Coming
off
the
heels
of
ETH
Denver,
the
rollup
ecosystem
is
buzzing
over
the
several
new
and
exciting
ideas
discussed
in
the
Mile
High
City
to
address
the
growing
state
fragmentation
issue
in
the
rollup
space.
Avi
Zurlo
is
the
chief
product
officer
of
=nil;
Foundation.
At
the
event,
leaders,
builders
and
visionaries
revisited
Ethereum’s
rollup-centric
roadmap
from
2020;
where
we’ve
come
as
an
industry
since
then;
and
how
the
new
roadmap
has
led
to
an
explosive
growth
for
the
L2
ecosystem.
Indeed,
the
total
value
locked
in
layer
2s
is
up
by
over
230%
in
the
past
year
alone.
With
this
growth
came
the
natural
next
step
in
evolution:
modular
scaling
designs.
While
modular
blockchains
(i.e.
networks
that
specialize
in
performing
specific
functions)
are
serving
near-term
demand
for
cheaper
transactions
and
providing
entirely
new
application
designs,
thought
leaders
in
Denver
unanimously
agreed
that
there
are
still
outstanding
challenges
presented
by
modular
scaling.
These
issues
are
particularly
apparent
when
new
rollups
are
introduced
to
the
Ethereum
ecosystem,
which
compound
the
problems
of
splitting
up
functionality.
Each
rollup
exists
within
a
siloed
environment
Addressing
the
current
technical
issues
of
Ethereum’s
rollup
architecture,
Ethereum
Foundation
developer
Justin
Drake
said
it
best:
We
have
a
fragmentation
problem.
Where
did
we
go
wrong
with
modular
scaling?
In
a
perfect
world,
Ethereum
scaling
solutions
would
maintain
Universal
Synchronous
composability
enabling
a
seamless
exchange
and
real-time
settlement
of
transactions
on
the
network.
In
reality,
however,
each
rollup
exists
within
a
siloed
environment
that
has
neither
notion
of
other
rollups
state
nor
Ethereum.
This
state
fragmentation
fundamentally
compromises
the
principle
network
effects
of
the
Ethereum
ecosystem,
introduces
compounding
complexity
(and
risk)
of
interoperability
protocols
and
results
in
an
objectively
worsened
developer
and
user
experience.
Making
matters
worse,
price-sensitive
applications
are
forced
to
run
app-specific
infrastructure
to
avoid
congestion
fees
on
general-purpose
rollups,
exacerbating
the
state
fragmentation
problem
further.
So
how
did
we
get
here?
Compromised
network
effects
Compromising
on
the
principle
network
effects
of
global
state
(i.e.
the
idea
that
Ethereum
is
the
“world
computer”)
is
perhaps
one
of
the
more
obvious
reasons
why
modular
blockchains
fail
to
deliver
on
their
promise
of
being
the
holy
grail
of
scaling
solutions.
First,
the
lack
of
unified
liquidity
across
the
L2
ecosystem
creates
a
barrier
to
entry
for
users
looking
to
tap
into
a
singular
network
whether
it
be
for
trading,
swapping
or
staking
needs.
Are
the
customizations
of
an
app-specific
chain
worth
it
Another
barrier
to
entry
for
app
founders
and
developers
is
the
user
distribution
across
all
chains.
This
means
app
founders
and
developers
are
required
to
ask
themselves
whether
a
specific
chain
has
the
appropriate
kind
of
users
their
particular
app
needs.
For
instance,
what
if
a
Web3
app
founder
wants
to
deploy
on
chain
X
for
its
low
transaction
fees
and
reputable
“scalability,”
but
the
network
has,
over
time,
catered
to
a
DeFi
user
base?
Prior
to
L2
inception,
app
founders
could
simply
deploy
on
the
Ethereum
mainnet
without
needing
to
question
the
user
base
since
users
lived
universally
in
one,
singular
blockchain
world.
Now,
however,
modular
blockchains
have
introduced
over
time
a
world
of
unlimited
architecture
possibilities
leading
to
chains
becoming
tailored
to
niche
vertical
interests
within
a
single,
independent
state
or
app-specific
chain.
This
calls
into
question,
are
the
customizations
of
an
app-specific
chain
worth
it?
Interoperability
complexity:
when
will
it
end?
Bridge
hacks
account
for
more
than
$2.8
billion
funds
lost
within
the
larger
crypto
industry.
Today,
users
have
grown
desensitized
to
bridge
hacks.
Unfortunately,
the
number
of
hacks
will
only
rise
as
we
continue
to
ignore
and
fail
to
come
to
consensus
for
a
solution
on
the
current
state
of
L2
state
fragmentation.
It’s
important
to
note
that
interoperability
has
always
been
extremely
difficult
to
solve
and
there
is
no
“one-size
fits
all”
silver
bullet
solution,
but
at
the
rate
in
which
the
L2
ecosystem
is
growing
and
the
plethora
of
app-specific
blockchains
arising,
the
interoperability
and
state
fragmentation
issue
will
only
escalate
and
become
even
more
complex.
Diminishing
developer
and
user
experience
Building
on
my
above
point,
interoperability
complexity
only
creates
additional
frustration
and
fragmentation
for
the
developer
building
on
any
given
network.
Developers
shouldn’t
have
to
worry
about
whether
their
deployed
application
will
successfully
scale,
maintain
low
transaction
costs
and
ultimately
meet
the
needs
of
their
users.
Simply
put,
developer
mindshare
should
be
focused
solely
on
building
an
application
set
to
move
the
needle
in
onboarding
the
next
billion
users
into
Web3.
Right
now,
however,
developers
are
working
around
convoluted
network
abstractions
to
offer
a
seamless
user
experience
which
ultimately
serves
as
a
distraction
and
unnecessary
workload
for
the
developer.
Similarly,
users
are
forced
to
manage
the
complexity
of
interaction
cross-chain,
including
asset
bridging,
wallet
network
management
and
juggling
endless
amounts
of
gas
tokens
just
to
adapt
to
this
fragmented
state.
Builders
need
to
focus
on
introducing
scaling
solutions
for
not
just
the
crypto
power-users,
but
also
the
crypto-curious
newcomers
who
will
immediately
feel
intimidated
by
the
endless
steps
needed
to
communicate
cross-chain
and
turn
their
head
on
the
Ethereum
ecosystem
all
together.
So
where
does
modular
scaling
go
from
here?
The
onus
is
on
the
L2s
themselves
who
have
failed
to
mitigate
congestion
fees
and
have
left
price-sensitive
applications
with
no
choice
but
to
migrate
to
app-specific
infrastructure.
As
the
next
cycle
approaches,
a
vicious
snowball
effect
is
set
to
take
place;
as
L2
congestion
fees
increase,
more
developers
are
forced
to
opt
for
app-specific
infrastructure,
exacerbating
the
(already)
pervasive
problems
associated
with
state
fragmentation.
In
a
few
years,
it
would
not
be
a
surprise
if
the
inability
of
L2s
to
solve
for
state
fragmentation
led
to
the
downfall
of
the
Ethereum
ecosystem’s
application
dominance.
To
all
my
rollup
friends,
comrades
and
peers
building
in
the
Ethereum
ecosystem:
We
need
to
do
better.
