Altlayer Research Report: Detailed Explanation of Rollup as a Service and the Current Ecosystem
This article will delve into the mechanisms and potential of AltLayer.Author: Dewhales Research
Compiled by: Deep Tide TechFlow
AltLayer has evolved from an aggregated boxed zk solution to launching proprietary technology to scale and accelerate web3 based on restaking. Let's dive deeper into this through application examples!
1. Introduction
In the ever-evolving blockchain environment, scalability and customization have become primary concerns for application developers. With the increasing popularity of ZK Rollups and Optimistic Rollups, there is a clear need for solutions that allow developers to scale their applications while maintaining flexibility and control.
In recent years, ZK Rollups and Optimistic Rollups have garnered significant attention in the blockchain space due to their ability to significantly enhance the throughput and efficiency of existing blockchains like Ethereum. However, despite their promising potential, these rollup technologies also bring their own challenges, particularly in terms of accessibility, customization, centralization of sequencers, soft finality, and liquidity fragmentation.
This is where AltLayer comes into play. Unlike existing options available to today's application builders, AltLayer offers Rollups-as-a-Service (RaaS) for developers seeking actual control over their rollup solutions. The RaaS service allows developers to manage their rollup directly, providing high levels of customization and control over their blockchain infrastructure.
What truly sets AltLayer apart is its new restaking Rollup framework, which introduces restaking into rollups. The combination of RaaS with the restaking Rollup framework enables anyone, including individuals with little to no programming experience, to create their own customized blockchain execution layer in minutes, bringing additional security and decentralization to their rollups. This significant feature bridges the gap between technical and non-technical users, making AltLayer an accessible choice for a wide range of application builders.
In this article, we will explore the mechanisms and potential of AltLayer, examining how it serves as a Rollup-as-a-Service solution in the rapidly evolving blockchain environment.
2. Rollup Hub
AltLayer is a Rollup-as-a-Service protocol that allows developers to launch their own Layer 2 (imagine launching a version of Optimism, zkSync, Arbitrum specifically for applications). AltLayer provides:
SDKs for developers who wish to manage their rollups themselves
No-code dashboards that allow anyone to launch a customized execution layer in just 2 minutes with a few simple clicks
Essentially, AltLayer is a decentralized rollup hub that allows individuals to launch their own L2 solutions to meet their needs. However, questions may arise regarding the types of execution methods available, rollup speed, general/specific rollups, and more.
AltLayer allows the launch of ZK Rollups and Optimistic Rollups using EVM, WASM, or other runtime environments to meet general or application-specific purposes. Users can fully customize their rollups based on their needs and preferences.
Figure 1: Advantages of AltLayer's Rollup-as-a-Service product. Source: docs.altlayer.io
As mentioned, AltLayer allows for rapid deployment in minutes, with a process similar to deploying on a general chain. AltLayer's rollups do not require hundreds of validators to ensure security (e.g., Cosmos SDK), as they use a single underlying chain (Layer 1) as a security layer.
AltLayer is designed with modularity at its core, enabling end users to customize rollup solutions according to their preferences. This flexibility extends to the choice of runtime environments, including options like EVM, WASM, and more. Additionally, users can choose their preferred data availability layer, whether it be an L1 blockchain or a data layer like Celestia. AltLayer also allows users to select their preferred settlement layer, such as Ethereum or Arbitrum One.
Figure 2: RaaS Architecture. Source: docs.altlayer.io
The primary issue most rollups face is the decentralization of sequencers (the ordering and processing of transactions). However, AltLayer operates with a decentralized network of sequencers. These sequencers are selected from a sequencer network called SQUAD, based on their staking and some randomness. We will discuss SQUAD in detail in the next section.
Lastly, a noteworthy core feature is layered finality. Traditional blockchains typically classify blocks as either finalized or unfinalized. However, AltLayer takes a more nuanced approach to block finality by implementing a layered system. This layered system allows end users to determine the final state of transactions based on their chosen security budget. As blocks pass through these different finality layers, the confidence in finality gradually increases. At the execution level, the confidence in finality is the lowest, peaking at the rollup level.
