Following a spell of TradFi breakthroughs, all-time highs, and intense optimism in the crypto industry, selling pressure across most major cryptocurrencies are slowly beginning to ease, with trading volumes submitting to more tenable growth levels. Amidst this growth, one category-defying group of tokens has witnessed persistent success regardless of the current market backdrop: memecoins. Known […]
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Developing Several Layer-2 Solutions: ‘The Real Solution’ to Ethereum’s Scalability Issue, Says Ken Timsit
The recent surge in Ethereum gas fees can be attributed to the rise in decentralized finance (defi) activity and the growing popularity of layer 2 (L2) chains such as Arbitrum and Optimism, Ken Timsit, managing director of Cronos Labs, has said. Timsit however agreed that the recent Dencun upgrade to the Ethereum network has helped […]
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Ethereum’s Dencun Upgrade Goes Live, Promises Lower Fees and Enhanced Scalability
The Dencun upgrade was seamlessly integrated into the Ethereum mainnet at 9:55 Eastern Time (ET) on March 13, 2024. The upgrade officially went live at Beacon slot 8626176. Ethereum’s Leap Forward with Dencun Upgrade Expected to drastically lower the transaction costs for layer two (L2) networks, Dencun introduces vital improvements aimed at boosting Ethereum’s scalability. […]
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Meme Token Frenzy Drives up Ethereum Fees, Testing Network’s Scalability
Amid a significant uptick in ERC20 tokens, especially meme coins, the expense of conducting transactions on Ethereum has notably increased, pushing the average fee to .19 for each operation. Further data indicates that executing a swap on a decentralized exchange (dex) platform could incur a cost of . Transfers and Dex Swaps Costlier as Ethereum […]
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Bitcoin’s Scalability Foreseen by Satoshi Nakamoto to Outpace Visa, Historic Email Reveals
This week, crypto enthusiasts and historians alike have found themselves enraptured by the wealth of newly released emails from Satoshi Nakamoto, uncovering the visionary’s early efforts with Bitcoin. Specifically, one email, identified as number #3, offers unparalleled glimpses into Nakamoto’s considerations regarding Bitcoin’s scalability, economic framework, and prospects. Emails Suggest Satoshi Nakamoto Was Quite Confident […]
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Starkware to Launch ‘Cairo Verifier’ for Improved Layer 3 Scalability
Starkware, in a collaboration with Herodotus Dev, is poised to launch the ‘Cairo Verifier,’ a system designed to verify cryptographic proofs on Starknet’s Layer two. This innovation aims to circumvent the Ethereum mainnet, offering a solution to the comparatively costly and slow verification process. Starkware Unveils ‘Cairo Verifier’ to Boost Layer Three Blockchain Scalability Starkware, […]
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The Scalability Solution: Understanding Layer One vs. Layer Two Blockchains
Layer one (L1) and layer two (L2) blockchains offer different approaches to scaling distributed ledger networks. While developers of L1 blockchains focus on improving the base protocol, L2 programmers have moved transactions off-chain to enable faster and cheaper transactions.
What Are Layer One Blockchains?
Layer one or L1 refers to a base blockchain protocol like Bitcoin or Ethereum. These networks operate on a decentralized ledger secured by proof-of-work (PoW) mining or proof-of-stake (PoS) staking. L1 chains such as Bitcoin and Ethereum offer unparalleled security. However, during peak times, both of these chains grapple with sluggish transaction speeds and steep fees.
Developers from several L1 networks are working to improve layer one scaling through methods like increasing block size, sharding, and introducing proof-of-stake consensus. However, substantial layer one upgrades require coordination among node operators and can take years to implement. Some blockchains intend to use L2 protocols as either a temporary or long-term solution.
What Are Layer Two Blockchains?
Layer two or L2 solutions take advantage of the security of an existing layer one blockchain while enabling faster and cheaper transactions off-chain. Then the data is summarized and settled on the L1, but that’s not always the case.
Here are some key L2 solutions:
Lightning Network for Bitcoin
Bitcoin’s Lightning Network (LN) is a second-layer scaling solution designed to facilitate faster, low-cost transactions on the Bitcoin blockchain (L1). It operates on top of Bitcoin’s base layer, allowing for instant payments by circumventing the need for block confirmations.
Transactions on the Lightning Network occur off-chain in payment channels between users. Only channel open and close transactions are recorded on the Bitcoin blockchain. Participants can transact multiple times within these channels, reducing congestion and fees on L1.
Critics target LN for its prevalent use of custodial wallets, as these demand users place trust in third parties to handle their money. Moreover, the off-chain method poses a risk: if nodes lack proper backup, it could trigger an irrevocable loss of funds.
