Vitalik

In a recent blog post, Vitalik wrote about the potential for using layer 3 for scalability, in addition to layer 2s.  The idea is that if layer 2s can be used to scale blockchains, then further layers on top of those ought to be able to scale it even further.

There are limits to adding evermore layers

One of the main problems with adding further layers on top of one another is that the security of the rollups is problematic.

Buterin makes the example that if rollups increase transaction output by 8x, then it isn’t as simple as rollups on top of rollups scaling to 64x the speed, since a layer 3 will not be able to inherit the same degree of security from the layer one that the layer 2 does.

As more layers are added, there are more centralisation risks that could be problematic, and endless rollups can fracture liquidity between chains.

Starkware provides alternative layer 3 technology

Starkware is a project that uses layer 3s to scale in a way that doesn’t require endlessly stacking layers on top of one another.  Starkware ensures that different layers are used for different use cases.

Other layers can be used to optimise for specific use cases such as privacy, creating walled gardens, and making compromises of decentralisation and immutability in favour of greater functionality.

Vitalik makes the case that there will likely be various different techniques employed for scaling Ethereum, and that layer 2s and layer 3s may often serve different roles within this niche.  Layer 2s will primarily be used for scaling, whereas layer 3s could be used for specific applications or less-trusted scaling known as validiums.

scaling

How does this affect ETH?

The merge transitioned from proof of work to proof of stake, at which point Ethereum ceased to become the largest Turing complete blockchain on proof of work, and instead joined a range of other blockchains that have already spent a decent amount of time on proof of stake.

However, unlike other blockchains, Ethereum has been optimised for decentralisation (albeit very little when compared with Bitcoin) and security over speed and transaction throughput.

As the most reliable and trusted Turing complete blockchain, ETH will likely remain in a position with dominant market share.

However, it remains to be seen how much the free market will value other chains, and how much the convenience and practicality of more centralised chains with lower fees and faster transaction throughput will compete with Ethereum.

Moreover, it is important to consider the potential shortcomings of a chain that relies on other layers in order to scale.  If Ethereum cannot scale on its own layer one then the value proposition of the blockchain becomes diluted as more and more liquidity moves to separate layers that aren’t easily interoperable (or have weakened security).

Alternative blockchains use different scaling solutions

Advocates of other layer one blockchains, such as Emin Gun Sirer, has also argued that scaling with an infinite number of further layers is not a good approach for a blockchain to take, since the security isn’t inherited on each layer.

Rather than scale in such a way, the Avalanche protocol uses a relay chain and deploys subnets, meaning that the blockchain can scale without being too distant from the security and reliability offered by the layer one.

Other blockchains, such as Solana, have taken the monolithic approach and attempted to make all the updates to their main chain.

Solana has opted for being an extremely centralised chain with very few nodes and a proof of history consensus mechanism in order to be able to process as much as they possibly can without the need for extra layers being built on top of them.

The Ethereum Foundation has attempted all sorts of solutions for scaling throughout its history, and it remains to be seen how the free market will develop and what solutions will be the most rewarded. One thing is quite certain: there won’t only be one type of solution for scaling Ethereum going forward.

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