Should everyone launch their own rollup? - Hubert Kotliński | L2BEAT

thank you very much uh yes so just before I start uh I would like to ask how many of you actually used nl2 uh each any of you used okay so I will just ask really quickly okay which one did you use okay and and you guys which ones did you arbit room okay okay I'm just I I really like to ask this question before I ever talk uh okay so uh should everyone launch their own rollup brief Showcase of rollups ecosystem uh yep so very quick recap uh what is actually a rollup because as you know if you you have like Twitter account and you are checking what are researchers are tweeting from time to time actually a lot of these terms on in our space are like uh not decided yet let's put it that way uh that's why uh l2b created uh a glossary you can check it on lb.com glossary and every single one of those terms is actually uh out there so in our interpretation Al Tobit interpretation rollup is a blockchain that inherits consensus and data availability from another blockchain called L1 in this uh particular case of course ethereum uh rollups enable trust minimized Bridges with base layer via proof systems either optimistic or zero knowledge so uh long story short uh if you will Bridge assets from ethereum L1 to like this this r up uh chain uh if the rollups goes down you still can uh withdraw uh the funds using only L1 so right now we have around 27 active rollups uh I by active I mean there is a main net that that you can use and there is 29 upcoming uh ones probably some of them are still missing because they were announced not so long ago so as you see it's uh pretty different than it was like three years ago because at at that point on l2b there were like I think seven or or six project so you see the the space is growing really quickly uh and it's getting easier and easier to deploy your own rollup uh yeah so let's say you are like a company or a guy even like a single person and you are actually thinking about deploying your own rollups or deploying your own chain uh so why should you even think about it right so let's say you already like for example you have an established app like a wallet uh so for example Zion or wup or metamask even right those are a great choices so you have this app already and you have a huge user base and you basically uh like for example I will use uh wallet as an example right now so you can like you have this huge user base and you can like very easily Channel users to use certain chains by that so for example on metamask right now what you can see is when you like you can use of course like ethereum like uh as like the the main chain right but if you want to go to nl2 like so you want to go to the other chain where the when you you will Bridge there and the transactions will be cheaper and faster the like the the the default option for nl2 is linear right so consensus uh Layer Two so that way they can channel the users to their own chain and basically of course like they can earn thanks to that they can earn fees uh from all of these transactions they can all uh also like uh for example add another features today own uh existing apps or DBS or anything like that an existing infrastructure that wouldn't be possible if they would like stick with like you know the normal setup that they have uh yeah you can also like for example uh let's say e you are a solidity developer but evm is not suitable for your needs so maybe you want to have a like an other virtual machine so for example Stark net uh that allows you to for example uh use skyro right they have their own language they have their own own uh virtual machine Kyo VM and basically you can do like cool stuff with it like a bit uh differently than on on evm so for example but like those bundle transactions that I like so much on stet let's say maybe you are an L1 you already have like an established uh user base you have like your own noes you have your own token but maybe for some reason you didn't went mainstream and right now you can like very easily migrate from being n L1 to being to be nl2 uh maybe you want to upgrade your existing protocol so for example a good uh like the like one of the newest uh l2s that are focused on this particular example is ens I know that you probably heard about it uh ens wants to launch their own L2 this is like for them it's like a natural uh extension of their protocol The Next Step the next step in their evolution uh and they are leaning toward ZK stack uh to do it uh and of course like maybe you like you only want to use an existing tag drop some additional stuff some marketing sprinkle some incentives and basically earn easy money like uh there are many choices so basically uh yeah what why I'm like talking about those certain uh uh possibilities because there is there is already uh a rollup that is doing something like that as you can see so for example base like is from this coinbase ecosystem they have the uh centralized exchange and what they can do is that they can very easily Channel everybody from the from their own ecosystem to like the their own L2 so there are like you can use like Sexes for many things right now but they are limited in a way uh and like basically um like the whole defi the whole like blockchains are also really cool they allow a lot