Debate on Ethereum and L2 Solutions

Compiled by: Elsa

Recently, there has been a viewpoint that L2 is splitting from Ethereum and extracting value from it. Is this true? How can we, as the Ethereum ecosystem, do better?

Steven Goldfeder, co-founder and CEO of Offchain Labs, believes that today's L2 and layered design are Ethereum's "superpower." He cites the internet, the most successful protocol in history, as an example of a layered architecture. In the 1990s, similar discussions took place: was the emergence of the internet a good thing or a bad thing? It turned out to be a good thing. The same goes for L2; it is also a good thing.

Currently, there are over 100 L2 and L3 solutions available on L2BEAT, thanks to Ethereum's layered architecture, with Ethereum at the base layer providing consensus. These L2 and L3 do not need to develop their own consensus mechanisms; they are all driven by Ethereum and can innovate on Ethereum, which provides security.

However, this does bring interoperability challenges, and we need to figure out how they can communicate and interoperate with each other. Steven Goldfeder believes one area where the community can improve is that sometimes people focus too much on their own tech stack. While this consideration is sometimes due to technical reasons, he thinks that whenever possible, we should consider "how to enable all Ethereum chains to communicate with each other," rather than limiting ourselves to our own ecosystems due to technical constraints.

Regarding whether L2 is parasitic to Ethereum or will bring value to it, Eli Ben-Sasson, co-founder and CEO of StarkWare, believes it is too early to discuss this issue. The current proportion of people using blockchain technology is very small. Our real challenge is to provide scalability, use cases, and a new vision for humanity to embrace this technology. When the dust settles, value will always accumulate somewhere, perhaps in places that do not yet exist. He admits he is not sure whether value will ultimately accumulate at StarkWare, with a competitor, or elsewhere. But that’s okay. The most important thing is that we invest time in valuable endeavors and drive technological progress. He has no doubt that advancing L2 and Ethereum in various ways will bring tremendous value to humanity. Looking back, he feels proud of the efforts he and his team have made, and although he is uncertain about the future allocation of value, he is satisfied with the technology being built.

Sandeep Nailwal, co-founder of Polygon, answered this question using proof by contradiction. Suppose all L2s were removed from Ethereum; Ethereum would become a very slow chain, processing only 13 transactions per second (TPS). Without L2, most decentralized applications (dApps) and activities might have migrated to other L1 chains. It is precisely because of L2 that all these developers are still within the Ethereum ecosystem. Today, Ethereum is no longer a single network but a "constellation." All developers can deploy applications on L2s like Starkware, Arbitrum, Polygon, and Scroll, achieving large-scale adoption. If it were only Ethereum, with gas fees reaching $50, Ethereum developers would be unable to utilize these resources, and on-chain activity would be minimal. We have seen in past cycles that the market doubted Ethereum's success and believed other L1s would replace it. Without L2, 100% of people would believe Ethereum would gradually be phased out. "Without L2, Ethereum could not exist as it does today," said Sandeep Nailwal.

Sandy Peng, co-founder of Scroll, recalled her first encounter with Ethereum's L2-centric roadmap and the concept of the "infinite garden" (refer to previous articles: "Infinite Garden": Ethereum's Vision), which left a deep impression on her. She believes that the approach of applying different technological variants and experimental applications to scale Ethereum is highly innovative and unprecedented.

At that time, multiple L1 chains were already experiencing fragmentation in terms of chains, liquidity, and developers. Therefore, from a foundational perspective, she believes adopting L2 solutions in Ethereum is a pragmatic choice. Different technical solutions are also experimenting and exploring how to scale Ethereum. Now, she believes the entire ecosystem is in a very healthy state, with many capable participants demonstrating their understanding of scaling Ethereum. Today, we have different solutions and numerous strategies.

We have entered the next phase, and the tech stack has matured. There are now many ready-made solutions that can be applied immediately. She believes Ethereum has been at the forefront of proposing these concepts, while other blockchains are trying to describe similar architectures under different names. But fundamentally, the L2-centric scaling roadmap may be the only truly scalable approach.

For developers and new users wanting to enter the Ethereum ecosystem, how can we simplify their experience when facing cross-chain bridging and operations among numerous L2s?

Sandeep Nailwal, co-founder of Polygon, stated that they have recognized the fragmentation issue among L2 ecosystems. To address this, Polygon is developing a solution called AggLayer, which can integrate with most L2s to provide a unified interface, making interoperability simpler and more intuitive, so users do not have to go through cumbersome processes. Developers also have corresponding libraries, and ordinary users do not need to face complex technical operations.

He believes that every ecosystem, especially the L2 ecosystem, is thinking about interoperability solutions in some way or collaborating with other ecosystems to find better user experience paths for users and developers.

Eli Ben-Sasson, co-founder and CEO of StarkWare, believes the real challenge is how to attract non-native crypto users. StarkNet has adopted a 100% native account abstraction mechanism, allowing wallets to provide users with a Web2-like experience, such as logging in via facial recognition or biometrics, without the need for complex keys or mnemonic phrases, while still maintaining Web3 security. This is a fully self-custodial wallet, ensuring security while making the user experience more convenient. Ethereum is also moving towards account abstraction models. He believes the future direction is to make all operations more abstract and seamless. With improvements in blockchain computing power and standards, users will be able to enjoy a convenient experience similar to other fields while maintaining Web3 security.

