L2s in a nutshell - Hubert Kotliński

uh so yeah so I'm Huber from the l2b team so we are this team that is building the website that's kind of showing you all of the data about all different l2s and nowadays as you probably know there is a lot of them so when I was starting I think think it was less than 10 and now we have uh 70 active projects and 80 upcoming so the L2 space is booming so I wanted to basically go through the whole L2 space very quickly with all of you so you actually understand what are the l2s what why do we actually need it and what the future holds for sculling etherum I guess uh so very quick recap for anybody if you don't know so Layer Two is a category of Technical Solutions I to scale the base layer in a trust minimized we I think the trust minimized way is like the most important part here so basically what this means that you can uh process more transactions uh like this whole layer one ecosystem without losing its security guarantees so uh for example we at L2 bit kind of separate those l2s into two versions so there are like light l2s and strong l2s uh like rollups so what that means is basically on some systems when you will send the bridge the assets from L1 to nl2 if the L2 goes down you will not be able to do anything about it basically you are screwed but some solutions allow you to withdraw uh the money back to L1 uh without the L2 actually being live so we kind of want to propagate this uh this second uh types uh of those L2 Solutions because we think this is like basically the future that is the most secure for for all of us so as I mentioned we had we have 74 active projects and 81 uh is upcoming I think uh we'll add probably like 10 of those next week so it will be even more uh so as you can see the space is grow growing and why is it growing because we basically need it right so the problem with uh ethereum maybe not right now but back in a day uh like even couple of months ago was that the fees were like gigantic right so I remember when a layer for example were opening the deposits uh when I wanted to put some uh if uh there to you know reate it uh I had to pay around $100 for single transaction right so like if you want to an app that is kind of uh targeted to everybody all around the world like such amounts are just something that will basically kill the project uh from the start right so those l2s basically are cheaper and faster so like the transactions are like sub sent uh right now uh but at the same time you still have these uh different types of guarantees uh from the base blockchain uh very important statement there is no official to by the ethereum team so uh we are all expanding ethereum together uh all of those different teams that are building Al VMS that are migrating from building l1s to l2s all of those new base rollups uh all of those teams that are already established so they have like some kinds of protocols or other products out there they are all building together they are all bringing more users more developers and that way basically ethereum is like this tree uh the the branches are going into all different directions uh all at once which wouldn't be possible if we would have like just one big solution right uh so there are like couple of types of l2s so first I will be going from like the the ones that are uh that you need to basically trust uh more to those that are trust minimized so first type will be optimium so basically they use fro proofs and the data is hold offchain uh so what that what it means is basically all of the data uh about the chain itself is holded like in some dock or on some server in even some cases so basically if the team behind an you let's say you send their $100 the team behind the L2 decided that they don't want to you know do anything with anymore and basically they are gone and if they will shut down the the2 uh like immediately with fraud proofs we basically need to wait for 7 days before withdrawing uh so so you would not be able to withdraw any of the fs that's first thing and the other the other is that you don't know where the data about the state of this chain actually is holded so you basically are very very uh screwed uh then we have validium so basically uh they use validity proofs and the the data is calleded off chain as well so in this case you basically can withdraw uh a bit faster because they valid validate every single block uh so uh let's say with like for example zking the the time is only 20 21 hours right now so that's a lot better but uh still this is not perfect so those solutions for example right now are mostly star xes so kind of old technology let's say uh and all these polygon cdk and uh ZK stack projects with custom da solutions that are just like I mentioned you don't really know where the data is actually holded in most of the cases so also not not perfect but a bit better than Optimus for sure uh then we have optimistic rollups so basically you have fraud proofs and the the data is holded on chain so it will go down like the community can uh can still uh kind of G around and uh do something about it and then withdraw the money in a permissionless way so right now of course like the biggest optimistic rapsis optimis and arbitrum and in our um semantic uh approach we are calling uh all of the rollups that aim to be ZK in the future like tyon zirut