Loopring and ZK-Rollups for Ethereum
Loopring uses zero-knowledge rollups (ZK-rollups) to batch hundreds of transactions off-chain and generate a cryptographic proof verifying their validity. This proof is submitted to layer one (Ethereum), avoiding the need to process each transaction on-chain.
Polygon ZKEVM also uses ZK-rollup technology to offer high throughput Ethereum transactions with lower fees. On the risk side, some believe that relying heavily on ZK-rollups can introduce centralization risks as validators and sequencers become key to the system.
ZK-rollups are also complex both in terms of their theoretical underpinnings and implementation. This complexity can lead to potential vulnerabilities if not implemented correctly or thoroughly vetted.
Optimistic Rollups
Optimistic rollups like Optimism and Arbitrum offer similar throughput improvements by processing transactions off-chain. However, they take a different approach than ZK-rollups for settling data on layer one.
While ZK-rollups cryptographically prove validity, Optimistic rollups assume transactions are valid and only settle/dispute transactions on layer one if needed. This requires a separate fraud-proof process.
Optimistic rollups are also complex and just like ZK-rollups the tech can lead to unforeseen vulnerabilities or bugs. Another critique is the delay in withdrawals from an Optimistic rollup back to the main chain.
Starknet and Validium
Starknet leverages Stark proofs to validate transactions off-chain for later settlement on Ethereum. Validium platforms like Boba Network also move contract execution off-chain but don’t settle back to layer one.
Starknet and Validium critiques include complexity, trust assumptions, and computational intensity. Moreover, relying on specific entities for off-chain data storage can lead to centralization, potentially making the system more vulnerable to attacks or manipulation.
The Scalability Trilemma
No solution offers speed, security, and decentralization in equal measure. Layer two aims for transaction speed without sacrificing the security of layer one. However, some believe decentralization is lost by moving computations off-chain.
Others insist the ideal long-term solution likely combines layers one and two. Meanwhile, numerous crypto enthusiasts remain firmly rooted in the belief that only L1s hold significance in the onward journey.
In summary, layer two platforms offer a different path to scalability by handling transactions off-chain, while some still benefit from the robust security model of layer one. To some this balance of speed and security makes layer two solutions appealing for blockchain adoption.
While some dismiss L2s as a complete waste of time or deem them entirely pointless, the discourse stretches on. Yet, through years of discussion, work continues to enhance both layers to achieve the optimum blend of scalability, security, and decentralization.
What do you think about the differences between L1 and L2 blockchain technology? Share your thoughts and opinions about this subject in the comments section below.
From MATIC to POL: Polygon’s 2.0 Upgrade Targets Internet-Level Scalability
Details have been released about Polygon’s upcoming upgrade, Polygon 2.0. The company, known for its Ethereum scaling solutions, has introduced a few Polygon improvement proposals (PIPs) as part of its shift to a network of interconnected zero-knowledge-powered chains.
Polygon 2.0 Unveiled in 3 PIPs
According to the announcement, Polygon 2.0 focuses on scalability and interoperability by implementing zero-knowledge (ZK) technology. The intent of the upgrade is to transition Polygon into a network resembling the structure of the Internet. This network of ZK-powered chains seeks to enhance Ethereum’s capacity without compromising its security.
“Three Polygon Improvement Proposals (PIPs) were released that lay out the specific changes that, following community endorsement, will begin to take place in early Q4 of this year,” the update details.
The initial proposals concentrate on modifications to Polygon’s current Ethereum contracts, aiming to prevent inconvenience for users and developers. Key changes include transitioning the native token from MATIC to POL and introducing a Staking Layer for validators.
Polygon developers note that the primary objective is to expand Ethereum block space in a manner similar to the network structure of the internet. Polygon believes that with ZK technology, Ethereum block space can potentially match the expanse of the internet.
The PIPs include:
- PIP-17: Polygon Ecosystem Token (POL)
- PIP-18: Polygon 2.0 Phase 0
- PIP-19: Update Polygon PoS Native Token to POL
In the past month, Polygon’s MATIC token has declined more than 10% against the U.S. dollar and 4% in the last two weeks. MATIC ranks 14th among more than 10,000 cryptocurrency assets, with a market capitalization of about .81 billion.
Regarding decentralized finance (defi), the total value locked (TVL) in Polygon stands at 3.13 million, spread across 474 defi protocols. With the upcoming transition to POL, users will have the opportunity to swap MATIC for POL at a 1:1 rate. Polygon’s recent statement about the Polygon 2.0 transition indicates that the upgrades will be implemented in phases, rather than all at once.
