Martin Köppelmann, the co-founder of Gnosis, a decentralized blockchain project that boasts a range of infrastructure products designed to improve the utility of Ethereum, shared his thoughts on the limitations of Layer 2 scaling solutions.
In ETHDenver, Martin Köppelmann discussed limitations and tradeoffs that rollups introduce with regard to decentralization and credible neutrality, and compared those tradeoffs the hierarchical roll-up approach to the tradeoffs of approaches with flatter hierarchy.
My talk about "The Limits of L2" is online:
— Martin Köppelmann 🇺🇦 (@koeppelmann) March 4, 2023
It discusses technical limits, neutrality issues, challenges from missing L1 ossification, security of native assets, and proposed solutions towards an "Inter Ethereum protocol".https://t.co/RvlJCt2FdA
L2s are protocols or technologies built on top of existing blockchain networks (such as Ethereum) to increase transaction processing speed and reduce fees. L2 solutions are designed to handle a large number of transactions off the main blockchain, reducing the burden on the main chain and enabling faster and cheaper transactions. Some examples of L2 solutions include state channels, sidechains, and plasma chains.
Martin pointed out that in the long run, even if it is perfectly implemented, L2 will still have some fundamental problems:
- L2 is only suitable for applications where the state will not expand, such as trading platforms (only transaction results are required, not transaction history), but for state expansion
- In terms of transaction costs, the gas fee at L2 peak sometimes exceeds 1 dollar, even if EIP 4844 is implemented (gas can be reduced by 90%), but for those who need gas less than 1 cent ( sbu-cent) scenario is still not applicable. In addition, after the demand increases, the gas will still increase
- L2 asset exit problem, if the exit cost exceeds the user’s asset value on L2, small asset users may not be able to Pay the exit gas fee, even if all users can afford it, they will be stuck due to bandwidth restrictions
- Some applications cannot be rolled up, such as Circles UBI, POAP status is too large to export to L1, and it is impossible to compress this data and put it on L1, so L2 has no effect on them.
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