optimistic rollups as well uh right now this is kind of uh still ongoing fight uh and discussion with all of those different projects but just so you know this is what what we are uh doing as an l2b and then we have ZK rollups so basically let's say like this future for all those different L2 Solutions so basically you have validity Pro validity proofs Plus on chain data you are validating every block which is in the a bit more expensive uh but at the same time uh Bas you can withdraw basically on it any time you want if the if the chain will go down if of course the architecture is uh is 100% uh done R and the biggest the biggest ZK rollups right now are of course scroll Z casing uh era uh Stark net and by consensus so as I mentioned those rollups are the the solutions that we are focused mostly on so there are this real trust minimized Solutions uh they are like marked green on our website so as I mentioned when the L2 will go down right so when the roll up will go down uh you can still withdraw the money uh with only uh uh L1 being active and since all of those L2 Solutions are posting the data uh on ethereum right ethereum has like those thousands and thousands of nodes all around the world uh world so even in case of like some war or some like if somebody would uh wanted to like seize all of those computers or whatever uh the chance that the whole network will go down is almost impossible right we we would need just uh just a bunch of machines and all of this would still work so as I mentioned we have those optimistic optimistic rollups so right now of course the leading solution is arbitr one uh it holds like 40% of the whole Market of all of the old2 solutions out there uh this is like basically one of the first teams that actually started building rollups uh but they focus on like at least like they were focused like even year ago on one single one single giant general purpose chain I think like most of the people probably use arbitrum at some point if you were in if Community uh and the other leading solution is optimism so they had like this completely different view so they just wanted to kind of Open Source their stack as soon as possible and no licenses or whatever and they would just get uh all of those cool uh other teams that need uh need their own chains uh and they got like this let's say cultural Advantage uh with Solutions like base for example for from coinbase right uh or or mode uh and many many others or Zora for example uh and right now top four op stack rups are equal to 40% of the whole market so it's almost the same as as barbit one uh but this is like around $ 226 billion but arbitro one recently you probably know about it but they uh also started chasing optimism and they launch this arbitrum orbits that you can deploy as Standalone l2s uh all L frees uh as well so I guess the conclusion is that the approach of optimism was the was correct at the end of course then are ZK rollups so this Market is a lot small smaller uh top 10 ZK rollups are equal to 11% of the whole Market uh so that's like seven times less than all of the optimistic rollups uh so yeah they are like they they didn't build like any Community uh like all of these other top optimistic ones but in views of the many like for example vitalic this is basically the end game for for sculling ethereum right so you you basically have this trust minimized chains uh all over the place that are deployed uh super quickly super easily uh and even if they will go down users are still able to withdraw uh so why even like all of those teams that I mentions thinking about launching their own rollups right so I think one simple answer is basically sequencer Fe right so if you are like a like wellknown used by many protocol like word coin for example on optimism uh they account for I think like 30% of all transactions on these specific chains uh and you know to basically send a transaction on the Chain you need to pay a fee right to the sequencer uh and if they account for 30% of it uh I guess that goes in like millions of dollars so like the natural thing to do like from the business perspective is to basically uh make sure that all of those fees would go to you uh so what they will be doing they are like partnering with optimism they deploying their own L2 and now like the whole system still works almost the same right this is like the same uh the same solution from the technical standpoint but all of the fees are going to them and they can maybe you know uh decide what to what to do with them in the future and also of course there are like other um um other answers to these question so basically maybe you have like a lot like huge user base that you can capitalize on maybe you want to do something that evm uh is not uh allowing you to do but you still want to focus on this uh ethereum security that I mentioned or maybe this is like an natural way to upgrade your existing protocol uh existing solution uh or maybe even you want to offer something unique right just for your users and it's like impossible to do without without your own chain uh so if you want to launch a roll why even choose ethereum as an L1 uh so this like also pretty important question right so as I mentioned those rollup chains are much faster and cheaper uh and if they will go down users can can withdraw the assets back to L1 