Ethereum 2.0 Launch: Layer 2 Solutions May Become Strategic Partners in Growth

The Ethereum 2.0 Phase 0 beacon chain officially launched its genesis block at 8 PM on December 1st, marking an important milestone in the development of Ethereum. It signifies the official start of Ethereum 2.0, as the network will gradually transition from PoW to PoS, laying the foundation for a tenfold increase in capacity.

However, the long landing cycle, changing roadmap, and high migration costs of Ethereum 2.0 have posed many challenges to this major upgrade. Meanwhile, various Layer 2 scaling solutions such as Rollup, Plasma, and Validium have emerged in the Ethereum ecosystem. Compared to the sharding technology emphasized by 2.0, these solutions may have advantages in terms of scalability, implementation cycle, and engineering complexity.

In the short to medium term, Layer 2 solutions seem more promising to become Ethereum's "mechanical skeleton", providing the necessary scalability for the network. In the long run, Layer 2 may even become a long-term partner for Ethereum's future development.

Layer2 may become an important part of Ethereum infrastructure

In the past, Layer 2 was often seen as a transitional solution before public chains matured, used to compensate for the performance deficiencies of the main chain. However, recent news shows that the Ethereum core development team has raised the priority of the Layer 2 solution Rollup above the originally planned sharding scheme.

This adjustment reflects the difficulties faced by the core concept of "sharding" in 2.0. Sharding technology is expected to take 2-3 years to be implemented, and it can at most bring a 64-fold increase in TPS to the network. In contrast, existing Layer 2 solutions like Rollup can achieve performance improvements of up to 100 times. From a technical standpoint, the strategic value of Layer 2 is evident.

From a design perspective, the relationship between Layer2 and Layer1 is also worth noting. Ethereum founder Vitalik has pointed out that the blockchain field generally tends to keep Layer1 simple, building more complex Layer2 functions on top of it. This is because changes to the infrastructure layer (Layer1) are difficult and come with high risks. Therefore, Ethereum needs to develop Layer1 and Layer2 in parallel, and in the long run, should pay more attention to Layer2.

This design concept suggests that Ethereum and Layer 2 may coexist in the long term, rather than just serving as a short-term aid. Currently, several important applications publicly support Layer 2 solutions, such as Uniswap and Synthetix supporting Optimistic Rollup, Tether supporting the Plasma-based OMG Network, and Curve supporting ZK Rollup. These applications are not only flagship projects of the Ethereum ecosystem but also the infrastructure for complex functionalities in the future, and their attitudes will influence the position of Layer 2 within the ecosystem.

The CEO of a project focused on custom Layer 2 solutions made a vivid analogy: "Vitalik compares Ethereum to the Swiss Army knife created for the blockchain industry. Although it is powerful and versatile, it is far from sufficient to work in the kitchen solely with a Swiss Army knife. This does not mean that the Swiss Army knife is not useful, but rather that it is not enough."

Each Layer2 solution has its own characteristics, and the prospects for Rollups are promising.

The notable feature of Layer2 solutions is their loose coupling with the main chain, meaning that the main chain ( Ethereum 2.0's "Beacon Chain" ) and the validity of the subchains are not inseparable. Currently, there are mainly six types of Layer2 solutions in the Ethereum ecosystem: state channels, sidechains, Plasma, Validium, ZKRollup, and Optimistic Rollup. These solutions differ in terms of custody methods, computation and storage locations, and verification mechanisms.

For Ethereum-based DApp projects, it may be wise to choose the appropriate solution based on actual needs while the Layer 2 landscape is still unclear. It may even be necessary to use multiple solutions simultaneously for different needs within the same scenario.

Currently, the Rollup series solutions are most likely to be widely adopted due to strong support from major applications, rapid development progress, and ideal scalability. Among them, Optimistic Rollup may receive more support, mainly thanks to the favor of DeFi giants. Synthetix has clearly adopted this solution and is advancing integration work, Uniswap has also opened a DEx demo based on this solution for users to experience, and the oracle leader Chainlink is also expected to adopt it.

Although Layer 2 solutions have a bright future, they also bring new challenges, such as the potential weakening of DeFi's composability. Taking Rollup as an example, the two solutions ZK and Op currently cannot interoperate, which may further exacerbate liquidity fragmentation. However, for DeFi as a whole, higher-dimensional integration should be the core goal of Layer 2.

Overall, the evolution path of Ethereum 2.0 is still full of uncertainties, and the community may continue to adjust the roadmap. However, it is certain that as the Ethereum ecosystem grows increasingly large, the difficulty of fundamental reforms will continue to rise. In this context, Layer 2 is likely to become a long-term strategic partner and infrastructure for Ethereum.