How will the market landscape of layer 2 evolve after the upgrade in Cancun?

1) The Ethereum Cancun upgrade EIP4844 Proto-Danksharding proposal will bring a "qualitative" boost to layer2 Rollup projects.

By introducing a new data structure called Blob space, it iterates on the limitations of the past reliance on calldata for data storage, while enhancing the data availability capabilities of the Ethereum mainnet.

Compared to the full node storage structure of calldata, Blobs are designed for temporary storage by partial nodes, which significantly increases the data submission limit for layer2 to the mainnet in a single instance, expands its TPS, and improves data storage efficiency while drastically reducing data storage costs. The enhancement of DA capability is sufficient to handle the 7-day fraud proof time window of OP-Rollup with a one-month temporary storage.

As a result, the volume of transactions submitted by layer2 to the mainnet will increase significantly, and the costs borne by individual users will also decrease noticeably. Before the Cancun upgrade, layer2 boasted about its TPS, but most of it was in testing environments, while users' direct experience of high Gas fees led to a poor perception of layer2.

After the Cancun upgrade, layer2 players will no longer have the performance bottleneck of the mainnet as an excuse; hard metrics like TPS and Gas fees will directly become the tests, which is a key factor in reshaping the competitive landscape of layer2.

This is precisely why I repeatedly emphasize that the competitive situation of layer2 truly begins after the Cancun upgrade;

2) After the Cancun upgrade, the layer2 market's internal competition intensifies, with new challengers emerging to challenge the existing OP+ZK landscape.

The decentralization issue regarding Sequencers has always been a focal point of market attention. As a result, it has been found that in the strong OP-Rollup lane, the decentralized Sequencer has turned into a Stack alliance nature of social consensus, a "soft decentralization."

Nonetheless, despite criticism of Optimism's inaction on decentralization, Optimism seems to be able to turn the situation around with the market success brought by OP-Stack. But can you say that OP-Rollup is all there is to Rollup? Clearly not; a more reasonable market evolution trend is that the strengths of OP-Stack will be further amplified, and the gaps in OP-Stack will naturally attract other contenders.

In recent days, the layer2 decentralized Sequencer solution provider @MetisDAO has performed exceptionally well in the secondary market, with a 7-day increase of over 100%, and its TVL has soared to $540 million, nearing zkSync. Why?

The core business logic is simple: since OP-Rollup has made no progress on the decentralization issue of Sequencers, as a contender, proposing a reasonable decentralized Sequencer solution is its market space.

Because the decentralization issue of Sequencers relates to the credibility of layer2 transaction submissions and the security of layer2 transactions' interactions with the mainnet. If we disregard this "foundation" issue, the TPS and Gas rates after the Cancun upgrade seem to become "castles in the air." I do not deny Optimism's success in its Stack strategy, but the decentralization issue of Sequencers will always have other disruptors to solve it.

Metis operates multiple Sequencer candidate nodes through POS staking, where nodes compete for block rewards through an election mechanism, and malicious actions will be punished by slashing. This POS consensus binds each Sequencer as a stakeholder into a community of interests, and the Metis Foundation uses token incentives, investing 4.6 million $METIS tokens to encourage Sequencer mining, new project deployments, and other subsequent ecosystems.

Compared to Optimism, Metis's market cap is still relatively low. It does not directly compete with OP but can open up a broad market with just the decentralized Sequencer. Metis is just a recent eye-catching example; in my view, after the Cancun upgrade, the market scale of layer2 will further expand, and new layer2 providers will have to seize opportunities from the two giants, OP and ZK, and will come up with innovative strategies to push the layer2 lane to new heights, of course, more opportunities will also arise in new layer2.

3) Layer2 is gradually evolving into a modular structure, and its orthodoxy will be broken; the chivalrous layer2 will be replaced by a broader definition of layer2.

I have mentioned in several articles that the core of layer2 is Ethereum's DA capability. If the full nodes of the mainnet do not participate in verifying the data security of layer2, the mainnet essentially becomes a "bulletin board," and layer2 cannot inherit the security of the mainnet. Therefore, those relying on Ethereum's DA are the chivalrous layer2, while those escaping the scope of Ethereum's DA are the broader layer2. (Radically, one might not even recognize them as layer2.)

However, when the layer2 market grows to a certain scale, the pure chivalrous orthodoxy of Ethereum layer2 may break its boundaries. The reasoning is similar to how the lack of actual battle-tested challenges for OP-Rollup's Fraud proof can be selectively ignored by the market. Technology is just one part of the business logic; the market and ecosystem ultimately decide, much like how Optimism can always create miracles in the name of optimism.

This means that after the Cancun upgrade, third-party DA solutions will invade layer2, including third-party DA solutions from @CelestiaOrg and shared Sequencer solutions from @EspressoSys. Although everyone is reluctant, the business logic of modular evolution will gradually break the defenses that the Ethereum mainnet can maintain.

The focus of the OP-Stack implementation is to achieve shared Sequencers. The more OP strategic alliances there are in the future, the greater the benefits they can capture through Sequencers. Conversely, the more interests they are entangled with, this social consensus will become a new constraint beyond technology, solidifying Optimism in a big brother position; the focus of the ZK-Stack is to achieve a shared Prover system, with its own DA capabilities and those of third-party DA solutions like Celestia, and of course, the limited DA capabilities of the mainnet will all belong to ZK's strategic territory, with its development focus being the new multi-chain ZK landscape interface of layer3 Hyperchains, and who provides DA is not the key.

Their interest orientation determines that they actually do not care where DA comes from; only Ethereum itself cares about DA. So in the face of Celestia's ongoing encroachment on the DA market, Vitalik has been waving the flag for Plasma+ZK, but the OP+ZK, busy with strategic expansion, does not care about these; they only care about how large the layer2 camp covered by their Stack strategy will be, after all, RaaS is the ultimate business endgame for layer2.

In summary, the layer2 lane after the Cancun upgrade will be exceptionally exciting, whether it is the frequent emergence of new players or the expansion of layer2 strategic boundaries, both will stimulate the layer2 market towards "diversified" prosperity.

The layer2 lane will ultimately become a highly modular market composed of integrated ZK technology + OP framework + various DA solutions + various Sequencer services + various Gas fee models, etc.