You call that decentralized? Layer 2s are destroying crypto

Opinion by: Steven Pu, co-founder of Taraxa

The rollup-based furniture 2s that are each the rage contiguous are destroying crypto or, much precisely, the precise trustless quality of crypto, by rapidly eroding its decentralized trustlessness. 

Crypto’s uniqueness comes from its trustlessness, powered by the underlying infrastructure chiefly successful furniture 1s. The lone mode to beryllium genuinely trustless is to beryllium afloat decentralized, wherever decisions are made dispassionately by a ample and randomized acceptable of nodes from each crossed the world, operated and owned by radical who, successful aggregate, person small to nary connections. 

That decentralization hinges connected 3 pillars: inclusion, ordering and execution. A web is lone arsenic decentralized arsenic its weakest pillar. When immoderate of them is handed to a azygous decision‑maker, the “trustless” statement becomes a selling stunt, and rollups fracture each 3 simultaneously.

Rollups supply nary decentralized guarantees connected inclusion and ordering and, successful the lawsuit of optimistic rollups, nary warrant connected execution correctness either. Rollup L2s are perfectly a scourge to crypto. 

Rollup L2s are rapidly eroding spot successful crypto 

There are two wide types of rollup L2s today: optimistic and zero-knowledge (ZK). Both are dominated by networks wherever a azygous sequencer makes each the decisions. Since having a azygous entity for this important task is simply a problem, these rollups bash marque immoderate feeble attempts astatine enforcing correctness, but lone successful presumption of execution. 

Optimistic rollups trust connected a weeklong “challenge period,” a ticking timepiece that invites chaos. Millions of transactions volition unwind if conscionable 1 fraudulent impervious sticks, locking superior and assurance for days.

For ZK-rollups, they bash warrant executional correctness done ZK-proofs. 

Related: Ethereum turns 10: Here’s however its booms and busts shaped history

But a cleanable impervious of execution is useless erstwhile a lone sequencer tin simply refuse, hold oregon reorder transactions to its advantage. Without public, immutable records of who tried to transact and when, censorship cannot beryllium proven and, therefore, cannot beryllium punished.

If a web can’t warrant transparency, fairness and correctness for inclusion and ordering, what bully is simply a warrant connected execution? Since you tin lone execute what is being included and ordered, execution fundamentally depends upon inclusion and ordering. Not having immoderate guarantees connected inclusion and execution makes guarantees connected execution untrustworthy. 

Markets are noticing this. Liquidity is splintering crossed bridges that inherit each rollup’s weakest‑link assumptions. The resulting web of custodial multisigs and emergency‑pause switches creates systemic hazard that traders are present pricing into plus valuations. If the discount for “sequencer risk” widens further, Ether’s monetary premium volition suffer.

Decentralizing L2s simply turns them into L1s 

A communal fallback antagonistic to the information that L2s are a centralized messiness is that they’ll beryllium decentralized astatine a aboriginal date. This is simply a self-defeating argument. 

If you instrumentality an L2 and crook it into a genuinely decentralized web of sequencers, whereby the sequencers collaborate utilizing a decentralized statement to supply beardown guarantees connected inclusion, ordering and execution, what bash you get? You extremity up with an L1. 

Anyone arguing that L2s tin yet beryllium decentralized is saying they’ll crook into L1s astatine immoderate point, leaching liquidity, fees and full worth locked (TVL) distant from the L1 (basically Ethereum) they’re purported to assistance scale. 

The incumbents moving today’s profitable single‑sequencer stacks would hardly spot immoderate inducement to dilute their power.

The mode to standard Ethereum is to… standard Ethereum

Ethereum doesn’t person to beryllium dilatory and expensive. Many newer statement designs connected mainnets tin beryllium referenced to amended the network’s method functionalities. 

With a TVL rapidly approaching $100 billion, it’s perfectly tenable that Ethereum developers would beryllium other cautious erstwhile implementing cardinal changes to the network’s halfway architecture. However, progressive advancement needs to beryllium made toward scaling Ethereum itself, not solely focused connected these parasitic L2s, which are role-playing arsenic decentralized networks. 

Funding cardinal upgrades connected production, execution and statement would reenforce Ethereum’s neutrality, sphere its interest gross and reconstruct idiosyncratic assurance without the bridge-risk taxation rollups imposed.

Let’s ditch the L2s and marque scaling the Ethereum L1 a priority. 

Opinion by: Steven Pu, co-founder of Taraxa.

This nonfiction is for wide accusation purposes and is not intended to beryllium and should not beryllium taken arsenic ineligible oregon concern advice. The views, thoughts, and opinions expressed present are the author’s unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.