AltLayer's finality process consists of three different tiers: execution level (suitable for low-security budgets), validation level (suitable for medium-security budgets), and rollup level (suitable for high-security budgets).
Execution Level Finality: The contents of the transaction pool are collected and organized into blocks by block producers. These blocks are then submitted to the consensus protocol. Once the consensus protocol verifies and accepts these blocks and their included transactions, they achieve finality at the execution level.
Validation Level Finality: Once the blocks generated and verified by block producers and the consensus protocol are validated by validators, validation level finality is achieved. Further, stronger finality occurs when more validators can confirm or reject updates, with more confirmations increasing the likelihood of correctness.
Rollup Level Finality: Blocks cleared through arbitration consensus will undergo a challenge phase, where anyone can run their validators and participate in validation. If discrepancies in on-chain proposals are found, challengers can raise challenges. Successful challenges will invalidate subsequent blocks, triggering a state rollback. Unsuccessful challenges will result in a reduction of the challenger's stake.
AltLayer also offers another type of rollup called Flash Layers, which are better suited for addressing scalability issues. Flash Layers are one-off, application-customized rollups with optional fraud proofs.
Through Flash Layers, dApp developers can:
Quickly launch a fast and scalable rollup secured by Layer 1
Use the rollup for as long as needed, preventing congestion on Layer 1
Handle the rollup through "final settlement" on Layer 1
This significantly optimizes resource utilization, as the execution layer and its resources are only called upon when the dApp experiences high traffic that exceeds Layer 1 limits. When demand decreases, the dApp can seamlessly revert to operating on Layer 1.
Potential use cases include NFT minting events, gaming, event ticketing, and more.
Figure 3: Flash Layer rollups. Source: docs.altlayer.io
3. Restaking Rollups
This is a new concept proposed in collaboration with EigenLayer. It consists of a set of three vertically integrated Active Verifiable Services (AVS) that are created on demand for a given rollup package. These AVS collectively provide three key services for rollup applications: decentralized ordering, state correctness verification, and faster finality. This aids in the decentralization of rollups, enhances security, and promotes interoperability between rollups while leveraging Ethereum's trusted network through restaking. The updated rollup package consists of three modular components:
VITAL (AVS for decentralized rollup state verification)
MACH (AVS for fast finality)
SQUAD (AVS for decentralized ordering)
Figure 4: Restaked rollups. Source: altlayer.io/restaked-rollups
Let's take a closer look at these components:
VITAL serves as the integrated verification layer for the rollup package. It consists of a network of AVS-registered operators who verify all new states proposed by SQUAD operators. VITAL operators detect invalid state roots and can challenge SQUAD operators using a binary protocol.
Essentially, VITAL is a network of operators that verifies new states. Unlike the preliminary confirmations provided by rollup sequencers, the confirmations provided by VITAL are more robust due to their underlying economic incentives. This allows for instant asset withdrawals. VITAL can also work alongside optimistic and ZK proofs, where VITAL operators can request SQUAD operators to generate ZK proofs for disputed state roots.
Figure 5: VITAL. Source: blog.altlayer.io
MACH aims to address the slow finality issue of rollups by verifying rollup blocks and ensuring that blocks are valid according to the rollup's state transition function. Once an invalid block is detected, MACH operators will raise an alert. If enough operators agree with the alert, it can escalate to upstream dApps.
MACH services will be provided to end users as an RPC endpoint that reports whether a specific rollup block is considered final. This RPC endpoint can be integrated into any aggregated decentralized application, providing faster and more reliable confirmations. Additionally, MACH will benefit exchanges, bridges, light clients, and other auxiliary services that need to stream access to rollup states and blocks to deliver their products and services.
Figure 6: MACH. Source: blog.altlayer.io
SQUAD allows nodes operated by EigenLayer AVS operators to register their interest in being rollup sequencers. Once the required number of sequencers stake the minimum collateral, these sequencers can begin ordering transactions for the rollup.
