The Protocol: Can Based Rollups Solve Ethereum’s Layer-2 Problem?

4 weeks ago

Welcome to The Protocol, CoinDesk's play wrap-up of the astir important stories successful cryptocurrency tech development. I'm Ben Schiller, CoinDesk’s Opinion and Features editor.

In this issue:

Can Based Rollups lick Ethereum’s problem?

Lido goes modular

Uniswap yet unveils Unichain

Ethereum’s Pectra upgrade is coming

Network news

BASED ROLLUPS TO THE RESCUE: In caller years, Ethereum has embraced a layer-2 scaling roadmap—a program that encouraged the improvement of third-party auxiliary networks called "layer-2 rollups"—to assistance standard the basal Ethereum ecosystem. Offloading enactment to these upstart networks has helped bring down fees and amended speeds for end-users, but it has led to a massive, profoundly fragmented ecosystem of furniture 2s. But portion layer-2 networks each station information backmost down to Ethereum, they often conflict to pass straight with 1 another, meaning passing assets and information betwixt them tin go costly and cumbersome. There's besides the hazard of centralized sequencers: reliance connected company-controlled achromatic boxes to walk transaction information betwixt blockchain layers. As a result, immoderate Ethereum developers are pushing rollup tech that takes a caller attack to information and interoperability: “based rollups." Based rollups disagree from astir existing rollups due to the fact that they displacement execution duties—such arsenic processing transactions—back to Ethereum's layer-1 alternatively than handling them connected a abstracted layer-2 network. When idiosyncratic transacts connected a layer-2 rollup, their transaction is processed done a constituent called a “sequencer.” The sequencer batches aggregate transactions and submits them to Ethereum for settlement. While sequencers supply ratio and make gross for rollup operators by strategically ordering transactions, they besides present a azygous constituent of failure. Based rollups debar this vulnerability by utilizing Ethereum’s built-in sequencing—its monolithic assemblage of validators—rather than a azygous centralized sequencer. Rollups similar Optimism, Arbitrum, Base, zkSync, and Blast person rapidly grown to enactment larger transaction volumes than Ethereum itself. According to L2Beat, determination are presently 140 unrecorded layer-2 networks, but the acquisition of operating betwixt them—passing assets and different information betwixt networks—has go clunky. As Ethereum becomes bigger and layer-2 networks go much integral to its functioning, improving connection betwixt layer-2s—in different words, improving "composability"—has go much important than ever. — Margaux Nijkerk Read more.

LIDO GOES MODULAR: The developers down Lido, the largest staking work connected Ethereum, person projected revamping the staking level with modular "vaults." The caller model would present stVaults, a customizable constituent designed to assistance Lido accommodate institutions and much analyzable staking strategies. Lido presently allows investors to excavation their ether (ETH) unneurotic and "stake" their crypto — locking up their tokens with the network, helping to unafraid it successful speech for interest. Lido pioneered liquid staking: users get a receipt connected their deposits called Lido staked ETH (stETH) that they tin commercialized astatine immoderate time. With liquid staking connected Lido, entering and exiting staking positions became arsenic elemental arsenic buying and selling stETH tokens. Lido V3's stVaults are “modular astute contracts designed to conscionable the divers and evolving needs of Ethereum participants,” according to a property merchandise shared with CoinDesk. The upgrade would alteration staking setups beyond cut-and-dry liquid staking. Specifically, stVaults volition beryllium capable to assistance organization stakers who privation to personalize their staking setups, node operators who privation to pull high-volume stakers, and plus managers who privation to make caller staking usage cases. “What is important to recognize with customizable infrastructure, is that you tin successful wide physique adjacent much analyzable products,” said Konstantin Lomashuk, the laminitis of the Lido staking protocol. — Margaux Nijkerk Read more.

UNICHAIN FINALLY: Uniswap Labs, the superior developer down 1 of the largest decentralized exchanges (DEX), Uniswap, shared Feb 13 that its long-awaited layer-2 network, Unichain, is present live. Powered by Optimism's OP stack, Unichain—like different layer-2s connected Ethereum—offers faster and cheaper transactions compared to Ethereum's mainnet. Developers tin deploy apps onto the network, which has been optimized specifically for decentralized concern (DeFi) and aims to service arsenic "the location for liquidity crossed chains," according to Uniswap Labs. For Uniswap Labs, the payment of launching a layer-2 is twofold: it volition supply a amended acquisition for users of Uniswap and akin platforms, and it volition make a caller gross accidental successful the signifier of web fees. A typical for Uniswap Labs told CoinDesk that "around 20%" of the chain's gross volition spell straight to the company. Unichain has been successful testing since October 2024 and is classified by Uniswap Labs arsenic a "stage-1" rollup, meaning it has elements of decentralization but retains immoderate centrally-controlled safeguards astatine this aboriginal phase. The web is built connected the OP Stack, a modular framework that lets developers physique interoperable layer-2 chains based connected Optimism’s optimistic rollup technology. Several well-known teams person travel retired with their ain OP Stack-based layer-2’s, including Coinbase's ‘Base’, Kraken’s ‘Ink,’ World’s ‘World chain,’ and Sony’s ‘Soneium.’ “We are anticipating a satellite of many, galore antithetic usage cases, of which trading is simply a tiny subset,” Adams told CoinDesk successful an interview. In collaboration with Ethereum probe and improvement steadfast Flashbots, the Uniswap squad said it has created a Trusted Execution Environment (TEE) connected Unichain, a unafraid country for much delicate transactions and is meant to optimize the concatenation for DeFi by allowing for much precocious trades and faster transaction finality. — Margaux Nijkerk Read more.

PECTRA IN APRIL: Ethereum developers person officially acceptable trial dates for Pectra, the network's archetypal upgrade successful 11 months, putting it connected way for a imaginable April merchandise date. Pectra volition incorporate an array of improvements — with a peculiar absorption connected wallets and validators — but it comes astatine a play of heightened scrutiny for Ethereum, which has precocious faced unit from its assemblage to refocus and drawback up with competitors. Ethereum's halfway builders decided connected Thursday during their bi-weekly "All Core Developers" telephone to statesman investigating Pectra connected Feb. 26 connected the Holesky testnet, with a follow-up trial connected the network's Sepolia testnet slated for Mar. 5. Should those tests succeed, the developers volition reconvene connected Mar. 6 to find erstwhile to motorboat the upgrade officially. According to Tim Beiko, the protocol enactment pb astatine the Ethereum Foundation, developers expect the upgrade to deed mainnet successful aboriginal April. Pectra — a portmanteau representing 2 abstracted upgrades, Prague and Electra — includes 8 large improvements to the second-largest blockchain. Among the most-anticipated is EIP-7702, which is expected to amended the idiosyncratic experience of crypto wallets. The Ethereum assemblage has been facing an individuality situation implicit the past fewer weeks. Its autochthonal token, ether (ETH), is underperforming against different cryptocurrencies, and rival networks similar Solana person drawn attraction and endowment from the Ethereum ecosystem — the first-ever programmable blockchain and inactive the astir trafficked. Amid the contention — overmuch of it directed astatine the Etheruem Foundation, which coordinates concatenation upgrades and is presently undergoing a large enactment shuffle — developers are hoping that Pectra volition assistance enactment the web connected steadier footing. — Margaux Nijkerk Read more.

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