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EthCC In Review
Exploring Three Key Themes From The 2022 Ethereum Community Conference
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After an eventful week at the EthCC conference in Paris, it is time to digest what developers are building and what could become the next major trends in the Ethereum ecosystem.
While several themes were touched on during the week, I have picked out three meaningful ones: (1) scalability and next steps to full-scale rollup adoption, (2) EVM to Cosmos interoperability and the importance of composability, and (3) on-chain communication and the next wave of crypto users.
Scalability - Next Steps in Full-Scale Rollup Adoption
One issue that has been front and centre for Ethereum over the past few years has been that of scalability, with the development of various Layer-2 (L2) solutions seeking to address these very issues. Many believe that 2022 is the year of L2s, having been dubbed ‘L222’, with EthCC certainly echoing this narrative.
Zero-Knowledge Rollups (ZKRs) are one of the two major scalability solutions on Ethereum, along with Optimistic Rollups (ORs). Both ZKRs and ORs move computation off-chain while submitting highly compressed data to the Ethereum mainnet. The result is higher throughput and radically reduced costs to users, all while leveraging the security of the Ethereum mainnet.
While validity proofs are far leaner to verify than the naive design of fraud proofs, the technology that underpins ZKRs is far more complex. I believe this complexity has likely deterred developers, hence the dominance of ORs for current Ethereum ecosystem use cases.
The launch of zkEVMs however, has significantly reduced the technical burden for developers wishing to deploy smart contracts to ZKRs. Utilising a rollup design pattern of using existing mainnet Ethereum clients (such as Geth) to give EVM-equivalence, developers are now able to deploy their existing code directly to ZKRs. This also enables compatibility with existing Ethereum tooling. I see this as a monumental step in the scaling efforts for Ethereum, which should mark the boom of use cases across ZKRs and a subsequent migration of value to L2s.
So, who’s responsible for zkEVMs? Enter the zkEVM class of 22’: Polygon, zkSync and Scroll.
Polygon zkEVM were the only team to speak at EthCC, where Jordi Baylina announced not only that the complete implementation of Polygon zkEVM would be fully open-sourced, but also the release dates for both testnet, Q3 2022, and mainnet, Q4 2022. Polygon zkEVM offers the all important EVM-equivalence. One notable difference between Polygon zkEVM’s solution, and that of other zkEVM Rollups, being that it leverages Plonky2, a recursive SNARK offering ultra fast (170 milliseconds on a MacBook) recursive proofs on Ethereum.
A major difference between zkSync 2.0 and other zkEVMs is that of Account Abstraction (AA). AA turns wallets into fully customisable smart contracts that can add additional layers of security, while allowing greater composability.
I believe that AA is the future of wallets and see it as a solution to many of web3s UX issues. Embedding custom logic within the wallet itself creates a myriad of use cases, such as genuine mobile interobaility, as opposed to a mobile merely storing and using the private key of your wallet - a big downfall security wise. AA could provide zkSync 2.0 with a significant enough edge in the form of elevated UX to incentivise both developers and users over other zkEVMs.
One slight technical nuance being that Scroll is providing its zkEVM at the byte-code level. Scroll is also focusing on the decentralisation of the product across all layers of the community: node operators, provers, and the community of users and developers. The bottom line? The rollup market is becoming very competitive.
Optimism Cannon (CANNON CANNON CANNON) and Bedrock
It wasn’t just ZKRs providing details on proposed upgrades, Nicholas Laurent of Optimism gave a talk on Cannon, a next-gen fault proof developed in collaboration with geohot. Much like the zkEVMs, Cannon is fully EVM-equivalent. We’re now seeing EVM-equivalence development across both ZKRs and ORs, which has the potential to dramatically expand the use cases we’ll see across L2s in the medium-term.
Cannon is being built with Bedrock in mind, Optimism’s upcoming Rollup architecture.
Tokens, Foundations and Partnerships
Despite StarkWare co-founder Eli Ben-Sasson declaring a StarkNet target of 10x Ethereum throughput at 1/100th of the fees compared to Ethereum mainnet, the StarkNet talk was less focused on product upgrades, and primarily centred around the decentralisation of the rollup.
