validiums, which would allow users to challenge and slash the economic stake of the sequencer if the inclusion promise is not fulfilled.
- Fast Recovery from Liveness Failures: The report also suggests designing systems that provide minimal service disruption in the event of liveness failures as an open direction.
Actionable Insights
- Exploring Trust-Minimized and Horizontally Scalable Systems: Given the limitations of Ethereum’s scalability, there is a need to explore the potential of trust-minimized and horizontally scalable systems for scaling blockchain applications.
- Addressing Risks of Trusted Off-Chain Services: The risks associated with trusted off-chain services highlight the importance of developing trust-minimized applications that can operate securely on the Ethereum network.
- Investigating Horizontal Scaling Solutions: The report’s discussion on horizontal scaling and trust-minimized services suggests a need to investigate solutions like state-diff rollups and validiums that can overcome data availability bottlenecks.
- Exploring Open Directions for Trust Minimization: The open directions identified in the report, including trust-minimized data availability, accountable pre-confirmations, and fast recovery from liveness failures, present areas for further research and development in the field of blockchain technology.
