1/ The case for why today's optimistic rollups (not ZK rollups) may have the best chance of winning the L2 wars 🧵👇
2/ Most people, including myself, think that ZK rollups will beat out optimistic rollups in the long term (better interoperability, L3 scaling, etc.)

Despite that, today's optimistic rollups such as @arbitrum and @optimismFND could end up the biggest winners.
3/ Optimistic rollups are likely to dominate for the next 2-3 years while zkEVM chains are not yet production ready, and proving costs / times are still high.

During this time, optimistic rollups could accrue massive network effects.
4/ Network effects for L2s are going to be extremely strong, much stronger than L1 networks effects.

Let's look at rollup costs to understand why.
5/ On-chain gas costs for L2s for can be broken down into two buckets:
1. Fixed gas cost per batch
2. Variable gas cost per transaction

Costs today are unoptimized and far from theoretically optimal.
6/ With rollup optimizations and Danksharding, on-chain costs are going to reduce dramatically over the next 3 years.

We see that variable costs become almost negligible as we end up with mostly fixed costs.
7/ A cost structure with mostly fixed costs leads to economies of scale.

This means on-chain costs for both ZK and optimistic rollups will decrease rapidly with increasing usage (see below).
8/ These economies of scale are super important! Why?

Because it means early L2s can accrue massive network effects, as there is a positive feedback loop of apps, users, and lower costs.
9/ In fact, L2 network effects are much stronger than L1.

L1 has diseconomies of scale (more activity => higher costs). Hence high ETH fees and the rise of alt-L1s.

With economies of scale on L2, the most used chains will also be the cheapest, creating a tight grip on users.
10/ Here's a hypothetical example to demonstrate this.

Suppose the @optimismFND chain grows from its current usage of 100k txs/day to 1M txs/day over the next three years.

Notice how it will have drastically lower on-chain costs compared to a newly launched ZK rollup.
11/ The ZK rollup could try to mitigate this cost difference by posting batches to L1 less frequently, but that would detract from the reasons to use the ZK rollup in the first place (i.e. better interoperability, synchronous calls to L1, etc).
12/ Of course it's not just costs, the optimistic rollup would also have developed a rich ecosystem of apps / users, while the ZK rollup will be starting from scratch.
13/ But with all the recent zkEVM announcements, why am I talking about ZK rollups 3 years from now? Shouldn't they launch any day now? Here's where some nuance comes in.
14/ Not all zkEVMs are the same, and @VitalikButerin has categorized them into four different types (see image).

Type 1 or 2 has the best chance of gaining real user adoption imo, as they are the easiest for developers to port over their code and use familiar dev tools.
15/ No team has yet achieved a Type 2 zkEVM, and it's unclear how long this will take.

Once we do get Type 2, it will still take time to launch a production grade chain.

Lastly, because ZK tech is so new, people may need time to feel comfortable before putting in lots of $.
16/ So it's not unreasonable that it takes 2-3 years to see a zkEVM rollup that is Type 2 EVM equivalent, production ready, has reasonable proving costs / times, and people feel comfortable trusting (would love to be proven wrong here!).
17/ During this time, optimistic rollups can amass big network effects. Users will be sticky due to low fees as well a large and liquid ecosystem of apps and users.
18/ Finally, once the tech is ready, optimistic rollups could transition to ZK.

In fact, optimistic rollups are already planning for this! Here's a clip of Optimism's @kelvinfichter discussing this. youtube.com/clip/UgkxF7E3L…
19/ Putting it all together, here's how today's optimistic rollups can win the L2 wars.
20/ Of course, this is just one scenario for how things could play out.

There are lots of moving pieces and many scenarios in which the ZK teams win (and no reason multiple teams can't win!)

The main point is: Despite all the ZK excitement, don't count out optimistic rollups.
21/ Follow me @sanjaypshah for more threads on rollups on modular blockchains.

If you liked this thread, would appreciate if you could like / retweet the first tweet (linked below).

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More from @sanjaypshah

Jul 28
1/ @VitalikButerin provided some theoretical estimates of what fixed and variable gas costs might be for rollups.

How do theoretical estimates compare to the actual costs?

I checked and got some surprising results 👇
2/ Rollups work by batching transaction data and periodically posting them back to L1.

Their L1 gas costs for this can be broken down into two buckets:
1. Fixed gas cost per batch
2. Variable gas cost per transaction
3/ First I looked at @optimismFND, and arrived at the following cost breakdown on the network today.

- 280k fixed gas per batch
- 3,300 gas per tx
Read 12 tweets
Jul 7
1/ ELI5: The argument for why Solana will eventually become a rollup on Ethereum (or other base layer). 🧵 👇
2/ Let's first start with a basic fact. The market cap of any L1 token MUST go up for that network to be secure in the long term. The more it goes up, the more secure the network is.
3/ This is because the security of a PoS chain is directly tied to the market cap of its token.

Example: It's much more expensive to accumulate enough SOL to attack the network if its market cap is $1T than if its market cap is $1B.
Read 29 tweets
Jun 2
1/ Modular blockchains promise to finally bring scalability to crypto. They also enable many types of rollup configurations, which can be a bit confusing to understand.

Let's dive into understanding the different types of rollup configurations that are possible.👇
2/ There are three different types of rollups that are enabled in a modular blockchain stack:

1. Secured rollups
2. Sovereign rollups
3. Settlement rollups

This diagram lays out the different rollup types and which functions are performed on which layers. Image
3/ The chart above is a modified form of a diagram originally created by @CelestiaOrg. The original chart can be found here: shorturl.at/gtHIW

In addition to pure rollups, the modular stack also enables validiums (and volitions), which I'll cover in another thread later.
Read 19 tweets

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