Opinion: Steven PU, co-founder of Taraxa
Rollup-based Layer 2, which is all rage today, destroys the highly unreliable nature of cryptography by destroying it or, more precisely, rapidly eroding its decentralized reliability.
Crypto’s uniqueness comes primarily from its reliability with the underlying infrastructure of Layer 1. The only way to truly trust is to be completely decentralized. There, decisions are made by a large set of randomized nodes from around the world, run and owned by people with a comprehensive relationship.
Its decentralization rests on three pillars: inclusion, ordering and execution. Networks are as decentralized as their weakest pillars. When any of them is passed to a single decision maker, the “non-trust” label becomes a marketing stunt, and the rollup destroys all three at the same time.
Rollups do not provide distributed assurances on inclusion and order. Also, there is no guarantee of correctness in the case of optimistic rollups. Rollup L2 is definitely a cryptic tragedy.
Rollup L2 is rapidly eroding trust in crypto
Today, there are two broad types of rollup L2: optimistic and zero knowledge (ZK). Both are dominated by a network in which a single sequencer makes all the decisions. Having a single entity for this important task is a problem, so these rollups make a little bit of a tiny attempt to enforce accuracy, but only in terms of execution.
The optimistic rollup relies on a weekly “challenge period.” Millions of transactions are unlocked when there is only one fraudulent evidence and locking capital and confidence for several days.
For ZK-Rollups, it ensures accuracy of execution via ZK-Proofs.
Related: Ethereum turns 10: This is the history of its boom and bust shape
However, if a lonely sequencer is able to reject, delay, or sort transactions in his favour, proof of perfect execution is useless. Without an unchanging record of who tried to trade and when he could not prove censorship and therefore not punished, who was attempting to trade.
If the network cannot guarantee transparency, fairness, and accuracy for inclusion and ordering, what is a guarantee of execution? Execution is fundamentally inclusion and ordering, as you can only do what is included and only ordering. No guarantees regarding inclusion and execution cannot guarantee execution.
https://www.youtube.com/watch?v=20zfedqdkl8
The market is aware of this. Liquidity scatters bridges that inherit the weakest link assumptions of each rollup. The resulting custody multisig and emergency conditions switch web creates systematic risks that traders are currently priced on asset valuations. If the “sequencer risk” discount increases further, the ether monetary premium will be compromised.
Simply decentralize the L2S and change L2 to L1
A common fallback counter to the fact that L2 is centralized confusion is to be decentralized in the future. This is a self-destructive argument.
Take the L2 and turn it into a truly distributed network of sequencers. So what do you get when sequencers work together using decentralized consensus to provide strong assurances on inclusion, ordering and execution? You will be L1.
Anyone who claims that L2S could ultimately be decentralized says that at some point it will turn into L1S. Liquidity, fees, and total value (TVL) is locked away from L1 (basically Ethereum) (TVL).
Incumbents running today’s profitable single-sexer stacks will see little incentives to dilute their strength.
The way to expand Ethereum is… to expand Ethereum
Ethereum doesn’t have to be slow and expensive. Many new consensus designs on the mainnet can be referenced to improve the technical capabilities of the network.
With TVL rapidly approaching $100 billion, it is perfectly reasonable for Ethereum developers to be extremely cautious when implementing fundamental changes to the core architecture of their networks. However, we need to focus not only on these parasitic L2s, which are role-played as distributed networks, but also take positive advances towards the scaling of Ethereum itself.
Funding for key production, execution and consensus upgrades will strengthen Ethereum neutrality, maintain fee revenues, and restore user trust without imposing a tax rollup of bridge risk.
Discard the L2S and prioritize the Ethereum L1.
Opinion: Steven PU, co-founder of Taraxa.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
