Vitalik Buterin: Scalability is one of the biggest challenges, Layer2 is the future of Ethereum scalability.

Vitalik Buterin believes that implementing Layer2 for Ethereum scalability is currently the safest solution, with Rollup being the only viable scaling solution.

(This article is authorized to be reprinted from ChainNews, with the original title "Vitalik Buterin's Speech at Wanxiang: Layer2 is the Future of Ethereum Scalability," original article here)

On October 26, the 7th Wanxiang Blockchain Global Summit was held at the W Hotel on the Bund in Shanghai. Vitalik Buterin, the founder of Ethereum and Chief Scientist of Wanxiang Blockchain Lab, shared his views on the current hot topic of Layer2 scalability through online live streaming. The following is the content of his speech.

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Scaling as One of the Biggest Challenges

Recently at the Wanxiang Summit, I have mentioned multiple times, as well as in other summits, the theme of scaling, which is one of the biggest challenges facing the blockchain industry. Among the biggest challenges we face today, such as the effectiveness of blockchain in decentralization and security, it can only handle a very small transaction volume, meaning its TPS is very limited.

A few years ago, this state of the blockchain did not pose a significant problem for us because there were not many users on the blockchain before. However, recently we have seen many people wanting to use the blockchain, and this number is growing every day. People also want to do more and more on the blockchain, and the number of such people is increasing.

Now there are various applications emerging, such as DeFi, GameFi, and many scenarios that people want to achieve. This means that the blockchain must scale to provide the space needed for all these applications.

There is a simple way to achieve blockchain scaling and a difficult way. Let's start with the simple method, which is to increase parameters such as block size and Gas limit to significantly increase the transaction volume we can handle. However, the problem with this method is that while it seems simple, it sacrifices decentralization. That is, to achieve this kind of scaling, by creating a massive system, each individual node in the huge system needs to process a large amount of data. Such a system is likely to lose its decentralization because few people operate such large nodes.

Another method to achieve blockchain scaling, which is more sustainable, is Layer2 technology. Layer2 technology is diverse and complex, with some using Lightning Network, others utilizing state channels, and others employing various other solutions.

The Only Viable Scaling Solution "Rollup"

The most common technology we see is Rollup. The concept behind this technology has taken many different forms, starting in 2014 and formalizing by 2019.

In 2019, I published a blog post, as shown in this PPT, where I outlined a technology roadmap centered around Rollup. In it, I wrote that we need scaling, but for Ethereum, achieving native scaling would take a long time, i.e., implementing sharding where transactions could be processed within each shard, overcoming many technical challenges, requiring a significant amount of time.

So we must wait a long time to achieve native sharded scaling for Ethereum. Rollup is now our solution. We have seen different versions of Rollup projects on the market, and we know that Rollup is useful and versatile, significantly improving scalability, at least up to 100 times.

Data sharding is a simpler form of sharding, not building a powerful transaction-handling shard, but rather creating a shard for storing and verifying data, a simple form of sharding.

Through this sharding, we can enhance Rollup's scalability further, potentially by another 100 times. By scaling through Rollup, we can achieve scalability, and we are well aware of it. For Ethereum, Rollup is the only viable scaling solution.

Various Optimization Solutions

The difference between last year and this year is that last year, when we used Rollup for scaling, most were theoretical projects. Loopring existed last year, while other projects did not. But this year, many Rollup projects have launched their mainnets, with their transaction fees significantly lower compared to Ethereum's transaction fees.

I believe these numbers, i.e., transaction fees, will further decrease, and I have seen many optimizations in this regard. Regarding how to use Rollup to reduce the amount of data that needs to be stored on the chain, by doing so, we can further reduce the Gas fees required for Rollup transactions. For example, Loopring has implemented many optimization solutions, making it at least 30 times cheaper than Ethereum.

There are also Arbitrum one and Optimism, these two Rollup solutions have not implemented any optimizations yet, but they are working on it. Once they incorporate optimization solutions, these two Rollup solutions will become even cheaper. Therefore, with such Rollup solutions, transaction fees can significantly decrease, at least much lower than last year's transaction fees. If sharding can be implemented, transaction costs can further decrease.

Optimistic in the Short Term, ZK in the Long Term

Currently, there are various Rollup technologies in the market, each with many technical components. There are two main branches of Rollup today, one being Optimistic Rollup, which uses a security solution, and the other ZK Rollup, which uses zero-knowledge proofs. Optimistic Rollup and ZK Rollup each have their own advantages.

Optimistic Rollup

For Optimistic Rollup, its technology is simpler, making it relatively easier to build Optimistic Rollup, especially for general applications like Ethereum smart contracts. ZK Rollup technology is more complex, but it offers higher security and supports fast exits, unlike Optimistic Rollup, which requires a one-week waiting period for exits.

