Taiko Co-founder: Ethereum scaling solutions should be more thoroughly decentralized

Author: Climber, Jinse Finance

On July 23, Taiko announced its future development roadmap, mentioning that the Ontake upgrade plan will launch on the mainnet in Q4 of this year, along with the introduction of new transaction types and other features. This has increased the community's expectations for Taiko.

Since the launch of the Taiko mainnet at the end of May this year, it has attracted significant attention, achieving impressive data performance, such as reducing L1 gas costs by over 30%, reaching a TVL of nearly $200 million, and the price of its token rising against the market trend to exceed $3.

Taiko (meaning "drum" in Japanese) was established in early 2022 as an Ethereum Layer 2 protocol designed to be the most equivalent and universal ZK-Rollup (Type-1 ZK-EVM). The protocol aims to lower Ethereum transaction costs while retaining its core features to help developers better build dApps.

To better understand the mechanisms and value of the Taiko project, Jinse Finance specially interviewed Mr. Daniel Wang, co-founder and CEO of Taiko, discussing the project's mechanism characteristics, future plans, and views on the entire L2 space through several questions.

Jinse Finance: First of all, congratulations on the Taiko public chain mainnet launch nearly two months ago. Could you briefly introduce Taiko?

Daniel Wang: Thank you very much for the attention to the Taiko mainnet launch. Let me briefly introduce Taiko.

Taiko is a Type-1 zkEVM, which means we provide the same opcodes and functionalities as Ethereum, ensuring seamless compatibility with the existing Ethereum ecosystem. This allows developers to easily migrate their applications from Ethereum to Taiko without any modifications.

What sets Taiko apart is our implementation of based rollup technology. This innovation allows Ethereum validators to ultimately be responsible for block production in Taiko, achieving decentralization of proposers. Our goal is to scale Ethereum without sacrificing decentralization, creating an ecosystem where centralized and decentralized Layer 2 networks coexist. This provides dApp developers and users with more choices to select different types of networks based on their needs.

In March of this year, Taiko completed a $15 million Series A funding round led by Lightspeed Faction, Hashed, Generative Ventures, and Token Bay Capital, bringing our total funding to $37 million. These investments not only provide us with financial support but, more importantly, bring strategic partnerships. We highly value the synergy with our investors, as their industry insights and network resources are crucial for Taiko's development.

It is indeed encouraging that Taiko has quickly become one of the largest Discord communities globally (with over 1.07 million members) and attracted hundreds of dApps for deployment. This achievement stems from a combination of factors: our technological advantages (Type-1 zkEVM), commitment to decentralization, community-building strategies, and the support and trust of our investors.

We believe that Taiko's success relies not only on technological innovation but also on how we empower the entire ecosystem. We are committed to providing developers with the best tools and environment while continuously exploring how to better serve end users, ensuring that the advantages of blockchain technology can truly benefit the public.

Jinse Finance: What factors prompted your team to decide to create and develop this decentralized Ethereum zk L2 public chain? What has its development history been like? What do you think are the biggest challenges in the project's development process, and how have you addressed them?

Daniel Wang: The core motivation for creating Taiko stems from our profound understanding and commitment to the essence of blockchain technology. In 2017, I founded the Loopring project, which later became the first zkRollup in the blockchain world. Although Loopring could only be built as a non-programmable Layer 2 network due to technological limitations at the time, and its block production mechanism was centralized, this experience provided us with valuable insights, including some insights into Ethereum's scalability.

The successful launch of Loopring provided an important reference for Ethereum's rollup-centric roadmap. This experience made us deeply realize that the core appeal of blockchain lies in its permissionless and decentralized nature. Therefore, when building Taiko, we prioritized these two characteristics as our primary design principles.

We firmly believe that an L2 can add new features while ensuring permissionlessness and decentralization, but the reverse is much harder to achieve. This is why the Taiko mainnet adopted a permissionless and decentralized model right from the start. We believe that many applications, especially the popularization of decentralized social networks, require a more permissionless and decentralized network layer as a foundation. Just as skyscrapers cannot be built on sand dunes, one could say that without the "skin" of a permissionless and decentralized Layer 2 network, the "hair" of decentralized applications cannot attach.