uh without the chain being life uh and in the ethereum uh never goes down uh since the merch so I think it's like what four years uh right now uh and and uh the other uh uh think is that basically you have this different econom economic security uh approach uh from let's other proof of work uh networks like Bitcoin for example so many people are saying that uh Economic Security is kind of a mean I I personally believe in it so basically like right now like the whole I mean like at the time of this Justin Drake quit the Bitcoin Economic Security so like this like basically uh this 600 Millions uh of har rate uh was worth around 10 billions and like staking all of this if was worth 105 I guess after the price is being down a bit uh it's like by 30 or 40% lower but still it's like much much more than than like next leading L1 that is bit right so deploying those rollups is also something that was kind of hard to do uh even like three or two years ago right uh so like not many teams were actually doing it but right now it's it's became as easy as launching a token so uh if you are you know like if you are focused on any specific part of the market right so maybe you are building a deex right you don't really understand how to launch your own chain how to take care of the infrastructure uh but what you can do is to basically just Fork already existing open source Stacks like arbitrum or optimism Z casing polygon or Stark net uh and even if you don't know what to do with them you can there are basically companies popping up every now and then the like Caldera or conduit uh that that are called to roll up as a service providers so basically they they will they are work like kind of like Amazon web services right they will just take care of uh all of all of these things just for you uh and you just need to pay them like marginal fees uh every month compared to the money you can make from the C Sur pce uh or you can just do it like you know you can create your own attack from the scratch and modify it if you have big brain uh Team of Engineers behind your project that's always a possibility right uh so it's like as I mentioned it's super easy uh it's uh is it's comparable to launching a new token via one smart contract so right now uh we believe that there will be this next wave of L2 uh so like the first wave was like at the very start right that there were like those first iterations of general purpose l2s like optimism and arbitrum H then uh it was possible to basically Fork them uh and and build uh Ste on top of them but as your own chain and now uh since like everybody kind of realized how much money is in the rollup market and how easy it is to to actually build something uh with all of those existing St uh we have like this another giant waves just around the Horizon with all of these new alt VMS so basically chains that will allow you to not use SOL solidity uh for the your smart contract so maybe you will be able to use like your some special uh programming languages like naras take or sway by Fuel uh base roll apps like Tao uh rice and puffer I believe uh so basically instead of like the standard sequencer um architecture you would use uh ethereum nodes uh privacy l2s right so all of the transactions right now are rather public on all of those uh general purpose el2 but other teams just basically want to allow you to to do it in a private way like so for example Aztec or or or Alf uh and then of course up chains so if it's so easy to launch a chain so quickly you can basically if you are like these Decks that I mentioned you can just launch your own chain uh uh and deploy your decks there uh and this is like the only thing you can do on this chain actually you Channel all of the users to this one de and all of the fees from the transactions are still going back to you right so yes I so I believe that uh we will have something similar to the Muro at some point so those those l2s will double each year but at some point it will break uh and and we actually you know the money from the investors eventually will run out uh and those chains will start to die out and only a couple of them will actually survive uh so like what are those what are the problems to all of those l2s that are launching nowadays so basically the problem number one is of course liquidity so getting a lot of those different assets like like if or or Bitcoin uh on your chain so you basically can offer uh better uh uh environments to your users and devs uh so I would say that right now like this is like the main focus of all of those teams so you not only have interoperability protocols like hyper lane warh or zero working on Omni Chain Solutions uh but also you kind of see that all of these stack providers wants to fix fix it as well with stuff like a layer and super chain so basically if you will choose to build with optimism uh every single chain or or polygon cdk every single chain of course ZK sync uh is doing the same like every single stack provider will be doing this probably at some point um you can just basically get connected to this one shared brief each on L1 uh so you know let's say one giant company will be getting a lot of users and even if you are a smaller team you still benefit from uh from all of this all of this e being bridged uh and there are also voices that actually this should be by