a16z: Why did we invest in the shared sorter network Espresso?

Original Title: Investing in Espresso
Original Author: Ali Yahya, a16z Partner
Original Translator: xiaozou, Jinse Finance

Editor’s Note: On March 21, 2024, a16z announced a lead investment of $28 million in the shared sequencer network Espresso in its Series B funding round. a16z partner Ali Yahya published an article explaining why a16z invested in Espresso.

The ultimate scalability of Ethereum is entirely about Rollups—potentially millions of Rollups, each a mini-ecosystem or an application built on the security foundation of Ethereum. A few years ago, Vitalik first proposed this idea in his famous Rollup-centric roadmap article. Since then, other ecosystem participants, such as zkSync, Optimism, and Polygon, have expanded this vision with cross-chain roadmaps (Polygon uses the AggLayer roadmap). For the first time, Ethereum has seen a bright path to support millions of applications and billions of users.

However, this plan is not without limitations. The biggest issue with a Rollup-centric future is the fragmentation of the Ethereum ecosystem. Today, on the Ethereum main chain, every application (i.e., smart contract) can seamlessly interact with other applications. In a world of millions of Rollups, composability with applications will become more challenging. This is because each individual Rollup is its own independent blockchain. They share Ethereum's security, but the computation is done independently. Each Rollup is driven by a so-called "sequencer," which currently belongs to a centralized party that performs all computations for the Rollup on servers.

Today, if an application on one Rollup wants to interact with an application on another Rollup, it must do so through the Ethereum main chain or via bridging. Both methods are slow and make it difficult for developers to synchronize state across Rollups (they are asynchronous solutions). Ideally, the sequencers of different Rollups would have a cooperative mechanism, providing developers and end-users with a smoother, faster, and cheaper interoperability experience.

1. The Espresso Team

Before I introduce the Espresso system, I want to introduce the team behind it. I knew Ben Fisch and Benedikt Bünz before joining a16z. It was early 2017 when I was working at Google Brain, and Ben and Benedikt were both PhD students under Professor Dan Boneh at Stanford University, whom I had known since my undergraduate days. Thanks to Dan, we were able to connect and advise a new crypto company that would later become Eco, now part of the a16z crypto portfolio. I remember being greatly inspired by their technical talents. For a moment, I even considered pursuing a PhD in cryptography under Dan's guidance, just like they were doing at the time.

What impressed me most about Ben was his ability to think clearly about the new technology he was building at every level of abstraction—from the lowest-level cryptographic primitives to various business and product considerations, all the way to the broadest societal impacts. I should have anticipated that he would inevitably transition from an academic role to that of a startup founder and CEO.

As it turns out, I did not pursue a PhD. Instead, I left Google and joined a16z as a venture capitalist, which is almost the same thing, right? Shortly thereafter, I met Jill Gunter through the cryptocurrency community, and we quickly became friends when she was working at Slow Ventures. What has always impressed me about Jill is her incredible strategic thinking ability. She has the sharpest intuition about how the world works and how people might operate within it. So, when she joined Ben, Benedikt, and Charles Lu at Espresso in 2021, it was impossible not to notice.

Through his work at Espresso, I also got to know Charles. He is technically astute, and like others at Espresso, he has worked with Dan at Stanford. But most importantly, due to his outstanding operational capabilities, he is the perfect partner for Ben, Benedikt, and Jill. Without Charles, Espresso would not be what it is today.

Last year, as the limitations of Ethereum's Rollup roadmap became increasingly clear, Ben and his team brought us one of the most compelling solutions to the fragmentation problem we have ever heard.

2. The Espresso System

Espresso is building a decentralized network that will serve as a coordination mechanism for Rollup sequencers. It is a marketplace where sequencers can both sell their block space and participate in a unified mechanism for cross-Rollup transaction ordering. With Espresso, Rollups will be able to sell block construction rights to block proposers bidding on the network. These proposers can also bid for multiple Rollup blocks simultaneously, becoming joint proposers for multiple chains. This allows Rollups to continue to develop independently while also enabling more seamless interoperability with other Rollups.

At its core, cryptography is a technological movement that creates better tools for larger-scale human cooperation, especially in situations where the cooperating parties do not trust each other. Espresso and Ethereum are perfect embodiments of this beautiful ideal.

We are very excited to work with Ben, Benedikt, Jill, Charles, and the Espresso team to help bring a more seamless interoperable future to Ethereum.