The StarkNet token was confirmed to be arriving in 2022. The primary driver of this token being to push developer inclusivity, achieved by automatically compensating, and thus incentivising, developers for contributions to the network, and allowing developers to have a say in governance of the StarkNet protocol. Smart contract developers will receive these compensations in the form of fees generated on their smart contracts, acting as an automated compensation measurement mechanism.
Comparing this with public knowledge about the zkSync token release, albeit limited, shows a distinction between the purpose of the token. StarkNet’s token has been used as a symbol of their developer-first mindset. The zkSync token on the other hand appears to be solely focused on security through staking utilisation. Two different approaches for the same overarching goal.
StarkNet continues to utilise its native programming language Cairo, as opposed to developing EVM-equivalence. What’s interesting about this is that StarkNet has taken a novel approach to incentivising use cases on their network when compared to other ZKRs. Rather than focusing on ease of deployment, StarkNet wants to align the long-term incentives of developers by gifting ownership and direct financial alignment.
The final announcement from the StarkNet team was that of a strategic partnership with Ledger as they build out their Ledger Live product. This partnership immediately gives StarkNet exposure to the magnitude of Ledger Live users and will prove to be an important onboarding vector.
It’s worth noting here that much like zkSync, StarkNet boasts AA support. This is likely a driver for both networks having partnered with Ledger, and is particularly meaningful given how poor the UX and user onboarding process currently is in crypto. A combination of the Ledger Live mobile app and AA will make this a competitive user onboarding route. I believe this acts as a significant competitive edge for zkSync and StarkNet over Polygon, Scroll and optimistic rollups from a user onboarding perspective.
EVM to Cosmos Interoperability - The Importance of Composability
EthCC wasn’t all about Ethereum this year. In fact Cosmos was frequently referenced throughout the week. If you’re new to Cosmos, I’d recommend reading this brief article for a great overview.
Why was Cosmos the talk of the town at EthCC? The easy place to start is dYdX, once a poster child for Ethereum-based application specific rollups having been deployed as a StarkEx ZKR, dYdX is transitioning in their V4 iteration to a Cosmos based appchain.
At their core, Cosmos appchains are a close fit with the Ethereum scalability outlook: interoperable, modular, Proof-of-Stake blockchains. Though diving deeper, the composability of these blockchains is unparalleled by that of application specific rollups on Ethereum.
Composability spans across all layers of the Cosmos stack, from fees, ‘precompiles’, execution models, down to validator requirements. For example, customisable fees allow any appchain the discretion to charge users fees in any token, be that a native token, stablecoin etc. The composability even allows Osmosis to architect a model in which swap fees on their application count towards transaction fees, dramatically enhancing the UX.
Composability can be framed as an alternative developer attraction strategy to ease of deployment and incentive alignments outlined in the scalability section. The implications being that composability attracts more developers given the flexibility over what they’re able to build. In turn, this leads to not only more use cases, but use cases with dramatically improved UXs. This is particularly important given use cases and UX are core to user adoption, both crypto- and non-crypto-native.
It’s this reason why composability may be Cosmos’ competitive edge and has the potential, if able to attract significant developers and use cases, to lead to a far better UX than Ethereum can offer alone. What I believe to be the true end-game for crypto is a fully composable Ethereum and Cosmos ecosystem, that leverages the existing value, security and scalability of Ethereum, while leveraging the composability of Cosmos. The road may be long but the destination will make it worth it.
While composable application based rollups are currently limited on Ethereum, there’s scope for appchains to secure each other in the future, based on a network of shared security and validity proofs, such as through Evmos
Evmos is an EVM chain that is interoperable with the IBC, and built on top of the Cosmos SDK. It acts as a bridge between the EVM ecosystem and the Cosmos ecosystem, connecting Ethereum smart contracts to the IBC. Evmos aims to become an infrastructure hub for EVM chains in Cosmos, offering EVM-specific dApps the ability to initially deploy on Evmos. When established, this chain can then spin out into its own sovereign chain, while leveraging select Evmos infrastructure such as oracles, indexers etc.
