Is Eths Layer2? Understanding Ethscriptions Virtual Machine and its positioning in one article
What is the difference between ESC-VM and the existing Layer 2?Author: Arrow Talk, Sleipnir Research
"Ethscriptions is a protocol aimed at allowing users to share information and perform computations on Ethereum L1 at a lower cost. It bypasses the use of smart contracts for storage and execution by applying deterministic protocol rules to Ethereum call data to compute state."
I first learned about eths in August of this year, by which time it was no longer a new concept. Various inscriptions were everywhere, and many people regarded it merely as a copy of BRC-20.
Moreover, there was absolutely no enthusiasm for this concept on Twitter at that time, until today when I saw various experts discussing whether eths is a Layer2, which piqued my interest.
In the evening, I searched various media outlets, and it seems there was no popular science explanation for the concept of Ethscriptions Virtual Machine (ESC-VM), so I decided to write an article to clarify what this is, aiming to avoid technical jargon and explain things clearly.
Layer2
Let’s briefly go over Layer2. This concept should be relatively clear to everyone. Previously, I wrote a series of articles on mainstream Layer2 scaling solutions like OP Rollup and ZK Rollup, with OP Stack as the main topic for chain SaaS tools. We will not reiterate many basic issues here.
The core problem that Layer2 aims to solve is scalability and reducing transaction costs.
This is because excessive nodes on-chain compete for limited block space. With the rapid development of the Ethereum ecosystem, more execution and computation are required, leading to severe congestion in on-chain transactions, with gas fees skyrocketing.
There are many solutions to achieve L2, and they are constantly being updated. Early solutions included state channels, Plasma, Validium, and now popular Optimistic Rollup and ZK Rollup.
Rollup solutions perform transaction calculations and specific state changes off-chain, handling transactions and the final state summary after batch processing on-chain for verification, effectively alleviating congestion on Ethereum.
However, at that time, we did not consider eths as a Layer2 solution, nor did we discuss it as a preparatory scheme, because eths was merely regarded as an Ethereum inscription protocol without anything particularly special.
In subsequent updates, a proposal to improve the Ethscriptions protocol: ESIP-4: The Ethscriptions Virtual Machine fundamentally changed many aspects.
Ethscriptions (ETHS)
Ethscriptions is a protocol aimed at allowing users to share information and perform computations on Ethereum L1 at a lower cost.
It bypasses the use of smart contracts for storage and execution by applying deterministic protocol rules to Ethereum call data to compute state.
This method is cheaper because it uses Ethereum transaction call data instead of storing data on-chain via smart contracts, naturally lowering costs while also eliminating the verification costs associated with optimistic proof mechanisms like OP and validity proof mechanisms like ZK.
Of course, there is already a lot of content regarding Ethscriptions, so let's focus on The Ethscriptions Virtual Machine.
ESIP-4: The Ethscriptions Virtual Machine
The Ethscriptions Virtual Machine is the core content of the proposal ESIP-4, which expands the functionality of ETHS, allowing it to break free from the concept of mere inscription speculation and gain practical utility beyond speculative value.
According to a statement in the white paper, we can clarify its development purpose:
The goal of ESC-VM is not to replace smart contracts or L2, but to prioritize how to provide low-cost computing power in a decentralized manner.
In the draft of ESIP-4, the concept of the Ethscriptions Virtual Machine (ESC-VM) is introduced, which is a new protocol built on top of Ethscriptions.
ESC-VM enables eths to function as computer instructions, enhancing the capabilities of the Ethscriptions protocol. These computer instructions allow users to interact with special programs called Dumb Contracts.
In previous ETHS inscriptions, the "burning" of various images utilized Ethereum's "call data" functionality.
Call data refers to the data provided in calls to smart contracts. This is also the core point that makes it cheaper than using contract storage.
