Ethereum Scaling for Dummies Series

Scaling For Dummies #1

Sequencers are the 'transaction organizers' for L2 networks, ensuring cheaper, faster transactions on Ethereum. They batch transactions and send them to the L1, earning a fee in the process.

Scaling For Dummies #2

Shared vs decentralized sequencers:

Shared sequencing is a network service, creating a mega block for multiple rollups, promoting interoperability.

Decentralized sequencing, on the other hand, assigns a dedicated sequencer army to each rollup, allowing for tailored mechanisms and easier collaboration within the network.

Scaling For Dummies #3

Validium is a scaling solution that ensures transaction integrity via validity proofs like ZK-rollups, without storing data on the Ethereum Mainnet.

Despite trade-offs from off-chain data availability, it significantly boosts scalability, processing around 9,000 transactions per second or more.

Scaling For Dummies #4

Settlement

Transactions on a validium are only confirmed after parent chain verification.

All validium activities must be settled on Mainnet.

Ethereum blockchain ensures that off-chain transactions, once committed on-chain, are irreversible.

Scaling for Dummies #5

EVM-based rollups, seen as computational shards, face issues as more applications share the same VM, leading to a scarcity of CPU capacity and network congestion.

However, Application-specific rollups, which allocate individual CPUs to applications, can mitigate these issues, ensuring high performance and efficient dispute resolution.

Scaling for Dummies #6

Monolithic chains integrate all key operations such as consensus, data availability, execution, and settlement within a single layer or closely-linked chain group.

Scaling for Dummies #7

Data Availability ensures that once a block with all its data and transactions is published by the proposer, it becomes accessible for other nodes to download and store upon request.

Scaling for Dummies #8

Modular chains, unlike traditional ones like Bitcoin, offer flexibility by focusing on weak spots. They respect base trade-offs and can prioritize security, data availability, or execution as needed.

Scaling for Dummies #9

Atomic Execution across multiple rollups is tough. Sequencers can promise atomic inclusion, but can't ensure atomic execution due to the potential failure of complex DeFi transactions. Achieving true atomic execution remains a hurdle.

Scaling for Dummies #10

Layer-2 solutions enhance cost efficiency by processing transactions off-chain, reducing fees and congestion on the main blockchain. This is crucial for microtransactions, making more applications viable and expanding blockchain technology's potential use cases.

Scaling for Dummies #11

Securing L2 transactions on L1, to leverage L1 security, hinges on L1 block time. The need to wait for L1 finality, confirmation, or just L2 confirmation varies based on your application's specifics.

Scaling for Dummies #12

ZK proofs are an encryption method enabling parties to prove and verify information without having insight into the information itself.

Scaling for Dummies #13

ZK-SNARKs are used to make cryptocurrency payments more private, while ZK-STARKs are now widely deployed in Layer 2 scaling platforms. ZK technology has other potential use cases in identity and authentication.

Scaling for Dummies #14

The transparency of ZK-STARK is a prominent highlight in the zksnarks vs zkstarks debate.

Unlike ZK-SNARKs, ZK-STARKs do not require a trusted setup phase, ensuring no compromise or future vulnerabilities. With public verifiability and anonymity, ZK-STARKs prevent the creation of false proofs.

Scaling For Dummies #15

Users can seamlessly move funds from Ethereum to a validium by depositing ETH or ERC-compatible tokens into an on-chain contract. The validium off-chain credits the user's address, and the operator includes the deposit in a batch.

Scaling for Dummies #16

Validity proofs, such as ZK-SNARKs or ZK-STARKs, are used to verify the correctness of state transitions without revealing sensitive information. These proofs ensure the integrity of off-chain computation in ZK-rollups.

Scaling for Dummies #17

An advantage of zero-knowledge proofs is that proofs can verify other proofs. For example, a single ZK-SNARK can verify other ZK-SNARKs. Such "proof-of-proofs" are called recursive proofs and dramatically increase throughput on ZK-rollups.

Scaling for Dummies #18

ZK-rollups stores data needed to recover the off-chain state on L1, which guarantees security, censorship-resistance, and decentralization.

Scaling for Dummies #19

Entries and exits

Users deposit tokens in the ZK-rollup contract on L1.

Operators submit transactions to the rollup. Users can transact by sending transactions to the operator.

Balances can be verified using hashing and Merkle proofs. Withdrawing to L1 involves initiating an exit transaction and providing proof of inclusion.

The contract executes the exit transaction and sends funds to the user's chosen address on L1.

Scaling for Dummies #20

Merkle proofs don't work well with rollups because rollups store transaction data on one layer (L1) but process it on another layer (L2). Sending a Merkle proof w/ a transaction is expensive, costing around 638 gas per layer. If we have 1024 words of data, a Merkle proof would require ten layers, totaling 6380 gas.