vitalik himself that this should be done by other uh public good focused company in the future but I think the small problem is that this is probably like uh who would fund it this is the first question uh and the other one is basically there is so much money uh to be to be won by by a team that will actually achieve this uh that's uh you know everybody wants to do it uh and even I think like roll up as a service providers like Caldera they plan to do do this meta layer so basically something like this shed liquidity uh like super chain but uh for uh inter Stacks that they are deploying as a r as a service so you can actually I I I have doubt that I think like basically first will connect all of those different Stacks with each other and then somebody will figure out the way to connect the stacks each other right so this will be uh this will this will be probably how it will go in I would assume one one or two years uh fre Toops and the problem number two is developers of course uh so the so the problem right now is that according to Electric Capital developer report from last year we have around 2,400 deaths in solidity so it's already you know the fragmentation is not only uh from this liquidity standpoint but also the deps uh but at the same time uh all of those different uh Al VM teams that offer their own rust most likely rust based uh language programs uh programming language uh are getting new users new programmers on boarded to our ecosystem as well but still I believe this is like just not enough to kind of fill the remaining block space and you can actually see with all of those already existing teams that they are just milking the the grants and stuff by just redeploying the same uh the same uh DB on all of those different chains so you can like this is a huge problem right now and I think you can't really fix it easily you just need to give it time right I think like this fresh blood is slowly slowly coming a lot of those developers are teaching the the younger ones so I think we'll get there but it will take us some time uh so very quickly what are the cost of running those rollups right so uh the main the most important thing uh in our opinion is how you store the data right so either you can use the blobs uh on ethereum after EIP 4844 or you can use any of those alternative Das that are popping lately so most notably Celestia andda uh but still like for example Bas made Millions out of sequencer Fe when they paid only 11k of the of if equivalent in dollars uh for for for those blobs so you can actually see that this is like not that not that important anymore uh uh uh since like six uh eight months uh then you need to basically you know uh maintain the infrastructure so you can if you are using rollup as a service provider you can just pay this uh fre in this I think is for conduit $3,000 a month but the problem I see is there that they you will basically share all of those multi and probably other pieces of infrastructure as well uh with other rollups so if something will happen to to cond do it uh uh you you might find yourself in a pretty difficult situation so maybe running your infrastructure by your own even though more costly is a correct way to go uh and of course basically getting those developers right getting those users uh running those uh incentivized programs uh and grants for them so of course most of the teams are using their own native tokens to do that so I guess this is not that not that hard um but yeah this is like executing it correctly is pretty hard I would say because if you incentivize everything nothing is incentivized anymore right so uh so like this is like real problem right now on all of those different uh different chains uh so as I as you as you see there are like many choices and the question arises which Tech should we actually use so this is where L2 bit is coming uh into the picture so we are doing those uh like we are getting Gathering all of these data uh from all of the different chains and we are the neutral Watchdog so uh you can be sure that we you know we we are not getting paid by any specific company to basically Shield their solution right uh we are we are not only Gathering the data on tvl on activity of those chains finality liveness like all of those metrics that I doubt you will find on other websites but we also build our own Frameworks and we spend a lot of time to to research those so right now we have two most important ones one is stages so basically this shows you how how much the rollups are actually decentralized so if a rollup is stage zero is basically run by the by the team behind it and when it's achieving stage two it's fully IM mutable rollup and the other one is risk rosset so basically there are those five uh possibilities of how you can lose your money if you will send it from if to to n of those l2s and we basically go uh line after line of each uh of each of those uh smart contracts uh uh for all those different l2s and that's how we how we know uh what's actually happening there so if you want to to visit l2b uh here is a QR code you can also just put lb.com I guess uh I will uh leave it here for like uh 10 seconds or so uh and basically since that you know this is like this neutral Watchdog that is not funded by anybody specific but rather by everybody as a collective uh even if you if you