Ethereum 2.0 Launch: Layer 2 May Become a Long-term Infrastructure Partner

The Ethereum 2.0 Phase 0 Beacon Chain officially launched its genesis block on the evening of December 1, which is undoubtedly an important milestone in the development of Ethereum. It marks the official start of Ethereum 2.0, accelerating the overall transition from PoW to PoS, bringing the vision of significant scalability one step closer.

However, the expected multi-year rollout period for Ethereum 2.0, the repeatedly adjusted roadmap, and the high migration costs have cast a shadow over this significant upgrade. Meanwhile, the Ethereum community has seen the emergence of various Layer 2 solutions such as Rollup, Plasma, and Validium, which have certain advantages in terms of scalability, implementation timeline, and engineering difficulty.

In the medium to short term, Layer 2 seems to be a more attractive scaling solution and may even become an important component in the long-term evolution of Ethereum. This article will explore the necessity and value of Layer 2 in the context of Ethereum 2.0, and analyze the advantages and disadvantages of various Layer 2 solutions as well as the current state of the ecosystem.

Layer2 may become the long-term infrastructure of Ethereum

For a long time, Layer 2 has been seen as a transitional solution for public chains to mature, used to compensate for the performance shortcomings of the main chain. However, recent community discussions show that the Ethereum core development team has raised the priority of the Layer 2 solution Rollup above sharding. Vitalik has made it clear that the emphasis on the importance of Phase 2 will be postponed, shifting the focus to achieving data sharding for Rollup use. At the same time, the beacon chain will have execution capabilities and can directly include transactions.

This adjustment reflects the challenges faced by the sharding plan. As a project expected to take 2-3 years to implement, sharding can at most bring a 64-fold increase in TPS for the Ethereum network. In contrast, existing Layer2 solutions, such as Rollup, can achieve performance improvements of up to 100 times. From a technical perspective, the strategic value of Layer2 is self-evident.

In addition to technical indicators, the design philosophy between Layer 2 and Layer 1 is also a key consideration. Vitalik has pointed out that the common practice in the blockchain field is to keep Layer 1 as simple as possible, while building more complex Layer 2 functions on top of it. This is because changes at the infrastructure level are difficult and carry greater risks. Therefore, Ethereum needs to advance the development of Layer 1 and Layer 2 in parallel, with a long-term focus on Layer 2.

Based on this design philosophy, we can infer that Ethereum and Layer 2 are more likely to maintain a long-term coexistence relationship rather than a short-term supportive one. This is also evident from the current support of many important applications for Layer 2 solutions, such as Uniswap and Synthetix's support for Optimistic Rollup, Tether's support for the Plasma-based OMG Network, and Curve's support for ZK Rollup. These applications are not only the core of the Ethereum ecosystem but also the infrastructure for future complex applications; their attitudes largely determine the position of Layer 2 in the Ethereum ecosystem.

Comparison of Layer2 Solutions: Rollup is the Most Preferred

Currently, there are 6 main solutions for Ethereum Layer 2: State Channels, Sidechains, Plasma, Validium, ZK Rollup, and Optimistic Rollup. These solutions have their own characteristics in terms of data hosting, computation location, data storage location, and verification mechanisms.

For Ethereum-based DApp projects, in the context where the Layer 2 ecosystem is not yet clear, selecting the appropriate Layer 2 solution based on specific needs may be the best choice. Even in the same scenario, it may be necessary to use multiple solutions simultaneously to meet different requirements.

From the current discussions in the Ethereum community, the Rollup series of solutions is most likely to gain widespread support first. Among them, Optimistic Rollup has attracted significant attention due to the support from DeFi giants. Synthetix has explicitly adopted the Optimistic Rollup solution and is advancing related integration work. The leading DeFi platform Uniswap has also launched a Unipig DEX demo based on this solution on its official website for users to experience. In addition, the leading oracle project Chainlink is also expected to adopt Optimistic Rollup.

Despite the flourishing of Layer 2 solutions, new challenges have also emerged: the composability of DeFi may be significantly weakened. Taking the widely discussed Rollup as an example, the two solutions, ZK and Optimistic, are currently incompatible, which may further fragment the already dispersed liquidity. However, for the DeFi ecosystem, a higher level of integration is the goal that Layer 2 should pursue.

Overall, the evolution of Ethereum 2.0 is still full of uncertainties, and the community may continue to adjust the roadmap. However, it is certain that as the Ethereum ecosystem becomes increasingly large, the possibility of fundamental transformations is getting smaller. In this context, Layer 2 is likely to become a long-term partner and infrastructure for Ethereum.