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polynya

@epolynya

1 Jan

There's a real usecase for sovereign L1 chains with their own consensus & data availability. Rollups or their primitive predecessors shards/parachains & multi-chain/subnets do not accomplish this.

The answer: a validity proven execution layer(s) with a DAS proven DA layer.

There are multiple ways to accomplish this. Start with Mina and fork Polygon Avail or Celestia. I bet Polygon's next-gen SDKs will look like this - Polygon's ZKRs + Polygon Avail sharing a consensus mechanism.

The great advantage of validity proofs is they can be verified on...

...a different settlement layer. So even if the above is an alt-L1, Ethereum can verify it's full state. As long as this sovereign chain isn't compromised, it basically behaves like a ZKR. To be clear, rollups are superior: their bridges will continue working even if compromised!

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polynya

@epolynya

29 Dec 21

I'm delighted to see a lot of anticipation and excitement for rollups in 2022, but I'm only cautiously optimistic. With some exceptions (Immutable X), rollup teams haven't yet proved they are capable of outcompeting alt L1s on marketing, public relations & business development.

Some would argue they are in beta - but so are Solana, Cardano, Polkadot etc.

I think smart contract rollups - particularly StarkNet & zkSync 2.0 - will need most of 2022 to become a mature product out of beta. Arbitrum will be first, but Nitro & FSS will still take time.

Which is not to say there won't be adoption - but that depends entirely on how well their teams & communities market the rollups, and how their tokens turn out. But true blockchain scalability ready for mass adoption for the very first time - unlikely to happen in 2022.

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polynya

@epolynya

28 Dec 21

I have gotten a few questions about value accrual on layers. Hate to break it to you:

- Execution layer: highly competitive, tight margins, a race to the bottom. We can see this from alt-L1s, where the sole gimmick is accruing as little value as possible.

Rollups have a significant advantage as they pay a small fraction or zero of alt-L1s on inflation budgets, but any significant value accrual over that is unclear. MEV mitigation will be an area of innovation, and the rollup with the strongest MEV mitigations will be advantaged.

- Settlement layer: nearly zero for optimistic rollups in the optimistic case; tending towards zero for ZK rollups for anything above 100 TPS. Low-activity ZKRs become recursive rollups (L3s) or sharing proofs.

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polynya

@epolynya

26 Dec 21

Showerthought: ZKRs should be loss-leading, with max ~$0.10 transaction fees* for the end user. Verification price capped at ~250 gas. Cost to rollup: $12,000/day, decreasing rapidly with growing activity, with break-even at 3.33 TPS*. From there, tx fees will keep decreasing.

This solves for the chicken-and-egg problem of low activity = high costs and thus low demand. The $12K/day can either come from the rollup team's marketing budget, or from token inflation. For perspective: SOL, DOT, AVAX, ADA etc. are subsidizing >$10M per day - $12K is peanuts!

The way I see it: if a ZKR cannot have 3.33 TPS activity soon, then it's surplus to requirements anyway. So, rollup teams should just consider it a small fraction of what should be much larger marketing & bizdev budgets, even if there's no token.

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polynya

@epolynya

18 Dec 21

Recently, we have seen some revisionist memes around decentralization & security. I think we need better awareness of what these have always meant. Attempt:

Decentralization: ease & cost of verifying transactions
Security: risk-adjusted difficulty to compromise the network

Possible metrics:

- Decentralization: how much money do you have to spend on hardware that can verify transactions reliably? Lower is better.

- Security: PoS - how many entities own enough tokens to compromise the network? PoW - cost of acquiring hardware. Higher is better.

Of course, there are many nuances: multi-clients? slashing? nature of delegation (plutocratic? randomized?)? Staking queues? Battle-tested? Etc. Which is why people can exploit the complexity with populist revisionist memes.

Thoughts? Is the above over-simplification helpful?

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polynya

@epolynya

14 Dec 21

Haven't listened to UCC, but seeing a lot of comments about it. Firstly, I'm delighted we have moved past the "rollups bad" phase to "rollups awesome but only on L1 bags I hold". However, the whole point of a modular architecture is the concept of L1s melt away.

1/

Rollups will always verify on the most secure, decentralized, robust, battle-tested settlement layer, backed by the soundest money and with the widest range and depth of liquidity. The cost is negligible, and the risks of having a bridge to a less secure SL isn't worth it.

2/

I believe Bitcoin would have been the best SL, but given it doesn't support rollups, Ethereum is the next best option. For a PLONK rollup doing 1,000 TPS, gas fees per transaction is only $0.00003. With 10,000 TPS it's 10x lower still etc. These are negligible numbers.

3/

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