To facilitate the discovery of sequencers, SQUAD is designed as a node network that any EigenLayer AVS operator can join, effectively acting as a complete blockchain with WASM and EVM execution environments. Nodes in SQUAD are referred to as validators, which is typical in any PoS network.
Figure 7: SQUAD. Source: blog.altlayer.io
4. Related Participants
Partners and Projects Using AltLayer Technology
AltLayer has numerous partners, most of which are integrative in nature, involving the use of AltLayer's tech stack or integration with other projects' tech stacks to collaborate with AltLayer. This is a strong indicator of providing Rollup-as-a-Service products. As of September 2023, AltLayer has several partners and integrations: EigenLayer, Sovereign SDK, HyperLane, Celestia, Orbiter Finance, Espresso Systems, Radius, Double Jump.Tokyo, Arbitrum Orbit.
Other projects related to AltLayer include: Another World, My Square, Connext, MatchBox, Oveit, BendDAO, Skyark, Port3, Degame, Uforica, Evolv, Chirpley, StratisX, RNS.ID, 3UP, Evolv, Fobo.club, Automata, MySquare NFT, TaskOn, and DF Archon. By the end of May 2024, AltLayer will have numerous partners and integrations, with weekly blog announcements covering 120 different categories of projects.
Figure 8: AltLayer Ecosystem. Source: altlayer.io
Integration Examples
EigenLayer is an Ethereum restaking protocol. As mentioned earlier, AltLayer and EigenLayer jointly proposed the concept of restaking rollups. AltLayer currently has the following restaking rollups on the EigenLayer mainnet:
Polyhedra: The ZkBridge from Polyhedra Network has made significant strides in the blockchain industry, providing a robust, efficient, and secure cross-network interaction protocol covering multiple Layer 1 and Layer 2 networks. By integrating zkBridge, AltLayer rollups can now ensure seamless compatibility with over 30 different Layer 1 and Layer 2 networks. As part of the collaboration, AltLayer plans to join Polyhedra AVS to restake Bitcoin zkBridge.
Injective: Integrated AltLayer's MACH for inEVM, allowing the deployment and integration of smart contracts compiled to EVM bytecode within the Injective ecosystem while ensuring composability through WASM/EVM. AltLayer's MACH will provide restaking-based security in inEVM, benefiting applications running on inEVM.
Brevis: Brevis is a zero-knowledge co-processor that allows smart contracts to read and utilize the complete historical data of any chain and execute customized computations in a trustless manner. Using Brevis, developers can create various data-driven functionalities. AltLayer's restaking rollups will now be enhanced by the Brevis co-processor. Restaking rollups are our flagship product. By making the Brevis co-processor available for restaking rollups, developers on AltLayer can reliably execute on-chain historical data computations and build data-driven decentralized applications responsive to dynamic data inputs.
Sovereign SDK: This is an interoperable and scalable rollup package ecosystem that can run on any blockchain. Their SDK is an open-source toolkit for creating zk and optimistic rollup packages. The Sovereign SDK is used by protocols such as Haun, 1kx, EigenLayer, and Celestia. In AltLayer, Sovereign is integrated to facilitate the deployment of rollup packages within the Rollups-as-a-Service (RaaS) ecosystem.
HyperLane: Simplifies the deployment of functional compatibility on its blockchain. With permissioned interaction capabilities, users can deploy Hyperlane anytime and anywhere. Thus, blockchain creators and developers can enjoy greater autonomy and quickly make their products available across chains. AltLayer collaborates with Hyperlane to provide permissioned compatibility within the AltLayer ecosystem. In addition to the built-in merge bridge, projects using the AltLayer tech stack can also leverage Hyperlane for merge service deployment and communication.
Celestia: A modular blockchain used by AltLayer for data availability (DA) to address challenges of data availability and reliable state verification. AltLayer is configured to support Celestia's DA layer as one of the possible options for rollup packages created through the AltLayer merge dashboard, reducing the costs associated with data availability. As part of the integration, AltLayer developers will extract chain data from Celestia, compress it, and upload it to the Celestia network. This will allow for the complete reconstruction of the rollup's state using Celestia's data.
