The investment value of MegaETH

In the past couple of days, a new Ethereum Layer 2 scaling project, MegaETH, has suddenly gained immense popularity. The reason for this surge is likely its luxurious lineup of investors, including Vitalik and a number of well-known venture capitalists.

About a month ago, a friend mentioned this project to me. At that time, there wasn't much information available, which left me with some details still unclear. After its recent rise, the information is now much more detailed.

Two points about this project left a deep impression on me:

1. It is the first Ethereum Layer 2 scaling project to propose specific performance metrics.

2. In its white paper, it provides a detailed enumeration of the methods and means for scaling blockchain (including Ethereum Layer 2), along with experimental data to support some important details (such as performance bottlenecks).

Regarding the performance of Ethereum Layer 2 scaling, in my impression, at least over the past few years, although it has been emphasized as an important metric by various project teams, many times the focus on performance improvements has been primarily on specific aspects or methods.

For example, the OP series focuses on using "fraud proofs" to enhance Layer 2 scaling performance, while the ZK series emphasizes improving the efficiency of proof generation to boost Layer 2 scaling performance. Additionally, a certain degree of centralization (like sequencers) is employed to achieve high performance.

After these projects launched, when everyone realized that their performance improvements were quite limited (far from what was expected), these projects shifted their focus to other areas: such as strengthening ecosystem development and supporting ecosystem projects.

Of course, I fully agree with the approach of these project teams focusing on ecosystem development and supporting ecosystem projects, and I believe it is necessary.

However, the emergence of MegaETH suddenly made me feel that these Layer 2 projects have gradually diluted their pursuit of performance.

From the perspective of Ethereum, it seems that the expansion of performance has gradually turned into an increase in the number of Layer 2 solutions: as the number of Layer 2 solutions increases, the number of transactions processed by Ethereum per unit time naturally increases as well—this does represent a certain degree of performance enhancement.

Yet, this kind of performance improvement always feels a bit forced, lacking some hardcore elements.

The emergence of MegaETH refocuses the enhancement of performance on hardcore technology, a style that seems to have been absent in this ecosystem for quite some time.

I believe the description of each technical detail in MegaETH's white paper is worth reading; such a detailed enumeration of technical specifics has not been seen in project white papers for a long time. It feels more like a review paper on various factors of blockchain performance scaling.

For ordinary readers, it is perfectly fine to overlook the technical details and explore the project's logic to understand the team's thoughts and plans.

In summary, after reading this white paper, readers should be able to understand from which angles the project team plans to use what means to achieve the claimed 100,000 TPS for this Layer 2 scaling solution.

Of course, whether this goal can be achieved will depend on the actual product in the future.

Overall, I see the project's approach as classifying nodes, breaking down various functions of Layer 2 scaling into different nodes, allowing different types of nodes to use hardware with varying performance according to their needs, thereby pushing the system's performance to the hardware's limits.

This approach reminds me of an earlier article I read by Vitalik about the future classification of Ethereum nodes.

In that plan, Vitalik envisioned that future Ethereum nodes would also be classified:

Some nodes that need to efficiently process transactions and generate blocks would use high-performance hardware, requiring a stake of 32 ETH;

While another part, which only serves as block validators, would use very ordinary hardware (even embedded devices), requiring only a small amount of ETH as a stake.

This satisfies the performance requirements of the Ethereum mainnet while ensuring that the entire network remains as decentralized as possible.

I wonder if MegaETH's approach resonated with Vitalik, prompting him to participate in this project?

Of course, I also have some questions about this project: for example, does it always use a designated sequencer or select one through sampling from many candidates? This detail seems to be not specifically addressed in the white paper. If it's the former, how does the system avoid single points of failure?

Overall, MegaETH adds a high-performance project to the Ethereum Layer 2 scaling ecosystem, enriching this ecosystem and undoubtedly providing significant value.

As for the project's investment value (if it issues a token in the future), here's my perspective:

Projects like MegaETH require substantial funding for research and development, making it difficult for such projects to avoid accepting venture capital involvement. This determines that the project's value (if it issues a token) will certainly take venture capital interests into account.

Additionally, such projects are typically "white horses": their value is clear at a glance, and their significance is easily understood.

Therefore, such projects generally have a ceiling on their appreciation potential.

In my view, the ecological significance of MegaETH for Ethereum, especially for Layer 2 scaling, far outweighs its investment value.

Reference link:

MegaETH White Paper: https://megaeth.systems/research