What do you think about the Polygon 2.0 upgrade? Share your thoughts and opinions about this subject in the comments section below.
Sidechains Can Provide ‘Scalability and Flexibility Needed for Real-World Applications’ — Horizen Labs CEO
All-in-one infrastructure solutions may be what is needed to drive the adoption of Web3, but such solutions might turn out to be complex and not as flexible, Rob Viglione, the co-founder and CEO at Horizen Labs, has argued. In addition, Viglione believes that such comprehensive infrastructure solutions “may not be as compatible with tools that sit outside of the services tech stack.”
Making Infrastructure Solutions ‘More Interoperable and Composable’
Furthermore, all-in-one infrastructure solutions are likely to make it difficult for developers to adapt their applications to new programming standards, the CEO of the blockchain solutions group added. Meanwhile, when asked why sidechains are needed, Viglione pointed to their ability to expand the functionality of existing blockchains “requiring significant modifications to their core codebase.”
In written answers sent to Bitcoin.com News, the co-founder also argued that sidechains can play a critical role in Web3 by “providing the scalability and flexibility needed for real-world applications.” With respect to ways that the so-called Web3 backbone can be strengthened, Viglione said this can be done by making infrastructure solutions like blockchain software development kits (SDKs), wallet SDKs and dapp development tool kits “more interoperable and composable.”
In the rest of his answers to questions sent to him via Telegram, Viglione also offered thoughts about the future of application or enterprise-specific custom chains.
Bitcoin.com News (BCN): When looking at the existing Web3 infrastructure, one can see that it is dominated by specialized players in various areas — such as node providers, indexers, SDKs, and wallets. Do you think all-in-one infrastructure could improve the developer experience to accelerate Web3 adoption?
Rob Viglione (RV): A key determinant for the adoption of Web3 is ease of use. Developers must be able to build and scale blockchains and dapps, and users must be able to interact with them with minimal friction. Infrastructure providers like Ankr, Thirdweb, and others help reduce the barrier to entry for developers looking to launch new projects. All-in-one infrastructure providers allow developers to develop tools more easily and quickly, shortening the time required to go to market and test out ideas.
An all-in-one infrastructure could benefit developers by eliminating any compatibility issues between wallets, smart contracts and nodes as all components would be offered as a single packaged service.
While these companies offer plenty of supporting tools for developers launching web3 applications, it remains to be seen how well each tool performs relative to competitors that are focused entirely on one type of infrastructure.
BCN: What would be the downside, if any, for developers and enterprises relying on an all-in-one infrastructure solution?
RV: The main drawbacks of all-in-one infrastructure solutions are complexity and lack of flexibility. Developers will need to contend with UX/UI designs that may be suboptimal for their applications, while customization may be expensive or limited due to standardized setups. Furthermore, comprehensive infrastructure solutions may not be as compatible with tools that sit outside of the services tech stack. This could make it difficult for developers to adapt their applications to new programming standards.
BCN: With the era of multi-chain Web3 now seemingly upon us, what do you think are some of the challenges to ensuring better cross-chain privacy and security?
RV: Challenges include poor smart contract auditing practices that lead to bridge hacks, and the nascent implementation of zero-knowledge proofs to ensure privacy. Maintaining cross-chain security requires robust and universal auditing practices, which is difficult to achieve in an industry where new programming standards and cryptography methods are constantly being implemented across different blockchains.
When these blockchains become connected via a bridge, there is often very limited communication between them beyond authenticating the existence of assets on either side of the bridge. Upgrades to different areas of the protocol could have an impact on the bridge contract and expose new vulnerabilities if not carefully monitored.
BCN: In the last few years, sidechains are said to have become essential for helping pre-existing blockchains acquire the capabilities they lacked. Can you tell our readers the fundamental value proposition of sidechains and their role in taking Web3 mainstream?
RV: The fundamental value proposition of sidechains lies in their ability to expand the functionality of existing blockchains without overloading them or requiring significant modifications to their core codebase. Sidechains are essentially independent blockchains that are interoperable with the main blockchain and allow for the transfer of assets between chains.
This interoperability allows for a network of blockchains to operate as a single blockchain, thereby addressing issues of scalability and interoperability. For example, Horizen EON is an EVM-compatible sidechain launching on the Horizen blockchain, which will bring smart contract functionality to Horizen.
Sidechains can be optimized for specific traits like speed, security, privacy, and decentralization, and can be made private and permissioned or public and permissionless. This flexibility allows developers to build applications that are tailored to specific use cases, without being constrained by the characteristics of the main blockchain.