Nebra: AltLayer collaborates with Nebra to integrate its advanced Universal Proof Aggregation (UPA) technology into its rollup solutions. Nebra's UPA is the first production-ready universal proof aggregation protocol designed to achieve over 10x gas fee reductions and composability of zero-knowledge proof verification.
Orbiter Finance: Acts as a bridge between Ethereum and L2 rollups. Orbiter collaborates with AltLayer to address liquidity fragmentation issues in L2 through functionally compatible tools.
Espresso Systems: Integrated into the AltLayer stack, adding Espresso sequencer, a decentralized sequencer solution. Developers can choose to use AltLayer's decentralized verification solution and/or Espresso sequencer when deploying rollup packages within the AltLayer stack. This partnership provides application developers with a straightforward way to launch scalable and customizable L2 layers while ensuring that users utilizing merged packages in the future benefit from the attributes provided by decentralized sequencers.
Radius: Redefines the decentralization of rollup packages by protecting them from MEV, censorship resistance, and financial stability threats. This protects users from censorship and MEV risks through cryptographic ordering. With Radius's integration with AltLayer, developers will find the user-friendliness and efficiency of the AltLayer platform combined with the dual advantages of cryptographic ordering provided by Radius.
Double jump.tokyo: A leading blockchain gaming and NFT startup in Japan, collaborating with AltLayer to integrate its comprehensive tech stack into Oasys, a blockchain optimized for game development created by a group of developers including Double jump.tokyo.
Notably, AltLayer embraces the web3 gaming narrative and caters to customers in that space. AltLayer offers two types of rollup packages for game developers: ephemeral and persistent. Ephemeral rollup packages are ideal for event-driven applications that experience rapid demand spikes in a short time, such as mini-games or turn-based games. On the other hand, persistent rollup packages are best suited for games with longer lifecycles.
Additionally, AltLayer's rollup packages (the village layer) have been used to host popular full-network games like Dark Forest, attracting 250,000 transactions daily. AltLayer positions Flash Layers as a solution suitable for gaming.
Arbitrum Orbit: A permissioned solution recently announced by the Arbitrum Foundation that enables developers to create fully customizable Layer 3 secured by Arbitrum One. AltLayer has begun integrating support for Arbitrum Orbit and its tech stack on its no-code launch dashboard, set to be ready for use in Q2 2023, becoming the first rollup package provider to support Arbitrum Orbit.
Deri Protocol: A method of using DeFi trading derivatives: hedging, speculation, and arbitrage, all on-chain. Through Deri Protocol, trades are executed based on the AMM paradigm, with positions marked as NFTs, making them easy to integrate with other DeFi projects.
Automata: A blockchain middleware provider supported by Binance Labs, Jump Crypto, and others. They recently launched a modular proof layer where proofs are fully on-chain for off-protocol computation.
Cometh: A game studio based in France. They have previously collaborated with well-known clients such as La Française des Jeux (FDJ), Lacoste, FanLive Rugby, and Life Beyond Studios to meet their Web3 needs.
5. Token Economics
Functions of the AltLayer token include:
Economic Bonds: The ALT token will be used alongside restaked assets to provide economic collateral. This collateral can be slashed if malicious behavior is detected.
Governance: ALT token holders can vote on governance decisions.
Protocol Incentives: Operators in the AltLayer ecosystem can earn ALT tokens as rewards for providing services.
Protocol Fees: Network participants need to pay ALT tokens to use services within the network.
Additionally, AltLayer has token wrappers ------ reALT and stALT:
reALT: Represents "restaked ALT tokens," an ERC20 interest-bearing token that records the holder's stake in ALT and accumulates rewards earned through compounding. reALT tokens are issued to users who stake ALT in the main staking pool. It is a reward token that accumulates restaking rewards.
stALT: An ERC1155 token representing the holder's stake in the main staking pool. stALT tokens can be manually converted to reALT through the portal.
