Original Title: "Infrastructural Frontiers for Multi-Rollup World"

Original Author: Grace, SevenX

Recently, there has been an obvious trend: more and more dApps have announced the launch of their own Rollup applications. In addition, the number of upcoming general Rollups is also increasing day by day.

With the continuous growth of transaction volume and dApp quantity, Ethereum is facing the problem of scalability, and the universal Rollup comes into being. These Layer 2 solutions can process more transactions off-chain and then securely record these transactions on the main chain, perfectly balancing scalability and security. The versatility of Rollup supports various dApps, and each application no longer needs a unique scaling solution.

The specific application Rollup is a customized solution tailored to meet the unique needs of a single application, improving speed by optimizing transaction processing for specific use cases. In terms of cost, this Rollup may offer a more efficient alternative, especially in times of network congestion, where this efficiency is particularly valuable. One of the great features of Rollup is its flexibility. Generic Layer 2 solutions are more rigid and limited by EVM design, while Rollup tailored to specific applications can be customized, making it ideal for applications such as games that require specific pre-compilation. In addition, Rollup helps dApps more efficiently capture value and better control token economics and revenue streams.

With the consensus on the popularity of Rollup technology among people, multiple Rollups will dominate the market in the coming year. Therefore, the top priority is to build a strong infrastructure to make it play the role of "reinforced concrete".

This article will delve into the four fundamental pillars that shape the future of the multi-Rollup ecosystem.

·Security Foundation: The security layer is the cornerstone of trust in the decentralized world. In this section, we will explore the critical role that the security layer plays in ensuring the integrity of Layer 2 transactions, establishing trust assumptions, and addressing potential security risks.

·Balancing Customizability and Interoperability: Achieving seamless interoperability between different Rollups is key to a modular blockchain world. In this section, we will delve into the interoperability issues brought about by modular structures and discuss how to address fragmentation to build a cohesive ecosystem.

·Cost Analysis: To make Rollup widely popular and feasible, the key point is to reduce costs, as reducing costs can lower economic barriers compared to smart contracts. Rollup's cost efficiency is mainly achieved in two ways: one is to achieve economies of scale by aggregating and sharing costs with other Rollups, and the other is to delegate some tasks to external service providers to achieve division of labor.

·Shared Security: Shared security layer is essential as it reduces the time and resources required to ensure security for new protocols or module layers, making it have a strong security comparable to mature platforms such as Ethereum. There are currently many solutions available, such as Eigenlayer, Babylon, Cosmos' ICS, and Mesh Security applications.

The above four levels have drawn a comprehensive blueprint, driving the infrastructure construction needed to promote a prosperous and cohesive modular blockchain world.

Security Basics

Trust and security are the foundation of all decentralized systems. Without trust and security, the trustless ecosystem becomes a source of water without a source. The security layer is crucial, without which users and Total Value Locked (TVL) are exposed to risks. Plasma and Sidechains were once seen as the saviors of Ethereum's scalability, but their decline sounded the alarm for us. Issues such as "data availability" have undermined trust and ultimately lost users. In view of this, this article will discuss the security layer as the first part.

To understand the complexity and potential vulnerabilities of Rollup, it is necessary to analyze the lifecycle of Layer 2 transactions. Taking the example of smart contract Rollup, we will delve into each stage and identify trust assumptions and potential security risks:

Submit transactions via RPC:

·Trust assumption: RPC endpoints are reliable and secure. Users and dApps now trust RPC providers such as Alchemy and Infura.

·Security issues: Users may be subject to scrutiny by RPC providers, such as Infura and Alchemy, who block RPC requests to Tornado Cash. RPC providers may also face DDOS attacks, as evidenced by ANKR's DNS hijacking attack.

·Solution: RPC providers such as Infura are actively promoting decentralization roadmaps. In addition, users can choose decentralized solutions such as Pocket Network.

Sorting devices sort transactions and provide pre-commitment: insecure state.

· Trust assumption: Users believe that the sorter can fairly sort transactions and provide true pre-commitments.

Security concerns: The system must resist censorship and ensure that all transactions are processed without bias. The system must always remain operational and ideally be able to prevent sorters from obtaining maximum extractable value (MEV) at the expense of end users.

