The recent popularity of DeFi applications and yield farming alongside the ongoing bull market has led to well-documented capacity issues on the Ethereum network, causing extreme fee levels during peak periods that price out all but the wealthiest of participants and render many dApps unusable at times.
Scalability isn’t a new issue, however, with improvements on layer-1 not able to match Ethereum’s user base and extensive dApp growth. A known concern for some time, it has contributed toward the development of Ethereum 2.0 that, though promising, is still a very long way off. The pressing nature of this problem has therefore led to a growing number of layer-2 proposals to combat the high fees and performance issues that are hampering further adoption in the ecosystem, including a promising new unique approach.
Existing Scalability Proposals
Most proposals for layer-2 or effective layer-2 solutions to Ethereum’s scalability issues are based on:
- Commit-Chains (such as Plasma).
- State Channels/Payment Channels (such as The Raiden Network – similar to the concept of Bitcoin’s Lightning Network).
- Validium (such as StarkWare).
- Sidechains (such as xDAI and Polygon).
- Ethereum-compatible layer-1 chains (such as Polkadot, Cosmos, and Avalanche).
- ZK-Rollups (such as Loopring).
- Optimistic Rollups (such as Optimism).
Each solution presents different trade-offs. Plasma was one of the earliest solutions but suffers from security vulnerabilities related to data availability. Another disadvantage is that Plasma, as well as state channels and payment channels, don’t support open participation smart contracts. For that reason, it does not offer a general-purpose programmability model supported by layer-1, fundamental for the creation of prominent applications like Uniswap. Ethereum-compatible layer-1 chains introduce additional security considerations associated with newer or less decentralized consensus mechanisms, and sidechains have been slow to make progress.
Given the drawbacks of other proposals, Rollups have gained popularity in providing a more promising scaling solution for this increasingly pressing issue. Broadly, Rollups aggregate transactions off-chain inside an Ethereum smart contract, reducing fees and congestion by increasing the throughput of the blockchain. For ZK-Rollups, validity is ensured via zero-knowledge proofs. Optimistic Rollups are ensured by fraud proofs. ZK-Rollups’ biggest advantage over Optimistic Rollups is its instant finality, given by validity proofs. One drawback is its complexity, posing a rather difficult engineering problem to port smart contracts from the Ethereum main chain. However, the biggest disadvantage of ZK-Rollups is its deficiency in computational scalability, as it imposes a big overhead on intensive computations on layer-2. On the other hand, Optimistic Rollups with interactive dispute resolutions can support both simple payments and very complex smart contracts.
Cartesi’s Descartes Rollups Solution
As a result, Optimistic Rollups are hot right now, with top DeFi projects like Synthetix migrating over to layer-2 using these solutions. Cartesi’s Optimistic Rollups solution, Cartesi Rollups, goes a step further. It introduces interactive dispute resolution, allowing for immense scalability with validators executing computationally heavy tasks off-chain for specific applications rather than all applications on a blockchain. This provides million-fold computational scaling without loss of the strong security guarantees of Ethereum and solves the most immediate throughput and high fee issues.
If that wasn’t impressive enough, in a game-changer for blockchain development, Descartes Rollups are also integrated with the Cartesi Machine, enabling smart contracts that run off-chain on a Linux virtual machine. Rather than using Solidity, the programming language for implementing smart contracts based on Ethereum and dealing with the limitations of the Ethereum Virtual Machine, countless mainstream software components can be used by developers instead, providing an entire operating system for smart contracts for the first time in a form of decentralized world computer.
Cartesi sees this as an important step toward the maturing of the blockchain ecosystem, opening the door to mainstream programmers, and allowing dApp developers greater opportunity to build simple or complex smart contracts more similar to the regular apps we are used to on the path to broader adoption.
Disclaimer: The Daily Chain encourages you to carry out your own research before you make any form of investment and educate yourself about how to stay safe in the crypto space. This article is informational/educational and does not represent financial advice.