are a user if you're a developer you can just go there and you actually can easily check like the the state of the whole space and easily compare those different solutions with each other uh so brief introduction to these three levels of risks in Risk roset so basically as I mentioned there are five five different uh possibilities to lose money so we have data availability so it ensures that all the information needed to check the system is accessible to everyone uh uh we have state validation uh about making sure the system records are accurate and trustworthy uh we we have sequencer failure uh so basically uh it deals with the risk of the system operator bro broking or SL slowing down transactions we have exit window so what is the amount of time that you have to leave the system if uh there is an update scheduled that you don't actually like right if it's like is it like seven days or just like couple of minutes uh and proposal failure uh so basically uh what happens if the person or group responsible for updating the system pH can you actually uh Do Anything by yourself right can you actually withdraw the money uh that way so this is like a very brief uh explanation because I'm basically I think running out of time so if you want to to learn more I highly uh encourage you to do so because I believe that being like oriented and knowing about those different trust assumptions of those chains that you are using on the daily basis is pretty important especially with this account abstraction Focus uh nowadays uh I just don't want you to wake up someday uh and you know all of your money would be gone uh and uh probably like one of the last questions should everyone launch their own uh L2 so uh you actually need to know what you're getting into because we chains like PGN by gitcoin they didn't really know uh I think uh what the um different requirements for for the op stack so for example they didn't matter they didn't they weren't able to get a lot of users because they were only running Those gitcoin runs every couple of months so basically they didn't get a lot of fees from the transactions at at the same time they still needed to post the data on L1 so like they were bleeding money right the the cost of running the chain were just bigger than uh than just having uh uh than just M getting the getting paid by users right and then we have ens right so we also have like a lot of those core protocols for ethereum community that wants to focus on one specific stack provider so this is more like uh uh uh Vision uh question so do you actually want to for those core protocols to kind of associate themselves with the teams uh that are funded by some specific VC funds right uh and what future holds for all those Solutions so we are in this weird transition phase right now right so ethereum is calling but the if price somehow goes down with each with every single minute so we are scanning like crazy but uh we just as I mentioned we don't feel all of this needs we don't feel all of these block space uh seem like it's so easy to launch those chains but it's not easy to create a viable use case I would say uh and uh BL stuff like blobs is still waiting for the price Discovery in my opinion so like you you don't those those uh Solutions don't pay a lot to to if right now uh but we and the interoperability is uh just leaving the infant stage so I would say basically that right now we have a tech but we just need to kind of start really really working on those uh different consumer apps and stuff to actually uh um to actually you know fill this block space feel like create those different transactions and actually that way I believe in couple of years if we basically uh get a lot a lot of those speed uh from those from those al2s so uh I wouldn't worry too much about your Eve but uh you know it's my honest personal uh opinion so so yeah we are scaring everybody uh we did great for last couple of years and I think uh couple of another one holds like great things uh for this whole community as well so H can't wait when I will be buying the candy bar in the store uh on chain I guess so yeah that's all thank you very much for healing me out and I think I'm am out of my time so I'm not sure if there's a time for questions but okay uh thank you for your presentation Alexander kov fch Association uh first question I opened your dashboard l2b and uh can find that dydx uh moved from on uh L2 by ethereum to Cosmos SDK yep uh what do you think why oh I mean like I'm not from the idx team unfortunately so it's to me but expert but yeah but I think the they did it like actually some time ago uh and I think that was before we actually had this like like if you you remember my uh my waves slide so I think they kind of left just between the red and blue one so I think they just didn't have like the clear picture let's say and I think that was like this was like pretty close I think to the like this whole Celestia Mana right and like this like kind of uh uh reanimation of Cosmos chains uh so I guess they kind of been ited uh like on the start of it but like after after all of this time you can actually see that you know cosos think cosos is dying right so you think they can be back so uh yeah yeah like I mean as I mentioned it's like so easy to to launch those new chains right uh I think they were using