of stuff to be done that you can do on Sexes so for example they can easily uh channel the user they have this their own solution they can channel the users from the like coin coinbase wallet from coinbase sex or anything like that and uh then they can like you know they are basically starting they had like they are like super ahead of everybody else thanks to that right uh or maybe there like for example uh there is like this uh chroma uh protocol that basically uh what they did they took the opack technology and they added the uh scroll ZK evm on top of it they merg it basically they saw an opportunity let's say uh and they might they like connected uh two pieces of tech together and that way they basically made uh an OP stack uh rollup that actually has some kind of fraud proofs in a way right so there is like the the whole ecosystem is like uh really vast uh and I will try to uh talk about it in a detail right now so maybe after this talk you will understand it a bit better so yeah actually why choose ethereum rollups in particular so let's say as I said you want to launch your own chain so why shouldn't you just launch a new L1 right so there is a problem with launching new l1s and basically you need to do everything by yourself so you need to take care of the like setting up nodes right you need to like decentralize it like like in ideal way you would have like couple of uh notes on each continent for example right so that way they can be like shut down very easily uh you would need to have like your own uh Native cryptocurrency so like eer for example right you would need to set up this whole economic security by yourself and it actually takes first things first a lot of money a lot of time uh and you might fail along the way right so in theory uh the easier way to do it right now is to actually connect to something that that already has established those things that I talked about and in our case ethereum right or any other L1 you can connect to this L1 create another blockchain you post the data you like uh you can bridge between them in in any way but what you are doing you are basically uh taking this Economic Security uh from them by for example posting the like the data about all the transactions that happened on your chain on this particular L1 and that way if your chain like for example has I don't know like it can only has like three nodes for example if it goes down all of these nodes are destroyed thanks to like correct implementation uh all of the data is available on on ethereum and then you canot only like for example withdraw the uh the money the like using the smart contracts uh but also when the for example the chain goes up again like whole history is uh still uh available right you can like basically you have this super nice uh copy of it on ethereum and ethereum as we know it has like thousands of nodes all across the globe so like uh an event in which like ethereum goes down is like very uh hard to imagine actually right now and also you have of course eer so uh it's uh right here there is a tweet from Justin Drake uh that compares Economic Security of two at one so Bitcoin and ethereum and my in my opinion is very uh important because for example on bitcoin if you like the the whole Economic Security is over 10 billions so if you would like to do a 50% attack on on this particular a one that you are uh if you have this L2 uh you are dependent on you are basically uh betting that there will be nobody uh with so much like uh money to get this hash rate to actually take take over the network and if it take over the L1 it also takes over dl2 in the process as well right so in ethereum uh you have like uh proof of stake so to control ethereum you need to have 66% of the whole stake so it's a lot like harder to do right now The Economic Security is uh here it's for uh 3,400 per e but uh I believe right now it's around 3,800 right so it's even bigger so over 100 billion dollar of Economic Security uh the possibility that somebody will buy so much if to make so many notes to actually control the 66% of the network is a lot lower than to do it with Bitcoin in my opinion at least uh yeah so let's say that you think that ethereum is like the correct choice for your chain uh so you want to make this rollup so uh the next thing is you need to to choose the type of the rollup right now there are two main approaches so you can do a ZK rollup optimistic rollup I will not talk about hybrids that are slowly popping up here and there because there are really complicated cases so let's say right now for the purpose of this presentation there is only ZK rollups and optimistic rollups uh in the like pure uh implement mation so ZK rollups of course uh when they are posting this data that I mentioned to L1 they are validating every single block via ZK proofs uh which is a bit interior a bit more expensive but also there is a lot of like security connected to it as well and then you have optimistic rollups that post those data and if there is no entity or individual that is saying that like the data that they are posting to L1 is incorrect uh uh it is taken as as the truth right you have this seven usually 7day uh period of time and you can challenge every single block right so that's for example uh is when you are like bridging stuff