Evmos has been gaining traction in recent months, primarily driven by their novel ‘rektdrop’ airdrop model. This traction has extended beyond users, with blue-chips such as Aave looking to deploy to the EVM-based appchain. I expect we will see dozens of Ethereum-based blue-chips expand their reach to the IBC by deploying to Evmos, strengthening the interoperability between Ethereum and Cosmos.
On-Chain Communication - The Next Wave of Crypto Users
After Vitalik’s request at EthCC for more non-financial, public good use cases on Ethereum, a major theme throughout this year's EthCC was on-chain communication and social media.
Fully on-chain direct messaging enables messages to be cryptographically encoded and self-custodied by storing messaging history directly within wallets, with no need for third-party storage solutions. Moreover these messages preserve the trustless nature of transacting on-chain, enabling secure and private communication between entities. The use cases of on-chain messaging match all of those seen in traditional messaging services, only with enhanced security and inherent ownership over content. On top of this, the concept of combining on-chain direct messaging with transactions breeds a host of potential use cases, such as on-chain verbal negotiation and reconciliation services.
The two standout on-chain messaging developments spoken to at EthCC were that of WalletConnect and EPNS. WalletConnect is building out capabilities that enable direct messaging and transactions side-by-side. They facilitate messaging between any wallet, on any chain in a manner that allows users to own their message history through self-custody and encryption. They’ve also focused heavily on user experience, developing an attractive Web2-esque UI, and select features such as ENS compatibility, opt-in discoverability etc.
We then have EPNS (Ethereum Push Notification Service). EPNS enables users and dApps to send and receive push notifications on-chain, though at EthCC they spoke to a messaging product due to launch incredibly soon. Much like WalletConnect, this product will offer wallet-to-wallet messaging in a fully self-custodied and secure manner.
On-Chain Social Media
Currently, crypto onboarding requires financial commitment, whether purchasing assets to participate in governance, or paying for transaction fees. This acts as a huge bottleneck for potential users.
On-chain social media represents a path by which a user's first interaction with crypto is social and importantly, requires no financial commitment. This unlocks crypto to the masses, and could ultimately create a shift in mindset to thinking about crypto as a utility, as opposed to a financial hub. However, it’s likely once users have experienced the blockchain they may go on to use financialised services on-chain too. Of course, this will only be true if the use cases built on-chain add significantly more value to users than their Web2 counterparts.
Stani Kulechov, founder of Aave and Lens Protocol, spoke to Lens Protocol, a permissionless, composable and decentralised social graph enabling the development of on-chain social media applications. The problem Lens is trying to solve is one of creator and user reliance on a few siloed companies. In Web2, users are the product, and creators don’t have the ability to control their distribution. Stani referenced Bankless being censored from Youtube, and himself being censored from Twitter, at which point he lost access to the public community.
Since a social media profile is merely an extension of an individual's identity, Lens’ social media base protocol gives content and community ownership back to the users. This creates a censorship-resistant communication channel between users and content creators.
The design mechanism allows users to port their identities and content across the ‘Lensverse’ (i.e. the array of social media front-ends that will distribute this content to audiences). Meanwhile creators are also given much more choice in how they create, distribute and monetise their content.
I expect use cases on Lens to expand rapidly over the coming months, driven by their open-sourced code base and Lens API.
What was clear from my time spent at EthCC is that the future of Ethereum and crypto at large is bright, having seen a clear path to scalability, UX improvements through AA and IBC interoperability, and mass onboarding. I encourage readers to visit the EthCC website, where you’re able to watch recordings of talks on topics you may have found particularly interesting.
If you’re actively working on, or researching any of the topics highlighted in this article, I’d love to chat.
The opinions expressed in this publication are those of the author. The information above does not constitute an offer to sell digital assets or a solicitation of an offer to buy digital assets. None of the information here is a recommendation to invest in any securities.