Is the Ethereum L2 camp feeling anxious? Let's take a look at cross-network high-speed channel solutions
In the Layer 2 ecosystem led by Rollup-class scaling solutions, at least 6 teams are already attempting to solve the cross-network transfer performance issues.This article is from Chain News, author: Pan Zhixiong.
Layer 2 scaling technology can help Ethereum achieve a leap in performance, with at least two orders of magnitude improvement in throughput in the long run. However, aside from the uncertainty of security, the exit period user experience and the liquidity fragmentation between different Layer 2 networks may become the most concerning topics at present.
Of course, users can utilize Ethereum Layer 1 for cross Layer 2 transactions, for example, users can withdraw assets from Optimism to Layer 1 and then recharge them to zkSync. However, this is quite unfriendly for most users (Gas fees are high), and the settlement speed may also be affected.
The most painful issue is the time window problem for withdrawing assets from Layer 2 to Layer 1, especially for the early Optimism network, which has designed a 7-day exit period to ensure network security. This means that if users need to withdraw their Layer 2 assets to Layer 1, they must wait for 7 days, during which the funds are frozen and cannot be used.
Fortunately, some teams have long recognized this problem and provided a set of solutions that can address the slow exit period or help assets transfer quickly between different Layer 2 networks, greatly enhancing user experience and the adoption of Layer 2.
In the Layer 2 ecosystem led by Rollup scaling solutions, at least 6 teams are already trying to solve this problem. They may also venture into Plasma or sidechain scaling solutions in the future, providing a more comprehensive asset transfer tool. The main ones include:
Connext and Celer's cBridge utilize state channel technology to open high-speed payment channels across different networks, similar in principle to the Bitcoin Lightning Network;
Maker will open a special asset bridge for the dollar stablecoin DAI issued by the protocol, allowing for safe and fast instant transfer channels from L2 to L1 when Maker's oracles can read data on Layer 2;
Hop Protocol establishes bridges for different assets across various L2 networks, introducing special validation nodes and AMM components to ultimately achieve asset transfers between multiple networks;
StarkWare's main direction is to achieve asset interoperability across different networks through "Conditional Transactions" technology;
DeGate will initially provide cross-network trading through centralized asset custody, and will later shift to decentralized solutions.
MakerDAO (Dedicated Asset Bridge)
As one of the oldest DeFi applications in the Ethereum ecosystem, Maker, the issuer of the dollar stablecoin DAI, will initially design a dedicated fast transfer channel for DAI assets on the Optimism network, allowing users to quickly transfer DAI from Layer 1 to the Optimism network and also to quickly withdraw DAI from the Optimism Layer 2 network to Layer 1.
The feasibility of this solution is mainly due to Optimism's design, which publishes all transaction data to Layer 1. In the design of the Optimism network, there is a monotonically increasing transaction list called the "Canonical Transaction Chain" (CTC), and transactions published on this list can be considered definitively unchangeable (unless Layer 1 blocks are also reorganized).
Thus, the core of Maker's solution is the design of a new "oracle" and relay component that reads data from the CTC, using it as a basis to pre-release Layer 1 liquidity for Layer 2 users.
Users first submit a withdrawal request from Layer 2 to Layer 1. After the oracle reads the transactions from the CTC, it can mint a liquidity certificate called fDAI on Layer 1 for users in advance of 7 days. Then users can use the "fDAI vault" to collateralize fDAI and exchange it for DAI.
Additionally, although the withdrawal period is 7 days, any withdrawal transaction takes 7 days, so a withdrawal transaction from 7 days ago has just returned to Layer 1. This continuous flow of DAI withdrawal funds can serve as a source of funds for DAI in the vault.
However, regarding this "oracle" component, whether it may introduce some centralization risks has not been elaborated in detail. They explain the "trustless" advantage of this solution as follows: "Apart from the Oracle, there is no need to introduce trust assumptions in this system."
Currently, Maker has not mentioned plans for other Layer 2 networks, so it is focusing solely on Optimism, aiming to launch the official Layer 2 DAI solution for this network as soon as possible.
Detailed solution introduction:
Celer cBridge (State Channel)
The Layer 2 scaling project Celer has launched a cross-chain payment network called Celer cBridge, allowing users to transfer value across any Ethereum Layer 2 network, the Ethereum main chain, and other Layer 1 or Layer 2 networks.
cBridge is achieved by extending Celer's state channel, enhancing the existing protocol to run simultaneously on multiple chains. The Celer state channel network has already incorporated cross-chain payment functionality, and to test this feature, it is necessary to deploy the CelerPay contract on each EVM test chain or deploy corresponding contracts or plugins on non-EVM compatible chains (such as the Celer Substrate module on Polkadot).