In terms of taking Web3 mainstream, sidechains can play a crucial role by providing the scalability and flexibility needed for real-world applications. They allow developers to build on top of existing projects without needing to achieve consensus for protocol changes, which can be a cumbersome process. This gives developers more freedom while maintaining the advantages of the main blockchain.
BCN: Your company Horizen is said to have recently introduced the EVM-compatible EON sidechain. What does EON mean for developers and users?
RV: Horizen’s EON is a public proof-of-stake sidechain and a fully EVM-compatible smart contracting platform. It takes Horizen’s focus on interoperability to a new level. For developers, this means they can easily build and deploy decentralized applications (dapps) within the security-focused Horizen ecosystem while also taking advantage of the programmability afforded by the Ethereum standard. This compatibility with Ethereum’s Virtual Machine (EVM) allows developers to leverage the existing tools, infrastructure, and community of Ethereum, which can significantly reduce development time and costs.
For users, EON offers the potential for more decentralized applications to be built on the Horizen platform. These could include decentralized finance (defi) applications, games, NFT marketplaces, loyalty programs, voting systems, and more.
Moreover, Horizen’s sidechain deployment protocol, Zendoo, allows developers to deploy their own independent blockchain like Horizen EON to meet their specific needs. This provides developers with greater control and flexibility over the speed, security, and decentralization of their blockchain.
BCN: While users may not interact with the underlying infrastructure, there’s no denying that infrastructure solutions form the backbone of Web3. What, in your opinion, still needs to be done to strengthen this backbone?
RV: Infrastructure solutions like blockchain SDKs, wallet SDKs and dapp development tool kits need to become more interoperable and composable in order to strengthen the backbone of Web3. Given the competitiveness of the web3 market, there’s often little motivation for these projects to establish common standards or work together in a manner that decreases difficulties for end users operating on-chain. As a result, we’ve seen fragmented liquidity, suboptimal user interfaces and security vulnerabilities as developers have tried to achieve interoperability between systems.
BCN: What are your thoughts on the future of the application or enterprise-specific custom chains?
RV: We see a bright future for app-specific chains (app chains). It’s clear that different use cases prioritize different blockchain features. A game, for instance, might value throughput more than decentralization; a financial application, meanwhile, might sacrifice some speed for higher security. A platform like Horizen enables this flexibility by offering a way for developers to spin up sidechains optimized for specific types of applications and offering interoperability between those blockchains, the Horizen mainchain, and even other blockchain ecosystems. The future will not be “one size fits all;” instead, flexibility and interoperability will be defining features.
What are your thoughts on this story? Let us know what you think in the comments section below.
Geeq granted a US patent for the protocol’s security and scalability features
Geeq, a Canada-based blockchain company, has been granted a patent in the United States for features of its multi-blockchain, layer-zero protocol’s security and scalability systems, according to a press release.
Details found in the patent’s application describe a technology termed “Proof of Honesty,” which is Geeq’s alternative to predominant proof-of-work and proof-of-stake consensus mechanisms. Additionally, Geeq alleges that its system of federated blockchains is able to ensure security and achieve “infinite scalability.” According to the patent application:
“If there is at least one honest node, it will write an honest block to a valid chain. Users are able to discover honest chains and will always choose it for their transactions. Dishonest chains become orphaned.”
Geeq also claims that having flexibility built into the protocol, which can create additional chains during periods of increased network activity and then merge chains when transaction volume decreases, keeps the cost of transactions more affordable as well as 99% Byzantine fault-tolerant.
In the press release, Geeq CEO Ric Asselstine noted that gaining the approval of the patent “marks a critical point in time for Geeq as we push forward aggressively with the development of transformative solutions for previously intractable problems.”
One of these “previously intractable problems” is the poor user experience when using blockchain technology due to the complexities of interacting with smart contracts. Geeq noted in the press release that instead of having users interact directly with smart contracts, a suite of applications that facilitate the most common types of transactions makes it so that “the end user is able to focus on what they gain rather than worry about potential exploits, complex coding dependencies, or the downstream effects of governance decisions.”
In a company blog post, Geeq stated that its launch strategy would not include a private nor public beta but would instead consist of soft-launching features as they are developed and fixing bugs as they are found — reminiscent of Telsa’s software updates that rollout new features over time or security fixes included in every iOS update.
Geeq has also received funding from major players in the space such as GEM Capital, which committed million in August 2022. Geeq CEO Asselstine said with this funding, the company/protocol is now “ready to bring enterprise and individuals into the metaverse and Web3.”