The main challenge in building a Type-1 zkEVM lies in combining Type-1 and zkEVM, as well as the scarcity of related talent. We not only need to design the overall rollup but also write zk circuits and develop zk proof programs, even a distributed zk proof system.

In terms of choosing zk solutions, we did take some detours. But fortunately, we quickly realized that the proof system must be decoupled from the system design to ensure that the proof system is pluggable. Therefore, about a year ago, we made a crucial decision: to abandon the independent development of zkEVM and instead choose to wait for and adopt third-party general zk proof solutions, namely zkVM solutions.

This decision may have disappointed some community members in the short term, who felt we had given up on zk research.

However, in the long run, this is a very wise choice. It allows us to focus more on optimizing the overall system design and user experience while also enabling us to adapt and integrate more advanced zk proof technologies that may emerge in the future more quickly.

Currently, another significant challenge we face is how to provide a better user experience through transaction preconfirmation and reduce block production frequency. Transaction preconfirmation allows users to experience sub-second transaction confirmations, which is particularly important for applications like gaming and payments. At the same time, reducing block production frequency can further lower our operational costs as a Based Rollup.

Jinse Finance: Please introduce the current main products and business progress of the project. What impressive data performance has the project achieved so far? For example, TVL, on-chain projects, interaction data, etc.

Daniel Wang: Nearly two months after the mainnet launch, Taiko has achieved remarkable performance in many aspects. Our Taiko Labs has compiled the relevant data as follows:

In the first month of the mainnet launch, Taiko's total locked value (TVL) reached $138.7 million, with an average of 19.53 transactions per second, peaking at 45.3 transactions per second, and a total transaction count exceeding 21.57 million, with nearly 700,000 unique wallets.

Additionally, in the gaming and DeFi applications, Taiko has integrated over 80 projects, including LayerZero, Stargate, and Oku Trade. The Trailblazers loyalty program launched by Taiko attracted nearly 600,000 participants, minting over 220,000 badges.

Jinse Finance: What are the main differences between Taiko's scaling solution and other Rollup projects?

Daniel Wang: The main differences include the following:

1. Based Rollup Mechanism

One of Taiko's core features is the adoption of the Based Rollup mechanism. This means we do not rely on centralized sequencers but instead utilize Ethereum validators to order transactions and blocks. This design significantly enhances the decentralization of the network, making Taiko the only rollup that has achieved decentralized proposing and proving.

2. Based Contestable Rollup (BCR) Concept

At the end of 2023, we proposed the Based Contestable Rollup (BCR) concept, which is an important innovation for Taiko. BCR introduces a contestable mechanism based on the following considerations:

ZK-EVM code may contain unknown errors, and Taiko, as a decentralized network, has a low fault tolerance.

A mechanism is needed to address potential software bugs without halting operations for fixes, as is done in centralized networks.

While ensuring network security, it is necessary to balance verification costs and the degree of decentralization.

In BCR, anyone can contest the state transition of a block but must pay Taiko tokens as a deposit. Contests are resolved through higher-level proofs, ensuring both network security and providing an economic incentive mechanism.

3. Multi-layer Proof System

Taiko's BCR architecture allows each level to use its own proof system. This flexibility enables us to combine different types of proofs as needed, such as Optimistic proofs, SGX proofs, zkEVM, or zkVM proofs. This design not only enhances the system's credibility but also reserves space for future technological developments and Layer 3 and application-specific blockchains (appchains).

4. Flexibility and Scalability

Contestable Rollup can be seen as an abstraction of zkRollup and Optimistic Rollup. This design gives Taiko great flexibility and scalability. We can configure the system as a pure zkRollup or Optimistic Rollup, or a hybrid of both, based on future technological developments and application needs.