In simple terms, state channels are a type of special Layer 2 network scaling solution, and Bitcoin Lightning Network technology can also be categorized as state channel technology. They are typically used to solve small payment scenarios, moving high-frequency transactions off-chain to reduce on-chain pressure.
Detailed introduction:
Connext (State Channel)
Connect's Vector also uses state channel technology and has launched a very early version on the mainnet.
Recently, they released a new version that achieves interoperability between Polygon (Matic) and the sidechain xDai, launching the xDai-Polygon Bridge test version, allowing users to use state channels to transfer xDai to Dai on Polygon and vice versa.
The Connext team has actually launched state channel technology on the Ethereum mainnet quite early, with version 2.0 going live in September 2019. However, there has been little reporting on its adoption rate. According to the previously compiled ecosystem diagram, it mainly focuses on wallets, while the supported applications have not entered the majority's view.
Later, Connext began to explore a new product direction in 2020. Although they still use their most familiar state channel technology, the entry point has changed. In August last year, Connext participated in the scaling challenge initiated by Reddit, launching the Spacefold solution, attempting to address the high-frequency demands of social network scenarios, which also laid the foundation for the subsequent Vector.
Currently, Vector was launched on the Ethereum mainnet in January this year, but the version number is 0.1.0, so it can also be considered to be in the early stage, with more refined versions planned to be rolled out in phases in the first and second quarters.
StarkWare (Conditional Transfer)
Zero-knowledge proof research institution StarkWare officially launched the StarkNet scaling network based on the ZK Rollup concept in January this year. However, this is not the focus of this article; rather, it is their complete solution for Layer 2 interoperability, realized through "Conditional Transactions" or "Conditional Payments."
Conditional transfers are cryptographic components that can be used to achieve permissionless interoperability on the blockchain. In simple terms, conditional transfers are transactions that occur based on certain "events" (such as payments or state changes). Once a conditional transaction is defined in one network, it becomes effective once its conditions are met in another network.
This series of features will be implemented in phases,
Phase 1: Layer 2 exchanges based on StarkEx can achieve fast withdrawals to Layer 1.
Phase 2: Two Layer 2 networks based on StarkEx can perform fast transfers to each other.
Phase 3: Any two Layer 2 networks can achieve fast transfers.
Regarding whether this solution is "trustless," the team stated that ordinary users do not need to trust at all, but for liquidity providers (LPs), they may need to trust nodes to package and publish their conditional transactions (as they can choose not to package), but this layer of trust can also be removed through some means, such as bypassing these nodes via on-chain smart contracts.
Reference:
Hop (Universal Asset Bridge)
Hop Protocol is a solution somewhat similar to Maker, designing a universal asset bridge in their solution, and ultimately achieving rapid asset migration between Layer 2 networks by introducing "Automated Market Maker" (AMM) components and "Bonder" roles.
When using Hop's solution, assets need to flow through Hop to enter the Layer 2 network, for example, ETH entering Layer 2 through Hop's asset bridge is called Hop ETH (or hETH). hETH and ETH are completely equivalent, at least they can be exchanged through Hop.
However, there is also an "official" version of ETH in the Layer 2 network, which is the version of ETH that more people commonly use. The official ETH and hETH should theoretically be completely equivalent, but due to liquidity reasons, there may be some price differences.
Therefore, Hop Protocol introduces AMM components and "Bonder" roles. AMM is designed to address short-term price fluctuations between official ETH and hETH, while the "Bonder" role can provide liquidity for users needing to release liquidity in advance, and can also earn part of the revenue (as they save users the 7-day withdrawal period).
Bonders can observe transaction data between different Layer 2 networks to advance the payment of official ETH, and arbitrageurs between different Layer 2 networks will continuously rebalance (to gain profits), keeping the AMM price within a reasonable range.
This solution has many details and parts that still need improvement, such as the decentralized mechanism for multiple Bonders, etc. For more information, you can refer to the project's white paper.
DeGate (Custody)
The Layer 2 trading protocol DeGate, initiated by CoinHoo and MYKEY teams, adopts a more pragmatic approach, acting as an intermediary to provide fast cross-chain asset services. However, this introduces centralization risks, as users using this still need to trust DeGate and the team behind it, and will transition to a decentralized solution once the infrastructure is improved.
DeGate initially achieves a fast channel for cross-layer asset transfer through centralized asset custody, with the first phase implementing a rapid exchange channel between L1 and L2, and later considering opening rapid exchange channels between different L2s depending on the situation, as this solution can flexibly connect to different networks.
DeGate states in its white paper that the security of the custodial assets is guaranteed by the net assets held by Home DAO itself. Once mature oracle services appear on Ethereum's L2, DeGate Bridge will transition to a decentralized method for asset bridging.
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Risk warning