ZK Rollup

Technically, ZK Rollup's technology is not yet fully mature, but I believe that in a few years, ZK Rollup will support a complete version of the Ethereum Virtual Machine, allowing users to use ZK Rollup technology.

Short-term-wise, Optimistic Rollup is a viable option, but in the long term, I lean towards ZK Rollup. Once we have data sharding, ZK Rollup will have other applications. I am also contemplating some enterprise-level applications, which will be possible once ZK Rollup matures.

There is no need for a separate chain; you can use ZK Rollup, which is connected to Ethereum, with low costs, and you can benefit from being able to interact with the Ethereum ecosystem, gaining the advantages provided by the Ethereum mainnet.

This technology has made significant progress, with many projects gradually moving their applications to Rollup. Or many projects have started considering how to build their projects within Rollup. However, there is still much work to be done step by step, such as applications, infrastructure, and more.

Different Applications, Varying Migration Processes

If you are an application developer, you must actively seek ways to migrate your application to Rollup as quickly and securely as possible. For non-financial applications, migrating to Rollup is more critical because it can significantly reduce costs, which is essential for non-financial applications since their users are not willing to pay high transaction fees.

Many applications form a complete system, where users expect to interact with other applications, such as games. Taking the example of the Dark Forest game, a fully decentralized game based on Ethereum, it is a prime example.

It is currently running on a testnet and can be migrated to Rollup in the future. NFTs can also be moved to Rollup. This means that infrastructure can be moved to Rollup, and financial services, such as applications that use cryptocurrencies for payments, can also be migrated to Rollup, as well as DAOs, which can soon be moved into Rollup.

For different applications, the entire migration process varies, and each application needs to consider whether to fully migrate to a Rollup, support all Rollups, or continue to exist on Ethereum while establishing cross-chain bridges with Rollup. Each option needs to be carefully considered. Next, I will discuss the core part of the entire ecosystem - infrastructure.

Ethereum Infrastructure

ENS

For users, infrastructure is crucial. ENS represents Ethereum's Domain Name System, a decentralized domain system based on Ethereum. ENS is a very important infrastructure, with many Ethereum users using ENS, just like I have an ENS domain, and many other Ethereum users have ENS domains. My own blog also has an ENS domain.

If you visit my blog, you can see it. I expect more and more people to use ENS in the future. The current issue facing ENS is that all functions are implemented on the mainnet, resulting in very high transaction costs, which is the challenge we face in infrastructure. By migrating ENS to Rollup, ENS can exist within Rollup, potentially resolving this issue.

Light Clients

The second infrastructure is light clients. If we want the Ethereum system to achieve true decentralization, we need secure light clients that can access not only the Ethereum mainnet but also cross-chain bridges and Rollups. That is, easily transitioning from one Rollup to another, a cross-chain. In this scenario, there is no need to wait for a long time.

Proposal EIP-3668 allows ENS and other applications to migrate to Rollup, a generic proposal that also permits Layer1 smart contracts to specify where applications or information about Layer2 states can be obtained and verified. This allows verification of information by a lightweight client without the need for verification for Layer2 data. Additionally, you have ENS domain names that can be registered, updated on Layer2. Regardless of which Layer2 it exists in, users can see this information and view information from various Layer2s using the same software. This prospect is exciting.

Light clients allow a node to verify the blockchain without running a full client or verifying each transaction. Light clients are crucial for achieving decentralization in the blockchain ecosystem.

What we are currently doing is upgrading to PoS and supporting light clients, allowing light client systems to be equally robust on PoS and PoW. It has an algorithm that enables light clients to verify blocks. These blocks are signed by a committee, enabling a secure client to access the blockchain without trusting a centralized server.

However, the light client system itself also needs further expansion to migrate to the Rollup system. This is crucial, as we still need to maintain decentralization and continuously strive to apply this upgrade to all Layer2 protocols.

Conclusion

Layer2 is the future of Ethereum scaling. Using Layer2 for Ethereum scaling is currently the most secure solution. For Ethereum scaling, maintaining the network's decentralization while implementing functionality is crucial because decentralization is the core of blockchain.

Currently, Rollup compatible with the Ethereum Virtual Machine has emerged, providing strong scalability while ensuring performance. It also maintains the user and developer experiences. Therefore, developing for Rollup is equivalent to developing on Ethereum, with only minor changes. For example, the block generation packaging method is different, but its virtual machine remains the same, ensuring that all of Ethereum's capabilities are preserved while maintaining the essential attribute of Ethereum's decentralization.

At the same time, we need to continue building infrastructure, enriching the ecosystem, and ultimately achieving Ethereum's scaling path. We already have a clear development roadmap, with a large part of it already implemented or in vigorous development. I look forward to more exciting achievements in the future, and I am thrilled about the current state of the entire Ethereum ecosystem. Thank you.