·Solution: Censorship Resistance (CR) and Liveness: According to their Censorship Resistance and Liveness, the current ranking of solutions (from low to high) is as follows: Single Sorter - POA - Permissionless POS Sorter - Shared Sorter - Rollup-based (sorted by Layer 1). It should be noted that compared to a centralized sorter that enables forced txn, the Censorship Resistance of POA, which has limited permissions and does not support forced txn, may be lower.

As for validity, another key indicator to consider is proposer failure, which refers to the failure that occurs when the proposer is offline. In this case, it is necessary to ensure that users can still withdraw their funds.

- Even if the sorter is under review or rejecting work, some Rollups also allow users to directly submit transactions to Layer 1 on their own, which is an emergency exit (the validity of forced transactions depends on the specific implementation). The problem is that this approach may be too costly for users with limited funds, and users may want to have resistance to review and effectiveness at all times.

- Some Rollup solutions, such as Arbitrum and Fuel, allow anyone to become a proposer after experiencing a certain time delay, that is, self-proposal.

- View metrics for each Rollup.

For more details on other different solutions, please refer to my previous post.

MEV Protection:

·Solution 2:

The most common approach currently is to add a time delay, so that if the user does not agree to the planned upgrade, they can exit. However, this solution requires the user to constantly monitor the chain where all their tokens are located, in case they need to exit.

Altlayer's Beacon Layer can serve as the social layer for all Rollups, providing upgrade services. Regardless of whether the bridging contracts on Ethereum are upgraded, the Rollup sequencer running with the Beacon Layer Rollup validator can fork the Rollup in a social manner.

Long-term view: Enshrined Rollup has always been the ultimate goal of Ethereum's roadmap. In addition to enshrining bridging/fraud proof validators on Layer 1, it also enshrines settlement contracts.

- Ethereum PSE is working towards this direction.

As for the sovereignty Rollup, the main difference is that the chain state is settled by the Rollup full node, rather than the smart contract in Layer 1. For a more detailed comparison, please refer to https://www.cryptofrens.info/p/settlement-layers-ethereum-rollups.

It should be noted that improving security does not necessarily mean improving performance. In most cases, increasing security measures requires a trade-off with scalability. Therefore, balancing the relationship between the two is crucial. In short, Rollup provides flexibility to choose different levels of security assumptions based on personal preferences. This adaptability is a prominent feature of the modular world, which can provide tailored solutions for specific needs while maintaining system integrity.

Balancing Customizability and Interoperability

In the modular world, there is a well-known saying: "Modularism, not maximalism." If Rollup cannot safely and efficiently interoperate, then modularity is not maximalism, but fragmentation. Therefore, it is necessary to address the interoperability between different Rollups.

First, let's review how monolithic chains achieve interoperability. In short, it is achieved by verifying the consensus or state of other chains to enable cross-chain operations. There are currently various methods in the market, differing in who is responsible for verification (official entities, multi-signature mechanisms, decentralized networks, etc.), and how to ensure the correctness of verification (through external parties, economic guarantees, Optimistic mechanisms, zero-knowledge proofs, etc.). If you want to delve deeper into this topic, you can check out my favorite bridging article: Thoughts on Interoperability.

With the rise of modularity, interoperability issues have become more complex:

Fragmentation issue:

·Rollup surge is expected to significantly exceed the number of Layer 1, because deployment on Layer 2 is much easier than on Layer 1. Will this lead to a highly fragmented network?

Although a single blockchain provides consistent consensus and state for simple verification, what would the verification process look like for modular blockchains with three (or even four) different components (data availability, execution, settlement, and ordering)?

Data availability and settlement layer have become the main data sources. As Rollup itself provides execution proof, execution verification is already available. Sorting occurs before being published to the data availability layer.

可扩展问题：

Expandable Question:

With the introduction of new Rollups, a question arises: can we provide bridge services in a timely manner to accommodate these new Rollups? Even if building a Rollup does not require a license, it may still take 10 weeks to convince others to add a Rollup. The current bridge services mainly target mainstream Rollups and tokens. In the future, there may be a large number of Rollups emerging, and people are concerned about whether these services can be effectively evaluated and corresponding solutions can be launched to support these new Rollups, while not affecting security and functionality.

