Author | Dasheng Web3 produced | Vernacular Blockchain (ID: hellobtc)
In March, the issuance and distribution of Arbitrum governance tokens, the leading Layer2 protocol, set off a community carnival, and the related Layer2 ecosystem continued to be popular. The narrative of new public chains is still eye-catching. New public chains such as Aptos and Sui, created by former Meta employees, have attracted the attention of top investment institutions before they were born. Aptos was launched in October 2022, and the valuation of APT on the day of its launch was as high as 13 billion US dollars. In January 2023, Aptos led the crypto rebound with a shocking increase of 459%.
Under the current circumstances, what is the current status of Layer2 and new public chains? Which side will win in the end? Below we will analyze and compare new public chains and Layer2 based on the problems they solve, ecological construction and application scenarios, technical architecture, performance, community and governance mechanisms.
01 Problems Solved
Before that, let us first understand what problems the new public chain and layer2 mainly solve.
As we all know, the blockchain world has always had the problem of the "impossible triangle", that is, decentralization, security, and scalability cannot be achieved simultaneously on a blockchain. Ethereum has solved the problems of decentralization and security, but its scalability is insufficient, TPS is low, and its operating efficiency is insufficient. New public chains such as Solana, which broke out in the last round of bull market, have strong scalability and good decentralization, but they have frequent downtime incidents and their security is questionable.
To this end, whether it is Layer2 or new public chains such as Aptos and Sui, they are constantly optimizing on the "impossible triangle" to push the blockchain world forward.
Layer 2 is a general term for a series of off-chain scalability solutions. Currently, Layer 2 is more about Ethereum’s Layer 2, so all the following descriptions are based on Ethereum’s Layer 2. Layer 2 processes data in a way that reduces the burden on the base layer (ETH mainnet), and by transferring part of the main chain’s data processing to Layer 2, the scalability of the entire network is enhanced.
Processing efficiency TPS is an important indicator to measure the performance of a public chain. TPS (transactions per second) refers to the number of transactions a network can process per second. The higher the TPS, the higher the efficiency of the public chain. The TPS of the ETH main network is roughly around 15 transactions per second. Arbitrum's TPS has recently reached a maximum of 100 transactions per second, and the TPS has increased slightly (OKchain data).
Aptos' TPS officially claims in the final document that it can reach 100,000+ transactions per second, but according to the Aptos blockchain browser data, the current TPS is about 10 transactions per second. We will pay attention to whether the TPS will increase in the future. Solana's TPS is roughly 2,000+ per second, which is a high-performance public chain.
02 Ecosystem construction and application scenarios
In terms of ecological construction, Layer2 is superior. According to defillama data, as shown in the figure below, TVL accounts for each blockchain. The current leading layer protocol Arbitrum accounts for 4.36%, Optimism accounts for 1.81%, but the new public chain Aptos accounts for a very small proportion and is not listed separately.
In the overview, we can see that Aptos ranks 39th with a locked-in amount of only about 36 million US dollars, while Arbitrum ranks fourth with a locked-in amount of about 2.2 billion US dollars. Arbitrum's locked-in amount is roughly 60 times that of Aptos, and the gap is not small. Even Solana, which was very popular in the past two years, only has 286 million US dollars, which is only one-eighth of Arbitrum.
In terms of well-known projects in application scenarios, many projects in the Arbitrum ecosystem are familiar to everyone. For example, the derivative Dex protocol GMX, GNS, the full-chain borrowing protocol RDNT, and the game ecosystem Treasue DAO, which have been listed in the previous article, have all been launched on Binance. They are both popular and well-known, and have made great innovations in project mechanisms. The options protocol Dopex, the Dex protocol Camlot, the GMX Lego project GMD, and jonesDao are all well-known high-quality projects. In contrast, the Aptos ecosystem can be said to have no strong competitors. Although many projects joined as soon as the mainnet was launched, most of them were splicing projects for assembly line operations. Aptos has low requirements for project parties, resulting in a large number of low-quality projects flooding the ecosystem. To this day, some well-known projects have chosen to go online on Aptos, but the native projects on the chain have not performed well. Of course, Aptos has only been online for half a year, and there may be a turnaround in the project ecosystem in the future. Let's wait and see.
03 New public chain and Layer2 technical architecture
New public chains such as Aptos and Sui have some innovations compared to previous public chains such as Solana that focus on performance.
Aptos introduces the move language
Currently, there are three most well-known programming languages for public chain development: 1. Solidity; 2. WASM; 3. Move. Compared with Solidity, Move is more flexible and convenient; compared with WASM, it is more specific and safer.