starx uh so right now I think it's 10 times easier to launch with a much much better Tech uh and they would do it like faster and cheaper I guess uh than those ones so we may probably someday see them but I think that's also like mostly Business Development stuff and not really you know like Tech St right so I would rather say that there is just money money in play than you know like any specific Tech oriented features thanks and second one uh short question uh on your slide with um expensive uh $3,000 I see uh to keep yeah yeah to to to keep your own own uh yes yes uh mayet what what do you mean it's uh it cost for sequencer run no this is basically I think uh like everything they charge you for like basically they will do anything for you they will deploy the rollup uh from the you know you can just choose the the stock you can choose the a choose like you do you want to G be paid in e or your native token or whatever and you just pay them a flat fee every single month and they run it for you so you basically don't need to get involved with the rollup at all okay thank you any other questions uh yes uh what do you think about the up and cominging Bitcoin l2s do you see similar development there to the uh so the problem with Bitcoin l2s is that most of them are not l2s but side chains right so you don't really any like you don't really uh get any uh security uh from the from the L1 right mostly you just deposit your Bitcoin and get uh like random tokens uh for it so so this is the problem but I also at the same time believe that you know they like those hardcore bitcoiners didn't want to change anything for like like what 10 years or something and only now that they see that you know uh lightning network is not really working at any point uh and they just uh you know they they saw the that you know like paa do etherum every every single chain is doing this you know this uh L2 strategy right now so I think that's they they try at least right but also at the same time they're late by couple of years at least and uh also if we were not able to you know build those full fully scalable Solutions uh that are stage to for example right now with all of these sophisticated uh smart contracts and solidity and stuff I doubt that they will be able to do it with uh you know with the tech available on bitcoin right now right so it's very primitive in my honest opinion so all right so is it something you're like looking to cover if it gets more mature or you're sticking uh so we are sticking with only ethereum elus right now uh but I also know that a lot of teams are actually foring our repo and launching their own uh Bitcoin layers or Bitcoin Eden or something that is focused on that is basic basically based on our work our research and our code base uh but for those other other l1s so I think the space is space there is already taken by somebody else this is also what we wanted right so this L2 bit is this kind of like like like best uh uh best L2 Focus team let's say out there and like everybody can just this is like fully open source right this is a public good everybody can just take it and apply it on their own L1 right this was our goal as well okay and uh about um l2b as a company itself like what is it like to work there is it like most people used to research on L2 or like what are the uh I mean there's like 20 of us right now and I would say that half of us is technical so of course you need a lot of developers uh uh like you have those different teams right for different different features uh so right now if you for example launch ZK catalog so this is more like we are verifying all ZK circuits for ZK projects so this is more like a research uh focus of course you need a lot of you guys from front end to actually explain it to users in an easy to comprehens way uh uh but also you you need a lot of people to kind of you know take care of the business development site right now because like we are one of those teams that works with every single l on the market so as I mentioned when I was starting there was less than 10 of those so it was pretty easy but right now it's like 150 or so so you can kind of imagine how my telegram for example looks like right now right so so I would say that you need to like the the perfect perfect like person right now you can actually see it on all of these job job dashboards and stuff are people that are you know like bd/ marketing but also they understand the tech right so all of those Dev uh all of those different kind of similar career opportunities like this is something that is lacking and is is needed right this this is basically something unique for for all of these blockchain apps I believe you basically need to be at least a bit more technical to understand what is going on but I also believe that every single generation of humans is also a bit more technical like and that's I guess with all of the different AIS and stuff like everybody will be able to build an app or website in couple of years and they will not know how to code right so I think the this is like this younger generation will adapt those Solutions a lot easier than than the current ones I hope that explained your question yeah thank you so I guess this is the the last question that we had so thank you very much guys for staying so late again and and see you around the hakon