User experience issue:

·The final settlement of Optimistic Rollup takes seven days, which is much longer than other Layer 1 solutions. The current challenge is how to solve the seven-day waiting time for the official bridging of Optimistic Rollup. There is also a time delay in submitting zero-knowledge proofs, as Rollup usually waits to accumulate a large number of transactions before submitting proofs to save verification costs. Popular Rollups like StarkEx usually only publish proofs to Layer 1 every few hours.

·To save costs, there will be a time delay in the Rollup transaction data submitted to the data availability/settlement layer (as mentioned above, Optimistic Rollup takes 1-3 minutes, while zk Rollup takes several hours). For users who require faster and more secure final results, this needs to be abstracted.

The good news is that there are some new solutions available to address these challenges:

Fragmentation issue:

Although there are many Rollups in the ecosystem, it is worth noting that most smart contract Rollups currently share a common settlement layer, namely Ethereum. The main differences between these Rollups are their execution and ordering layers. To achieve interoperability, these Rollups only need to verify the final state of the shared settlement layer with each other. However, for sovereign Rollups, the situation is slightly more complicated. Due to the different settlement layers, there are certain challenges for sovereign Rollups to achieve interoperability. One way to solve this problem is to establish a peer-to-peer (P2P) settlement mechanism, where each chain is directly embedded with the light client of another chain to facilitate mutual verification. Another method is for these sovereign Rollups to first bridge to a centralized settlement center, and then act as a relay station to connect to other chains. This center-based approach simplifies the process and ensures closer interconnection between different Rollups. (Similar to the interoperability of Cosmos state)

·In addition to Ethereum, other potential settlement centers include Arbitrum, zkSync, and StarkNet, which serve as settlement centers for Layer 3 built on them. The interoperability layer of Polygon 2.0 also serves as a central hub for zk Rollup built on top of it.

· In short, although the number of Rollups and their variants is constantly increasing, the number of settlement centers is still limited. This effectively simplifies the topology structure and reduces the fragmentation problem to a few key centers. Although the number of Rollups will be more than the alternative Layer 1, the interaction between Rollups is simpler than the interaction between Layer 1 because Rollups are usually within the same trust/security range.

· The interoperability between different settlement centers can refer to the interoperability between individual chains mentioned earlier.

* In addition, to eliminate fragmentation issues on the user side, certain Layer 2 solutions, including ZKSync, have integrated native account abstraction to enable seamless cross-Rollup experiences.

可扩展问题是指在密码学中，一种可以在不泄露私钥的情况下，将加密后的消息进行扩展的技术。这种技术可以用于实现零知识证明、匿名认证等应用。

·Hyperlane (providing modular security for modular chains) and Catalyst (permissionless cross-chain liquidity) have emerged to address the issue of licensed interoperability.

The essence of Hyperlane is to create a standardized security layer that can be applied to various chains, making these chains naturally interoperable.

- The challenge of this solution lies in the settlement oracle. Taking UniswapX as an example, in order to facilitate cross-chain transactions, we need a settlement oracle to determine when to release funds to the solver. If the settlement oracle chooses to use native bridging (slow), or third-party bridging (which will raise trust issues), or even light client bridging (not yet mature), we will find ourselves still trapped in the previous cycle. Therefore, UniswapX also provides a "fast cross-chain exchange" function similar to Optimistic bridging.

- At the same time, the effectiveness of intent resolution depends on the competition between solvers. As solvers need to rebalance inventory across different chains, this may lead to centralization issues in solvers, thereby limiting the full potential of intent.

Summing up, there are three solutions to user experience issues:

1. The Magic of Zero-Knowledge Technology:

The main challenge of this solution lies in the performance of zero-knowledge technology, including the time and associated costs required to generate zero-knowledge proofs. In addition, when dealing with highly customizable modular blockchains, we need to consider whether we have a zero-knowledge proof system that can adapt to various differences.

2. Use economic penalty scheme:

The main disadvantage of this approach is the inherent time delay of decentralized methods (for example, in the case of EigenSettle, we must wait until the upper limit is reached). In addition, centralized methods can only provide limited commitments (such as shared sorting), relying on builders/sorters to make commitments, which may be limited and lack scalability.