Block-STM Smart Contract Parallel Execution Engine
Smart contract execution has always been the main bottleneck limiting blockchain throughput. Current blockchains are either executed sequentially or require parallel sequential execution (i.e., no internal conflicts) to improve performance. Similar to the following figure: Ethereum is a single-lane road, and all cars must be lined up in a line. Solana and Aptos are both four-lane highways, which obviously speeds up. Solana has four roads that are reserved for specific vehicles to pass through. The road selected by the vehicle is fixed and cannot be changed, while Aptos can be transferred to other roads to deal with other situations. This enhances the reliability of Aptos, and Aptos, Sui, etc. are expected to take over Solana to form a new public chain narrative.
Layer2 expansion solutions include channels, rollups, and plasma. The most mainstream and widely used one is the rollup solution. Rollups rely on proofs, allowing Ethereum to verify the correctness without processing transactions. There are two main types of rollups: Zero-knowledge (ZK) rollups and Optimistic rollups. Zero-knowledge rollups use zero-knowledge proofs, which can be exchanged in real time. Zero-knowledge proofs mean that the prover can convince the verifier that a certain assertion is correct without providing any useful information to the verifier. For example, I have the password of the room, but I am worried that the people next to me will find out. How can I prove to everyone that I do have the password without the risk of the password being leaked? Now I can let the verifier put a marked water cup in the room, and I can get the marked water cup smoothly, so that I can prove that I do have the password and avoid being seen by the people next to me when I enter the password.
Optimistic rollup uses fraud proofs. It assumes that all transactions are valid and sets a challenge period during which anyone and any node can question the data. The data is then rolled back to L1, and the main network performs verification calculations to determine authenticity.
This leads to a big problem. Assets from L1 to L2 can be transferred in real time, but it takes a week to transfer assets from L2 back to L1. This time is the exit period, which is the time for all nodes to question the verification. This is very user-unfriendly. It is believed that anyone would be crazy if they have to wait a week to transfer assets.
Distribution of rollup technology used by Layer2, source: L2beat
Currently, the Optimistic solution has the upper hand and is more compatible with EVM. Representative projects include Arbitrum and Optimism, which have already issued tokens. However, the ZK series is more favored by Ethereum founder Vitalik Buterin, and is more secure and private. Currently, due to the limited compatibility of EVM, the development difficulty is relatively high. Currently, the more well-known protocols are Zksync and Starknet. In general, layer2 solves the scalability problem and improves operating efficiency, but there are also problems such as weak interoperability between layer2 solutions and liquidity fragmentation.
04 Community and governance mechanisms
As an extension layer of ETH, Layer2 still uses ETH as a gas consumption token, but issues governance tokens as tokens for project development and governance. Holders generally exercise voting rights through staking and jointly participate in the governance of DAO organizations and the formulation of project development decisions. However, the recent opacity of the community governance of the Layer2 protocol arbitrum has sparked heated discussions in the market. The incident can be traced back to a few days after the ARB airdrop carnival. On March 28, the Arbitrum community initiated a vote on the Arbitrum Improvement Proposal 1 (AIP-1), which intends to introduce a decentralized autonomous organization structure called ArbitrumDAO, which will be managed by ARB holders to manage the Arbitrum Foundation and serve the ArbitrumDAO community.
The proposal mentioned that 750 million ARB (worth more than $1 billion) would be allocated to Lemma, a service provider of the Arbitrum Foundation. It didn't seem to be wrong, but community members discovered that the Arbitrum Foundation had already created an address in advance and received nearly 700 million ARB. This matter immediately blew up in the community, and then the official claimed that this proposal was just to inform the decision that had been made. In the end, the proposal received 82.56% of the votes against it. Under pressure, the official re-disassembled the AIP-1 proposal and launched a revised version of the proposal. On April 9, the community launched a heat check vote for the AIP1.05 proposal, proposing that the Arbitrum Foundation return 700 million ARB to the DAO Treasury. The vote will end on April 15, and currently 51.64% voted in favor.
AIP-1 Proposal Voting Results on April 9
But in any case, we can see that the current transparency of Arbitrum governance is poor and community governance needs to be improved.
The community governance of new public chains such as Aptos remains stable and standard.
05 Summary
In general, layer2 has a greater advantage in the current project development. At the same time, relying on the multi-chain system formed by ETH, layer2 forms a powerful whole. However, whether it is Aptos or Sui, they are still single-chain operations, and there have been no high-quality projects. If the pace cannot be accelerated, the gap may become larger and larger. Of course, new public chains such as Aptos and Sui are projects with strong support from star teams and capital. At the same time, Aptos is the first public chain with move as the programming language, which has its advantages. For emerging concepts, some time can be given.
Which one has a better future, the new public chain led by Aptos or layer2? What do you think? Welcome to communicate in the comment area.
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