Jinse Finance: The current competition in the Ethereum L2 landscape is fierce. As a newcomer, how do you view the current state of L2 development? What are Taiko's biggest advantages and characteristics compared to other competitors?

Daniel Wang: Before Taiko launched its mainnet, most L2 solutions exhibited a high degree of centralization. Whether it's zkSync and StarkNet representing zkRollup or Optimism and Arbitrum representing Optimistic Rollup, these are relatively centralized solutions. These projects are typically operated by companies that rely on operations to obtain data and users.

We believe that if we truly believe that Rollup is the core of Ethereum's scalability, we should not stop at these centralized Layer 2 networks. Ethereum's scalability solutions should be more decentralized, which is the goal Taiko is committed to achieving.

Although there are already many Layer 2 applications, the actual technical solutions remain limited. We believe there is still significant room for innovation in this field, especially in enhancing decentralization and security.

Compared to other competitors, Taiko's biggest advantages and characteristics include the following points.

First, Taiko adopts Based Rollup technology, which is a more thorough decentralization solution. We hope to provide Ethereum with a truly decentralized scaling solution through this approach.

Second, our goal is to achieve "ownerless" as soon as possible. This means that Taiko Labs, as the development entity, will gradually relinquish all special privileges. We hope that even if Taiko Labs or its members are no longer trusted, the Taiko network itself will still be trustworthy. Once we relinquish all privileges, Taiko, as a mature network, cannot be "killed," ensuring that the applications on it are also indestructible. I believe that once we achieve this milestone, Taiko's advantages will become very apparent.

At the same time, we also hope to influence the decentralization process of other Layer 2 networks through our accelerated decentralization and ownerless efforts. Ethereum has not yet progressed far on its rollup-centric roadmap, and I do not believe that the currently popular rollups will necessarily be the ultimate solution in the future. Many issues remain to be resolved, and Taiko is striving to be part of that solution.

Jinse Finance: Currently, Bitcoin L2 development is thriving. Do you think this trend will impact the Ethereum L2 landscape? Will the shift in attention in the crypto market affect Taiko's progress and development strategy?

Daniel Wang: I believe that Bitcoin Layer 2 network projects do not have substantial significance in the long run and should even cease development. The short-term "impact" of these projects on Ethereum mainly lies in attracting a portion of the audience that might have participated in building the Ethereum ecosystem, causing some degree of attention diversion. However, from a long-term perspective, these projects will not pose a real challenge to Ethereum's Layer 2 networks.

The original design intention of the Bitcoin network is primarily as a digital currency, rather than a smart contract platform. Although some have attempted to build complex application layers on Bitcoin, these efforts often encounter numerous technical limitations and challenges. In contrast, Ethereum was designed from the outset as a general-purpose smart contract platform, with stronger programmability and flexibility.

For Taiko, the short-term shift in attention in the crypto market will not affect our development progress and strategy. We firmly believe in the long-term value and potential of the Ethereum ecosystem. As a project dedicated to providing a decentralized and efficient Ethereum Layer 2 solution, our goals and roadmap will not change due to short-term market sentiment fluctuations.

Vitalik proposed the first block on the Taiko mainnet and expressed his appreciation for Taiko. After the launch of the Taiko mainnet, he mentioned and recognized Taiko's technical implementation multiple times. During ETHCC, Vitalik again acknowledged Taiko's unique positioning in his presentation. Previously, Taiko also garnered the favor of several institutions, including Sequoia, OKX, and IOSG, raising a total of $37 million across three rounds. The reason Taiko has quickly become one of the largest Discord communities globally (with over 1.07 million members) and attracted hundreds of dApps for deployment, in addition to the advantages of Type-1 and fully decentralized architecture, is largely due to the support from investors.

Jinse Finance: What do you think is the main reason for Taiko's recognition by industry leaders and capital?