Steven Goldfeder, co-founder and CEO of Offchain Labs, believes that while account abstraction is important, we must not overlook the issue of designated chain addresses. Currently, when users switch between different chains, it is easy to mistakenly transfer funds to the wrong chain. Steven Goldfeder believes users should not have to worry about the technical issues behind these chains; they should only focus on the application scenarios, just like in the Web2 world where users only need to know how to use a ride-hailing app to get a ride, without considering the underlying network stack (TCP/IP stack). In blockchain user experience, it is crucial to downplay these technical backgrounds.

Do you think there will be an L2 that separates from Ethereum and becomes an independent chain in the future?

Steven Goldfeder believes that establishing an independent L2 chain is not difficult now, and someone may do so in the future. However, for serious builders who genuinely care about security and decentralization, this is unlikely to happen. It is akin to trying to separate a ride-hailing app from the internet; it can be done, but doing so would cut off connections to the outside world, making it impossible to get a ride. L2 needs to rely on Ethereum's support and security assumptions. If Ethereum is removed, all of this ceases to exist.

Sandeep Nailwal, co-founder of Polygon, believes that dividing L1 and L2 into two categories is overly simplistic. L1 should be understood as the settlement environment, while L2 serves as the execution environment. Ethereum, as the settlement layer, provides decentralization, security, and assurance. If high performance is to be achieved in a serious execution environment, some decentralization and other prerequisites need to be shifted to the settlement layer, and Ethereum is the most powerful settlement layer.

In the future, many L2s may gradually become more decentralized, resembling L1, as they will have their own validators and consensus mechanisms, but they will still rely on Ethereum as the settlement layer. Therefore, from this perspective, future L2s will operate independently like L1s, but their core will still serve as the execution environment, while Ethereum will continue to be the primary settlement layer.

Additionally, he believes Bitcoin also has the potential to become a credible settlement layer that can compete with Ethereum. If Bitcoin can open up more functionalities, some L2s may choose to settle on Bitcoin in the future rather than solely relying on Ethereum. However, for now, Ethereum remains the most powerful settlement layer.

What else does Ethereum as a settlement layer need to provide ideologically or technically?

Eli Ben-Sasson, co-founder and CEO of StarkWare, believes Ethereum must pursue maximum decentralization and inclusivity, as this is the unique and core trust foundation in blockchain. Whether in L1 or L2, decentralization and inclusivity are crucial.

Sandeep Nailwal, co-founder of Polygon, believes that in addition to decentralization, there is a need for censorship resistance. Ethereum experienced shocks during increased OFAC scrutiny, and although the community successfully restored it to a sustainable level, challenges remain, and efforts need to continue in this area. Another key point is that the foundational layer needs to provide a better environment for settlement and L2 technologies. Furthermore, Ethereum needs a more predictable roadmap. As the number of L2s increases, the Ethereum foundational layer should remain stable and not introduce too many features, as this could undermine the trust in the L2 ecosystem.

Recently, the Ethereum community has faced pressure regarding price and value, and discussions are ongoing about how to integrate more functionalities into L1. Sandeep Nailwal believes this could be problematic in the long run, as L1 use cases should be simple. For Ethereum, the most important thing is to be the best settlement layer.

How do you view Vitalik's current role in the Ethereum ecosystem?

Steven Goldfeder believes Vitalik is an extraordinary leader with a strong vision. He is a staunch long-termist committed to fundamentally building technology that can revolutionize the world. He advocates for decentralized governance and embraces many controversial ideas. Vitalik is a leader in promoting decentralized values.

Sandeep Nailwal believes Vitalik's role is that of a mediator. He does not treat Ethereum as his exclusive network but views it as a public good, welcoming anyone to build on it. In past discussions about the roadmap, he has always listened to feedback, made multiple changes, and incorporated various inputs. Vitalik needs to continue providing this good mediation to ensure Ethereum's core is not affected by current market cycles and price pressures.

Will Solana replace Ethereum?

Sandeep Nailwal stated that Ethereum faced strong attacks from the Bitcoin community during its rise, but the Ethereum community maintained an open mindset and thought about how to make the entire industry more open and inclusive. The Ethereum community acknowledges that the Solana community may also be doing some interesting things and keeps an eye on it.

Sandeep Nailwal believes that building L1 is a long-term process that requires creating a community that grows organically over the long term, which is key to determining an L1's success. Moreover, Ethereum and Solana have different core goals. Ethereum aims to be the settlement layer, while Solana focuses more on building a fast execution environment. The competition between the two is merely a difference in marketing strategies, not direct competition.

Eli Ben-Sasson believes that the current competition within the cryptocurrency space is meaningless from a macro perspective; what truly matters is providing real value to the external world in daily life.

Steven Goldfeder believes that Solana's existence has prompted the Ethereum community to accelerate its push for L2 scaling, particularly in terms of improvements in security, decentralization, and scalability.

Conclusion

Overall, L2 solutions have gained widespread recognition in the development of Ethereum. Despite facing challenges in interoperability, decentralization, and censorship resistance, we look forward to seeing better solutions as technology evolves.