While making a speech at the 2021 Shanghai International Blockchain Week, Ethereum co-founder Vitalki Buterin suggested that Layer 2 was the future of Ethereum scaling and the only way to safely scale the network while preserving decentralization.
Buterin revealed that the initial phases of Eth 2.0 would soon be launched, and the Eth 2.0 roadmap would offer scalability. However, base layer scalability for applications will come as the last major phase of the upgrade, which could be years from now.
Ethereum scaling is not just an idea, but a clear roadmap where many pieces of that roadmap have either been developed or already been released or are well in progress.
Efforts to make Ethereum more scalable, secure, and sustainable have been going on behind the scenes, and the Eth2 upgrades are being deployed progressively.
The first Eth 2.0 upgrade, “Beacon Chain upgrade,” was implemented in December. It introduced staking to the Ethereum ecosystem, and the Ethereum mainnet’s merge with the Beacon Chain’s proof-of-stake system will signal the end of proof-of-work consensus. The Merge is scheduled to take place in 2022.
After the Merge, “sharding” is next on the development plan. It is a multi-phase upgrade to improve Ethereum’s scalability and capacity through the use of shard chains to spread the network’s load across 64 new chains.
Going further, Buterin admitted that the need to make Ethereum more scalable is a top priority, but Ethereum’s native scaling (sharding) would take a long time. Therefore, “Rollups,” a Layer 2 solution that handles transactions outside the main Ethereum chain (layer 1) but posts the transaction data on layer 1 was launched to cause a significant increase in scalability up to a factor of 100.
Layer 2 solutions that have been launched so far include Polygon Hermez, Loopring, ZKSync, Optimism, and Arbitrum One. Buterin pointed out that the current cost to transfer ETH on Polygon Hermez is $0.25 compared to $6.84 on Ethereum.
Buterin admitted that Ethereum had embraced rollups as a scaling strategy for the near and mid-term future, and optimistic rollups, which are easier to create, are likely to be preferred in the short term. However, ZK rollups, which are way more complex but more secure, were likely to be preferred for the long term.
Zero-knowledge rollups (ZK rollups) run computation off-chain and submit a validity proof to the chain, and are much faster than optimistic rollups, which can take about a week for withdrawals.
There is still a lot of work to be done despite the upgrade in technology and applications to rollups, and Buterin urged application developers to actively work on adopting rollups as soon as it is safe enough.
Finally, Buterin added that non-financial applications could switch to rollups to help reduce fees as users were growing weary of high fees.
Other applications that could benefit from rollups are NFTs, Ethereum Name Service (ENS), light-clients, and decentralized autonomous organizations (DAOs).