Daniel Wang: As the founder of Taiko, I am very grateful for the recognition and support from Vitalik, the Ethereum Foundation, and our investors. I believe they value our commitment and execution in scaling Ethereum in the most native and decentralized way. Taiko's recognition by industry leaders and capital primarily stems from our technological innovation and insistence on decentralization.

We adopt Type-1 and Based Rollup technologies, which represent a more thorough decentralization solution. Our continuous breakthroughs in technology, combined with our pursuit of achieving an "ownerless" state, align closely with Ethereum's core values, thus attracting the attention of industry professionals.

Our community building is also an important factor. Taiko has a Discord community with over 1.07 million members, making it not only the largest cryptocurrency Discord community but also one of the top Discord servers globally. We maintain community engagement and cohesion through regular content series, community dialogues, tea parties, weekly tests, and games. We also incentivize community member participation through special role rewards. This open attitude and community-building strategy have attracted a large number of developers and users to participate in the Taiko ecosystem.

Our support for developers has also been recognized. We provide collaboration and discussion spaces for developers through platforms like GitHub and Discord, while also increasing Taiko's visibility through conferences, hackathons, and sponsorships to attract more developers.

I believe our efforts to build an open and positive community are one of the important reasons for attracting investor recognition. We not only focus on technological innovation but also value community building and ecosystem development, and this comprehensive development strategy has garnered the favor of investors.

In summary, the core of Taiko's recognition lies in our comprehensive performance in technological innovation, decentralization philosophy, community building, and open attitude.

Jinse Finance: In February of this year, Coindesk published an article quoting Taiko's CEO saying that the Year of the Dragon has opened a new door for Ethereum, especially with the expected impact of ETFs. Now that the ETF has been approved, how do you view the prospects for Ethereum and L2? When do you think the explosive growth period for L2 will come?

Daniel Wang: I hold a very optimistic attitude towards the prospects after the approval of the Ethereum ETF. The approval of the ETF has opened a new door for Ethereum and its L2 ecosystem, which will bring broader participation from institutional and individual investors.

As more funds and talent flow into the Ethereum ecosystem, we will see further acceleration of innovation and development in the L2 space. The approval of the ETF not only increases confidence in Ethereum but also brings more legitimacy and recognition to the entire cryptocurrency industry. This recognition will attract more talented engineers and researchers into the Layer 2 scaling field, potentially giving rise to entirely new and revolutionary rollup design solutions.

Regarding the explosive growth period for L2, I believe this process has already begun, but the real peak may still take some time. As more institutional investors participate in Ethereum through ETFs, they will gradually recognize the importance and potential of L2 solutions. I expect that in the next 12 to 24 months, we may see a significant increase in the use and adoption of L2.

This development presents both opportunities and challenges for existing L2 projects, including Taiko. We need to continuously innovate and improve our technology to remain competitive. But from a broader perspective, this competition and innovation will greatly promote the development of the Ethereum ecosystem, providing users with a more efficient and economical blockchain experience. As industry participants, we welcome this healthy competition, as it will ultimately benefit the entire Ethereum ecosystem.

Jinse Finance: What are the team's plans and expectations for Taiko's future development?

Daniel Wang: Our primary goal is to quickly support transaction preconfirmation, which is crucial for the user experience of based rollups. This requires not only improvements in Taiko's technology but also enhancements in ecological infrastructure such as restaking. At the same time, we are committed to further optimizing the protocol and reducing fees. We hope that the Taiko BRC protocol can be easier to upgrade and reduce gas consumption on Ethereum to achieve profitability for proposers.

In terms of governance, we plan to relinquish owner privileges as soon as possible and introduce a community voting mechanism, allowing token holders to participate in Taiko's governance through a DAO. Additionally, we will continue to improve ecosystem development to attract more developers and users. Finally, while ensuring the stability of the Taiko BCR mainnet, we are also exploring more aggressive rollup solutions through the Taiko BBR project.

These goals reflect our comprehensive consideration of technological innovation, user experience, decentralization, and ecosystem development, and we believe this will help Taiko maintain a leading position in the competitive L2 market.