3. Trusting third parties:

Although trusting third parties may bring additional risks as users must trust the bridging, supporting intent-based cross-chain exchange is a more "decentralized" form of third-party bridging. However, this method still needs to face issues such as oracle delays, trust issues, and potential time delays, as you must wait for someone to accept your intent.

Interestingly, modularization has brought new possibilities for interoperability experience:

The modular interoperability solution is developing rapidly, and currently all solutions have their own advantages and disadvantages. Perhaps the final solution is still a distance away from us, but it is gratifying to see so many people working hard to create a safer and more interconnected modular world in response to the explosive development of Rollup.

Cost Analysis

One reason for the limited number of existing Rollups compared to using smart contracts is due to economic factors. The operation of smart contracts adopts a more flexible cost model, where the main cost is gas fees, while launching and maintaining Rollups incurs fixed and variable costs. This cost structure indicates that Rollups are more suitable for applications with high transaction volume or relatively high transaction fees, as these applications can more effectively share the involved fixed costs. Therefore, proposals aimed at reducing Rollup-related costs (fixed and variable costs) are crucial. As Neel and Yaoqi explained in their speech at the Ethereum Community Conference (ETHCC), a deep dive into the cost structure of Rollups can give us a clearer understanding of the situation:

By using financial models such as discounted cash flow (DCF) analysis, we can evaluate the feasibility of introducing Rollup. The formula is:

DCF (Revenue - Expenses) > Initial Investment.

As a benchmark to determine whether operational revenue exceeds the initial investment and to assess whether a new Rollup can bring economic benefits. If the protocol can successfully reduce operating costs while increasing revenue, it will help promote the Rollup. Let's take a closer look:

The initial development and deployment costs.

Although there are open source SDKs available such as Opstack and Rollkit, the initial setup still requires a lot of time and manpower for installation and debugging. Custom requirements such as integrating virtual machines into the SDK require even more resources to ensure consistency with the interfaces provided by each SDK.

RAAS services like AltLayer and Caldera can significantly reduce the complexity and workload associated with this, demonstrating the economic benefits of division of labor.

Recurring Expenses / Income

User fees

= Layer 1 data publishing fee + Layer 2 operator fee + Layer 2 congestion fee.

Although some user fees may be offset by expenses, it is still necessary to carefully review and strive to reduce such costs, because if user fees are too high, Rollup may become unsustainable. (Discussed in the cost section)

- According to Akaki's recent research, the shared sequencer is very valuable for arbitrage searchers who want to capture arbitrage opportunities on different chains, as it ensures winning in competitions that take place simultaneously on all chains.

- As a multi-domain order flow aggregation layer, SUAVE assists builders/searchers in exploring cross-domain MEV.

·Layer 2 operating costs

Sorting: Comparing centralized and decentralized sorting schemes can be tricky. In more decentralized solutions like Proof of Efficiency, competition can keep operator profits at a minimum and incentivize frequent batch releases to lower costs. On the other hand, centralized solutions typically involve fewer participants, which can simplify processes but may not lower costs as effectively as decentralized solutions.

Execution: In this case, the full node uses a virtual machine (VM)/Ethereum Virtual Machine (EVM) to execute the changes to the Rollup state for new user transactions.

- Optimized alternative virtual machines (such as Fuel and Eclipse's Solana VM) can achieve parallel execution, thereby improving efficiency. However, if technologies or solutions that are incompatible with EVM are adopted, there may be friction between developers and end users, as well as potential security issues. Arbitrum's Stylus is commendable for being compatible with both EVM and WASM (more efficient than EVM).

Proof

·Babylon allows BTC holders to stake their BTC within the BTC network and provide security for other POS chains by optimizing the use of Bitcoin script language and utilizing advanced encryption mechanisms.

On the other hand, Babylon has proposed a unique approach to unlocking the potential assets of BTC holders without moving BTC out of its native chain. By optimizing the use of Bitcoin's scripting language and integrating advanced encryption mechanisms, Babylon provides more security for the consensus mechanism of other chains, one of which is the shortened unlocking period. On other POS chains, validators holding BTC can lock their BTC on the Bitcoin network and sign POS blocks with their BTC private keys. Invalid behaviors such as double signatures will leak the validator's BTC private key and destroy their BTC on the Bitcoin network. Babylon's second testnet will introduce BTC staking functionality.