6. Who is Behind AltLayer?
Most team members and developers come from Zilliqa, with experience dating back to 2017, indicating a strong technical background. Additionally, team members have a good reputation within the crypto industry.
Yaoqi Jia, CEO. In 2019, Yaoqi was named one of Forbes' "30 Under 30 in Asia." He earned his Ph.D. in Computer Science from the National University of Singapore in 2017. Yaoqi led the design and creation of the first publicly accessible fully sharded blockchain platform, including network, transaction, and smart contract sharding. He also collaborated with Xfers to develop the StraitsX stablecoin project in Southeast Asia and participated in blockchain projects with Mindshare, the Singapore Exchange, Hg Exchange, and others. Before Zilliqa, Yaoqi worked at Parity Technologies.
Amrit Kumar, COO. Amrit holds a master's degree in Information Systems Security, Cryptography, and Coding, and earned his Ph.D. in Computer Science from Grenoble Alpes University in France, where he worked at the Inria Grenoble Computer Science Laboratory. He co-founded Zilliqa and served as its Chief Investment Officer and is currently the COO of Alt Research, a research company associated with AltLayer.
Tan Jun Hao, Head of Product Engineering. Tan Jun Hao is a former co-founder and core developer of Zilliqa, actively involved in the Zilliqa community, covering technical aspects to the DeFi ecosystem and its state. He has been working in computer security since 2019 and holds a Bachelor's degree in Computer Science with a focus on Information Security from the National University of Singapore.
Antonio Nunez, Head of Platform Development. Antonio holds a Bachelor's degree in Physics and Computer Engineering from Ateneo de Manila University. Since 2006, he has extensive development experience across various languages and tools and is a former co-founder and senior engineer at Zilliqa.
Dorothy Liu, Head of Growth. Dorothy holds a Bachelor's degree in International Business Management and a Master's degree in Marketing. She previously worked as a consultant at Deloitte and served as Vice President at OSL. With experience at well-known companies like Synthetix and HashKey Trading, Dorothy has an excellent understanding of inter-layer mechanisms in blockchain.
Aparna Narayanan, Head of Communications. Aparna previously worked in public affairs and strategic communications at APCO Worldwide and holds a Bachelor's degree in Economics, Management, Political Science, and Public Policy. She entered the crypto space in 2019, rising from Community Manager to Head of Communications at Zilliqa.
7. Supporters
AltLayer's supporters primarily come from Tier 1 and reputable individuals within the crypto industry: Polychain Capital, Breyer Capital, Jump, Binance Labs Fund, Hashkey Capital, Bankless Ventures, IOSG Ventures, Primitive Ventures, TRGC, Mask, OKX Ventures, DAO 5. Notable individuals include Circle co-founder Sean Nevile, Gavin Wood, a16z General Partner Balaji Srinivasan, Kain Warwick of Synthetix, Ryan Selkis of Messari, Jordan Momtazi of Synthetix, and Bodhi Ventures.
Figure 10: AltLayer Supporters. Source: altlayer.io
8. Conclusion
In the past development cycles of the cryptocurrency industry, various projects aimed to dominate the market by competing for liquidity and users, often exacerbating fragmentation. However, there is an increasing recognition that collaboration is essential. Each project has its strengths and weaknesses, as well as a focus on specific user categories and developers. In recent years, a clear trend of aggregation has emerged, with dApps, different strategies, liquidity, and modular blockchains coming to the forefront.
AltLayer is a forward-looking project designed to provide maximum convenience for developers without requiring significant resources, not only for launching their own networks but also for implementing it through the SDK. Furthermore, AltLayer offers its own practical technical solutions for launching rollups across various blockchain layers and is capable of leveraging other technologies (including modular technologies) to present products as Rollup as a Service.
Additionally, AltLayer has successfully integrated new technologies and incorporated them into its stack. This is evident in the integration with EigenLayer, where AltLayer quickly provided AVS-based solutions and seamlessly integrated them into rollup products.