to to optimism or like I don't know arbitrum you need to for example to withdraw you need to wait for those uh seven days right it's connected to this exact uh thing with ZK rollups you you in the should do it like immediately or in like very short span of time but right now a lot of those them have like this like additional time period in which you need to wait to withdraw for example ZK sync you actually need to wait 20 21 hours uh to withdraw from zking era like in the like the end game it shouldn't be like that it should be like instant thanks to ZK proof so yeah optimistic rollups so as you probably uh mentioned already I think there is arbitrum one right everybody is using arbitrum one they had like one of the first air drops uh ever uh for l2s right now they control over 40% of the whole L2 market so that's a lot and this is like a single chain right uh but also you have op main net so optimis like the The Pretender uh The Pretender for the first place that actually uh controls only 70% of the market but they have like totally two different approaches so arbitrum is as I said like this single giant big powerful chain uh of course you have like arbitrum orbits here and there but they are not as significant at least right now uh as others and but optimism has an approach of super chain so basically they have the op stack is public right you can use their code uh and you don't need to like partner with them in any way but you also can take their code and partner with them and basically for example share stuff like retr pgf or like Optimus incentives in op tokens of course uh and like development of the op stack in general right so now the biggest like chain that chose to do that is of course base that I already mentioned by coinbase but also there is uh blast I'm sure you heard about it uh so if you combine the top four Opa cups they actually control 31% of the market so a bit higher than arbitr one so yeah very um interesting case here for sure uh and also like one uh important thing to mention is that uh base like the the chain that is using optimis main technology is actually getting really close uh to beit optimism in tvl so yeah you can see that he maybe this is like this super chin theory is a correct right yeah and total of dvl of all optimistic rollups is close to 40 billion so I would say right now a lot and then you have ZK rabs market so uh right now if you combine all 10 top 10 ZK rollups so Linea stet ZK sink eras scroll polygon ZM and others uh they control like together 10% of of the whole market so a lot less than optimistic rollups you can still be pretty optimistic about uh optimistic as at Felton is saying the CEO of arbitrum uh and the total tvl is slightly less than5 billion so also it's a loss is it's it's 10 times less but vial ban the I I'm sure you know him he says that ZK rollups are the end game right so that the optimistic rups are only here for like the a bit shorter span of time maybe like 10 15 20 30 years and then ZK rollups will uh become the like the main rollup implementation yeah so let's say you decided to either go with optimistic or ZK so right now you need to deploy your rollup right so how to do it so as I said you can use one of the providers so arbitrum orbit stack Stark net polygon zvm or ZK stack those are the five core Stacks I would say right now uh they come with their advantages and disadvantages we don't have time to go into like every single one of them but I strongly suggest to check it out uh or if you don't want to do it by yourself you can use uh rollup as a service uh provider that the guy before me was talking about so basically there are companies that are working kind of like cloud services in a way and you just go to them you are clicking Sometimes some buttons like on uh AVS for example and they are deploying the rollup for you right so it's super easy uh it was never easier uh in in our history to actually deploy uh a chain and you are paying them a small fee so for example like I think for conduit it's like 3,000 ,000 uh dollar every month I think something around that so a lot less than if you would need to do everything by yourself right or you can create your own uh or modify your own Tech uh maybe you are a genius and actually you thought about something that none of these ethereum researchers uh thought about till now be my guest I would love to hear about it after the talk so if you actually deployed the rollup there will be a couple of problems for you so problem um number one is liquidity I'm sure you uh try to farm some air drops here and there like for example by sending if or or usdc or doing some transactions on those uh on those rups so right now there is the there is this liquidity fragmentation problem so you have a lot of chains that are not connected with each other uh that you bridge FS from ethereum and for example if you want to make like let's say say trade tokens or uh or do anything similar right there is not enough liquidity between them and sometimes you transaction is failing because of that right um so right now what are your choices you can go with uh like trusting um interoperability protocols so like layer 0 one H or hyper L some of them are permissionless some of them you need to like officially partner with uh they will allow uh you to like easily Bridge tokens between like different uh Solutions not a perfect um thing from like the user experience because like for me personally when I need to like search for the correct Bridge uh to actually send the token that I want to to another L2 it's no it's very uh it's not perfect let's let's put it like that then you can have like a shared liquidity so right now there are like some new uh ideas popping up here and there so for example I'm sure you heard about uh a layer by polygon so what they are doing is that uh when somebody is using the the stack so polygon Z AVM stack they can uh opt in to this ug layer idea and basically there is a one smart contract that is like uh responsible for for bridging and everything that you are bridging to like the certain chains so for example polygon ZK evm or asra ZK evm or uh layer X that change that are using uh this stack they basically they all of them can use the the same the same liquidity right and basically I think right now there are talks uh in optimis ecosystem to have something similar for super chain but I'm just not 100% sure uh if that will happen so uh do your own research and also there is a chance that there will be like a new other solution to quickly move assets from one L2 to another that vitalic proposed not so long ago that will be like operator free and governance free but I just didn't hear about something like that yet if you did let me know after the presentation as well so the problem number two will be developers so basically uh you can go with like standard evm implementation so you know developers will use solidity uh to make apps smart contracts anything on your chain um but evm is not perfect for every single use case right so maybe you would rather choose some other virtual machine so if you don't don't know what those virtual machines are doing they are allowing you to write smart contracts in other languages right so for example if you have like Aztec if you choose Aztec virtual machine you can write smart contracts using their own language called Noir like for fuel VM it's way for CYO VM it's Cairo uh and so on and so on for eclipse the upcoming L2 they are using Solana virtual machine so you can write smart contracts in Rust for example and my personal um thing that I would like suggest you is to check out Electric Capital developers report and you can actually check how many active deaths are there on this particular uh chain right so for example how many are using arbitrum stylus how many of them are using evm so on so on uh because if you don't have developers on your chain your chain will become dead sooner or later uh okay and so what cost should you anticipate so of course you need to post this data somewhere right to to have this like as I said this safe safely keeped uh copy so you can uh either choose ethereum as your as your da layer so you can post the data SC data or use blops uh following the EIP 4844 I'm sure you heard about it which are a lot cheaper or you can use like alternative da so uh till now your choices were quite limited uh for example like I mean like last year but right now you have Celestia you have a DA you have the blobs that di menion uh there is aail main net coming as well so there are a lot of choices that offer like different pricing uh offer different additional perks so you would need to again do your own research uh and check which one is more suitable for your needs of course you would need to pay in for infrastructure either your own if you deployed it by yourself or pay roll up as a service provider and also grants so this is a particularly tricky case because if you if you need to spend hundred of millions of dollar to get people build anything on your chain does your chain actually should be existing right uh but on the other note you can have these cool grants uh like Optimus retr pgf or arbitrum shortterm incentive programs that actually are allowing developers to build something cool and actually grow these ecosystems in a way uh as well right so so yeah this this one is tricky and uh you should for sure like plan it uh beforehand so as you see there are so many choices and basically right now we are probably uh overflowing with new informations uh and you are thinking which Tech should I actually use right so it would be like super cool if there would be a neutral ground where all of this uh knowledge is gaed in one single place curated by somebody that you can trust because you know if you will go to Optimist space or arbit spaces they of course will say that their Tech is like better in this way or another over their competitors like natural uh ways of thinking right of companies but actually uh you have uh lb.com uh the website that I'm helping U creating so what we are doing we are gathering all of these data everybody that you that everything that you uh uh that was shown on this presentation is actually from our website so our two like core let's say uh dashboards that we developed is stages and risk roset so risk roset shows you what can happen to the fs that you send from ethereum to those l2s so for example if they will want to do a malicious upgrade that will result in your lose of funds will you have time to will you have like an exit window period when you can withdraw uh or is like they like posting the data somewhere that you can actually uh like trust them right so so this da uh piece of uh of this spy that we call risk roset and also like for example what will happen if the sequencer goes down like if you can actually even uh propose uh new blocks uh will the chain even like still exist right and also you have stages so basically uh those are for the centralization so this is showing you how much of are those rollups decentralized compared for example to ethereum right so if you if the rollup is stage zero it's still in the centralized period of its lifetime if it's stage two it's like fully truly immutable rollup and spoilers ahead there are not many stage two rollups right now I think there is like only uh two one of them has $100 on it so not used too much uh and the other one is uh the centralized exchange that forked from uh other uh L2 implementation and they already had to uh redeploy three times because they found bugs and due to being an immutable Orab it was like impossible for them to make like an uh immediate upgrade right so they had like to redeploy to secure users funds so yeah if you want you can uh visit our website scan the QR code uh and check everything that I was uh talking about till now I will like give you three seconds if you want to do it so last one two three yeah and uh to end this presentation I would actually want to uh uh not answer the uh the question in the in the title but like ask some questions to you as the whole ethereum Community right so should everyone launch their own rollup so as you probably heard about those two cases maybe like ens is pretty fresh one but public goods network uh was a biggie uh here and then so basically uh ens announced that they want to build their own L2 this is the evolution of their protocol right and they are strongly leaning from what I know at least uh to ZK stack right so the question to the community is uh is like a protocol that is like a core piece of ethereum should actually like lean towards certain L2 provider right so L2 solution so I'm not going to answer this question I just want to leave it like that uh and then we have public goods Network case so basically if you don't know gitcoin launched their own L2 uh using op stack uh and due to like some from mismanagement here and there they had to shut it down and due to various op stack uh implementation details for example there is a problem now with the funds of users uh it's like basically gitcoin was bleeding money because of this project uh it it was like costing a lot to maintain it they didn't have enough activity here and there to actually cover it uh by Fe for example right so they have to shut down it and due to the op stack not having fraud proofs there is a problem uh for users to actually withdraw the money that they have on it there is like I think couple of millions of dollars there uh they will have the problems to actually withdraw the money back to L1 right so maybe in like particular cases in for particular protocols you actually shouldn't try to launch your own chain but rather maybe stay on ethereum or like use like other already existing implementations yeah and basically uh that's it thank you and if you have like any questions about rollups l2s I'm here to answer them we have time for one quick question I just wait for the mic yeah thank you for the talk um I just wanted to ask what is the relationship between stages and the risk rosette is the stages like a mapping of the risks in the rosette or is it something completely different uh no this those are like completely different so risk rosette is uh what like five things that can happen if you will Bridge your Farms to the L2 right to the rollup uh so do you have time to exit what will happen if the sequencer goes down proposal goes down do you is the data is like that is available somewhere uh and the last one that I forgot right now uh and stages are like about the centr ization so for example is there a security ccil like properly set up is there is like uh like all of this like is the project actually calling itself like a rollup let's say for example is there like uh a governance uh that allows you to you know like make the uh updates in like after like a period of time uh for voting right so that the whole like all all of the token holders can actually agree on that and so on so on yeah would it be fair to say that uh moving up the stages is uh and is a solution to the risks that described in the rosette like we're decentralizing to solve the risks uh not necessarily uh actually not necessarily to be honest those are like two separate cases uh because you can have like uh um I mean you can for example have an imut fully immutable rollup uh that has like admin keys right for example but you can still have like for example stage one rollup right that has like some of the red parts of risk croset there is like no problem with that like for example right now I think the only like general purpose rollup that is stage one right now is arbitrum so I would suggest like uh looking at it they they have like their wh listed uh fraud proofs uh so yeah this is B basically I think the best uh thing to uh check out on our website so you will know that I can also talk with you after the presentation a bit if you want okay thank you guys much