In the Dumb Contracts of ESIP-4, commands can be executed: deploy (create new contracts), call (invoke state-changing functions of existing contracts). This process is also stored in an inscription manner, with transactions stored on-chain in the calldata field, thus bypassing EVM execution and storage costs.
ESC-VM provides an environment for Dumb Contracts similar to the EVM, allowing Dumb Contract functionalities to run in parallel with smart contract functionalities. In simple terms, ESC-VM can essentially be regarded as the EVM.
In this process, by bypassing EVM execution and storage costs, Dumb Contracts are significantly cheaper than smart contracts, which greatly reduces costs, thereby addressing the core purpose of Layer2.
However, the differences are still significant, so let's take a look at the distinctions between ESC-VM and existing Layer2 solutions.
Differences Between ESC-VM and Existing Layer2 (Is the ESC-VM an L2?)
In the white paper of ESIP-4, it is clearly stated and justified.
The ESC VM is not an L2. One way to understand this is to consider the two notions of consensus that exist on Ethereum:
(1) Consensus over what transactions are included in each block and in what order.
(2) Consensus over the aggregate impact (1) has on the state of the EVM.
The main idea of Ethscriptions is:
To build a fully decentralized system by focusing on (1), since the state of the blockchain explicitly and deterministically specifies the state of the EVM. With just the blockchain itself, anyone can independently and precisely verify the state of the EVM.
On the other hand, verifying the "truth" of (1) is impossible because it is a non-deterministic process with no "correct answer." Combining (1) and (2) in the Ethereum protocol is ideal.
However, for most applications, this combination is too costly. Ethscriptions sacrifices part of the Ethereum protocol (2) and builds tools to make the computation of deterministic states convenient.
In contrast, L2 takes the opposite approach. Since L2 states are managed in the context of the blockchain, they are more convenient to verify than the states of the Ethscriptions ecosystem.
However, the verification of L2 is conditional. It states that given X transactions are included in a block ordered as Y, we can infer that the state of the blockchain should change to Z. But in L2 systems, there is no way to verify whether X and Y are correct.
In general, X and Y will only be fair when they align with the goals of the organization operating L2. The companies operating L2 have a fiduciary duty to prioritize shareholder interests over L2 user interests. In extreme cases, if L2 no longer aligns with the company's interests, L2 will be shut down.
The philosophy represented by Ethscriptions is:
Without forming a decentralized consensus on non-deterministic issues (such as block inclusion and transaction ordering), a blockchain can never be considered secure. The goal of using ESC-VM is to combine decentralization and security with functionalities approaching those of the EVM.
Existing Issues
Currently, there are some issues with Dumb Contracts that need to be addressed.
- Dumb Contract functionalities cannot be paid directly and require bridging;
- ESIP-4 does not allow arbitrary creation of Dumb Contracts. Dumb Contracts can be deployed and executed in an untrusted manner, but the code itself is defined along with the other Ethscriptions protocol rules in the ESIP process;
- A very important issue mentioned by teacher 0x8699: eths is highly dependent on indexers, but the mechanism does not give indexers enough importance. Given that this issue could be elaborated on in a separate article, I will not discuss it further here.
References:
- ESIP-4: The Ethscriptions Virtual Machine: https://docs.ethscriptions.com/esips/esip-4-the-ethscriptions-virtual-machine…
- @ethan0x8699 https://twitter.com/ethan0x8699/status/1717421307619688501…
- @cryptocupideth https://twitter.com/cryptocupideth/status/1717191327543443633…
- @0xNing0x https://twitter.com/0xNing0x/status/1717186567130030476…
- @wangfeng0128 https://twitter.com/wangfeng0128/status/1717188580471406858…
- Shijian Finance: https://panewslab.com/zh/articledetails/3x3fi5984w57.html…
- Arunkumar Krishnakumar https://cointelegraph.com/authors/arunkumar-krishnakumar…
- Selected past articles by Arrow on Layer2: https://twitter.com/ArrowCrypto_eth/highlights