Although Babylon overcomes the limitation of Bitcoin's lack of smart contract support, Eigenlayer must run on the Turing-complete Ethereum platform. Eigenlayer not only provides economic security for new Rollups and chains, but its environment on Ethereum also supports more diverse AVS. According to Eigenlayer's article on programmable trust, the security it can provide can actually be further divided into three types:

·Economic trust: The trust brought by validators making commitments and being supported by financial interests. This trust model ensures consistency regardless of the number of parties involved. In this case, there must be objective punishment conditions that can be submitted and verified on the chain, which often affects re-stakers.

·Decentralized trust: The trust brought by decentralized networks operated independently and geographically isolated. This emphasizes the intrinsic value of decentralization and achieves some use cases that cannot be objectively proven, as decentralization increases the difficulty of collusion. The cost and complexity required to utilize decentralized trust are often relatively low.

·Ethereum contains trust: Trusted Ethereum validators will build and include your block while running consensus software according to their commitments. This can be specifically committed by Ethereum validators (not LST re-stakers). They run the sidecar software to perform additional calculations and receive additional rewards.

Now that we have a clear understanding of security-related information, what is there for us to look forward to?

·ICS and Mesh Security have reduced security barriers for Cosmos application chains such as neutron, stride, and axelar.

·Eigenlayer can be applied to many of the solutions mentioned earlier:

Rollup Security: Relay Network; Monitoring, Sorting, MEV Protection, EigenDA.

Rollup Interoperability: Eigensettle; Bridging.

Cost Analysis: Prover Network.

More content awaits exploration, please see https://www.blog.eigenlayer.xyz/eigenlayer-universe-15-unicorn-ideas/

·Increasing complexity will bring more uncertainty. Validators may face additional penalty conditions, but these conditions may not have sufficient safeguards, which may bring risks.

Eigenlayer's proposed solution is to establish a veto committee. The committee serves as a trusted entity between pledgers, operators, and AVS developers. In the event of software vulnerabilities within AVS, pledgers and operators will not face penalties because the veto committee can cast a veto. Although this method may not be scalable in itself and subjectivity may exist if AVS is not adjusted strictly based on use cases that are not attributed to untrusted behavior, it can still serve as an important means of risk mitigation strategy in the early stages.

· The increase in complexity also brings additional burdens. Inexperienced validators may find it difficult to determine which service to share security with. In addition, the initial setup phase may come with higher risks of errors. Mechanisms should also be set up to allow "less technically proficient" validators and stakers to earn higher returns without being limited by their operational capabilities, provided they are willing to accept relatively higher risks.

Rio Network and Renzo are both working to address the challenge faced by Eigenlayer. They offer a structured approach, carefully selecting advanced node operators and AVS services for potential re-staking to increase security levels and reduce entry barriers for participants.

In addition, with the popularization of Eigenlayer, it is expected to open up new prospects in the field of secure finance. This may help to evaluate the shared security and various applications based on shared security.

·One limitation faced by EigenLayer is that it cannot expand the capital allocation of its system by competing for profit opportunities in DeFi with the same supported asset (LST). EigenLayer commoditizes secure value, providing the ability to support this value for many primitives and enabling re-stakers to re-stake and participate in a larger DeFi ecosystem.

Ion Protocol aims to achieve this goal in order to expand the impact of re-staking. Ion is building a price-agnostic lending platform that uses zero-knowledge infrastructure to support such assets (zero-knowledge state proof system + ZKML), thereby avoiding the low-level penalty risks inherent in such assets. EigenLayer commercializes the secure underlying value, which may be the beginning of many new DeFi primitives, further enhancing the scalability of re-staking throughout the ecosystem.

Standing at the forefront of major changes, we must embrace the principles of security, interoperability, and cost-effectiveness. These pillars will not only guide the development of more scalable and efficient blockchain solutions, but also lay the foundation for building a more connected and accessible digital world. If we embrace these changes with foresight and adaptability, we can certainly create breakthrough progress in the blockchain ecosystem.

Original Link

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia