If ETH-Layer2 already exists, why do we need Alt-Layer1?

The Environment in which the New Public Chains Exist

If there is a law of universal gravitation in the blockchain world, then currently, Bitcoin and Ethereum are like the two brightest stars, illuminating this brilliant starry field. The reason they can shine brightly and sparkle among the countless stars lies in their respective innovative technological implementations (i.e., blockchain and smart contract platforms) and years of continuous iteration and upgrading, resulting in their massive market value, prosperous ecosystems, and active communities.

In the cryptocurrency cycles from 2017 to 2021, we often heard the term “Ethereum killer”. Many new public chains aimed to surpass Ethereum and proposed their own technical architectures and implementation plans. For example, Solana introduced the Proof of History, Avalanche adopted the Avalanche consensus protocol and subnet functionality, NEAR focused on sharding technology, Flow separated consensus and computation, EOS had parallel processing and asynchronous communication capabilities, IOTA had a DAG transaction structure, and Polkadot and Cosmos had native support for multi-chain networks. It must be said that they all achieved success in specific time periods in terms of on-chain user activity, DApps development, and TVL data indicators. However, with various reasons (such as team disbandment and financial collapse) and the gradual launch of Ethereum’s Layer 2 solution, the situation has quietly changed. The most obvious change is that Arbitrum and Optimism surpassed most Alt L1 chains in terms of TVL rankings on DeFiLlama’s public chain TVL leaderboard. In addition, some innovative projects have also shifted their focus to Layer 2 networks. The most representative example is the derivative platform GMX, which migrated from Avalanche to Arbitrum.

At the present time, the stable development of Bitcoin and Ethereum, as well as the rapid growth of Layer 2 networks, are clearly squeezing the once bustling Alt L1 market. Many Alt L1 projects seem to be in a “stagnation” bottleneck period, which does not bode well for new public chains. Take the recent Move-based new public chains Aptos and Sui as examples, the market sentiment towards them has changed drastically. Before the mainnet launch, everyone was enthusiastic about deeply understanding their whitepapers and technical architectures, envisioning their application scenarios, and developers were eagerly learning new contract languages and competing for ecological positions in the DApps projects of new public chains. However, after the mainnet launch, especially after the token issuance, everything seems to have drifted away from us again, with a downturn in the DApps ecosystem and sluggish TVL data.

PS: Considering that privacy chains emphasize anonymity and user privacy protection, and storage chains emphasize decentralized storage, their design concepts and technical roadmaps differ from general-purpose public chains. In order to focus and delve deeper into the discussion, we will temporarily not explore privacy chains and storage chains.

The Necessity of Developing New Public Chains

It can be said with certainty that developing and implementing new public chains to challenge the two giants, Bitcoin and Ethereum, as well as the emerging Layer 2 networks, is undoubtedly a challenging endeavor. This raises a question: Is it necessary to continue developing new public chains?

The answer is yes. From the perspective of Mass Adoption, since 2020, the entire Web3 has seen the emergence of various new applications such as DeFi, NFT, and Metaverse, and the user base has increased to millions or even tens of millions. However, compared to technologies that have already achieved Mass Adoption, such as search engines and instant messaging, Web3 still has enormous development potential. If we compare Web3’s infrastructure public chains with traditional cloud computing, the number of applications and users of public chain services is still in the rapid development stage and has not yet reached the mature stage of large-scale applications. Therefore, the future market size and the speed of demand changes will give rise to public chains with excellent service capabilities and responsiveness. Currently, Bitcoin and Ethereum have taken the lead and gained wide recognition and market share in the field of public chains. However, this does not mean that other Alt-L1 and new public chains have no room for survival or opportunities to surpass them in certain niche areas. It is precisely because of this that institutions are willing to invest a large amount of funds in the field of public chains, not only based on financial investment considerations, but also based on their judgment of the future of Web3 and the importance of public chains.

Hard Power and Soft Power

When studying and analyzing public chains, they can be evaluated from two aspects: hard power and soft power. Hard power mainly focuses on technological innovations related to public chains, such as P2P networks, consensus mechanisms, block data structures, smart contract languages and virtual machines, token economics, etc., as well as the adaptability and adjustment of technological development routes. Soft power mainly involves business operation capabilities, ecological construction, capital coordination, and other aspects. Both types of power are indispensable in the development, implementation, and growth of public chains. If there is only hard power and lacks soft power, it is easy to fall into the trap of isolated development. On the other hand, if there is only soft power and lacks hard power, progress will be limited.

As for hard power, Alt-L1 is prone to technological rigidity and stubbornness, which is why we emphasize the adaptability and adjustment of technological development routes to the current situation. Bitcoin, shortly after its creation by Satoshi Nakamoto, developed its network and community in an organic manner. When it comes to major functional changes and support for new features, the overall progress has been slow and conservative. However, it is also keeping up with the times, as evidenced by the recent popularity of the Ordinals protocol. Ethereum’s scaling solutions had a phase dominated by the Plasma solution before formally entering the era of Rollups. Looking at Ethereum’s roadmap released last year, we can see that the focus at the protocol level is mainly on the security of the PoS consensus mechanism, decentralization optimization, data sharding, and the integration of Rollups, while the original goals of eWASM and state sharding have been replaced by other features.

Exploring Innovative Technologies

When Ethereum’s Frontier was launched in 2015, it provided a basic usable network with features such as the PoW consensus mechanism, transactions, account model, and the core EVM smart contract platform. Over the years, Ethereum has continuously iterated and upgraded, such as the more stable and efficient Homestead in 2016, Metropolis Byzantium in 2017, which supports ZK-Snarks proof chain verification through precompiled contracts, Beacon Chain in 2020 with PoS functionality, London Hard Fork in 2021 introducing EIP-1559 based on market transaction fee model, and the Paris upgrade in 2022 officially closing PoW and starting PoS (ETH Merge). Ethereum adheres to the spirit of open and free blockchain, beginning with its rich programmability, and has never stopped its footsteps, demonstrating a public chain’s continuous development in the exploration of innovative technologies through upgrades time and time again.

Therefore, whether it is a new public chain that has not yet been launched on the primary market or an old public chain that has been listed on the secondary market for a long time, those public chains that are brave enough to explore innovative technologies are worth our attention and learning.

Next, let’s temporarily ignore the pros and cons of the public chain’s economic model design and the performance of market tokens. Combined with the open developer data panel provided by Electric Capital, we will further research some interesting public chains other than Ethereum and their unique or iconic innovative technologies.

Polkadot – Substrate

Polkadot introduces the concept of relay chain and parachains through blockchain parallelization technology, realizing the shared security and interoperable communication of multiple blockchains through the cross-chain communication protocol XCMP. The technology framework that supports Polkadot’s these functional features is Substrate. Substrate provides the smallest development unit, called LianGuaillets, which abstracts and extracts various functional modules such as assets, staking, and EVM. Based on LianGuaillets, it provides development framework Frame and blockchain customizable runtime. Combined with its unique asynchronous model and parallel chain sharding mechanism, Substrate provides the ability to process a large number of transactions simultaneously, improving the overall network throughput and performance. In addition, Substrate also supports plug-and-play consensus mechanisms, allowing developers to choose different consensus algorithms according to their needs. Furthermore, Substrate has built-in Ethereum EVM and WASM runtimes, making it convenient for the migration and development of Ethereum ecosystem applications. Finally, Substrate supports on-chain hot upgrades, allowing upgrades and updates to the blockchain without interrupting the network.

Cosmos – Tendermint / Sovereign Chain / App Chain / IBC

Tendermint is one of the first PoS consensus algorithms that has achieved Byzantine fault tolerance. It is also one of the inspirations for Ethereum’s PoS algorithm. The concepts of Sovereign Chain and App Chain perfectly embody Cosmos’ decentralized multi-chain concept. They allow each sovereign chain to have its own consensus mechanism, economic model, and governance rules, and also allow specific applications or services to build small-scale application chains directly through the Cosmos network. They can communicate and interact with each other through IBC, creating a multi-chain internet advocated by Cosmos as a whole.

The two core development kits of Cosmos are the consensus engine CometBFT (the successor of Tendermint Core), which implements the Tendermint consensus algorithm and defines the application connection interface ABCI, and Cosmos SDK, which supports IBC and CosmWasm, etc. The corresponding ecological landscape includes the central Cosmos Hub and various Zones connected to the Cosmos Hub. Since the launch of the Cosmos mainnet in 2019, IBC has evolved from supporting interconnection between the initial Zones, interconnection between Zones and Hub, to more rich and complete functionalities such as Inter-Chain Accounts (ICA) and Inter-Chain Security (ICS). The Cosmos Hub will also transition from the initiation phase to the integration phase in September 2022, marking a key turning point.

Sei Network – Optimized for Trading

As a popular Cosmos ecosystem application chain that recently went live, Sei has a built-in order matching engine, sub-second settlement speed, parallel processing of orders, and execution of orders in a single block. All these customized features are implemented at the base layer, mainly through ABCI++ to achieve their optimizations. ABCI++ is an upcoming upgrade to Cosmos’ ABCI, which allows each step of the consensus to be programmable.

Solana – Proof of History

Proof of History (PoH) is an innovative timeproof technology that can be understood as a mechanism for implementing a global clock in a distributed system. It is used to coordinate operations and time sequences between nodes in a distributed system. By embedding timestamps in each block, PoH builds a globally shared time series in the Solana network, enabling nodes in the network to easily verify the order and time of transactions. This not only improves the throughput and performance of the entire network but also effectively prevents malicious tampering and replay attacks.

NEAR – Nightshade Sharding / Beacon Chain

Derived from the early sharding concept of Ethereum, NEAR also inherits the concept of the Beacon Chain but optimizes the block producers and validators for each shard. Each shard has a group of block producers responsible for generating blocks and packaging transactions and state data in the blocks. Since each shard is relatively independent, each block producer only needs to focus on their own shard and can independently generate blocks without coordinating with block producers from other shards. Validators only need to verify transactions and states belonging to their own shard, without having to pay attention to the entire network’s state. This improves the efficiency of block production and validation, allowing for the processing of more transactions and state updates.

Avalanche – Avalanche Consensus

The Avalanche protocol introduces a voting mechanism that creates an avalanche effect, allowing nodes to quickly reach consensus and form a consistent sequence of decisions throughout the network. The key to the protocol lies in the process of multi-round voting and iterative decision-making, where nodes gradually converge to a consensus result through continuous voting and feedback. By allowing parallel voting and decision-making, the overall system’s parallel processing capability is improved, and the Avalanche protocol also allows dynamic entry and exit of nodes, as well as adaptation and adjustment of voting rules and parameters, thus achieving flexible scalability.

Flow – Multi-node Architecture

A pipeline-style multi-node architecture. Execution nodes are responsible for transaction execution, enabling massive transaction processing and computational operations. Verification nodes monitor and verify the execution nodes’ computation results, ensuring that smart contracts are executed correctly according to the rules and verifying the accuracy and consistency of the computations. Consensus nodes are responsible for transaction ordering and block generation, with the task of ensuring network security. Such a multi-node architecture is reminiscent of the modular blockchain architecture advocated for the execution layer, data availability layer, settlement layer, and consensus layer, all implemented directly at the public chain level.

Monad – Asynchronous Concurrent Transactions

Monad is an EVM-compatible L1, with transactions equivalent to EVM. In order to improve TPS, Monad identifies and tags transactions that do not affect each other, eliminating the common dependencies among these transactions, and then achieves high-concurrency transaction performance through asynchronous execution mechanisms.

Diem/Libra – Move

Since its inception, Diem (formerly known as Libra) by Facebook/Meta has attracted attention from both inside and outside the blockchain community. Whether it is criticism from traditional regulatory bodies or questioning from the native Web3 world, Diem’s original intention is to serve billions of people worldwide and enable them to enjoy financial services comparable to traditional banking payment systems. To achieve this, Diem has designed a high-performance validation node in terms of technology, as well as the Move language and corresponding Move virtual machine that balance asset security and smart contract execution efficiency. However, due to regulatory and policy reasons, Diem did not go live on the mainnet as scheduled. As a result, the Diem team derived three different public chain projects from these technological accumulations, namely Sui Network, Aptos, and Linera, which will be mentioned later.

Sui Network – Causal Order / Object Model

Sui adopts a DAG-like processing method for transactions, combined with a unique object model and a version management mechanism similar to snapshots, so that transactions no longer need to be fully ordered, but only need to be causally ordered, thus obtaining massive parallel execution capability. Of course, the technical support behind this also stems from the optimizations Sui has made to the object system in the Move language, adding many asset attributes related to Web3.

Aptos – Block-STM

The parallel execution engine of Block-STM is similar to the optimistic fraud proof in Rollup, directly introducing optimistic locking and concurrency control mechanisms at the public chain level. Of course, optimistic locking technology has been widely used in traditional databases. However, because optimistic locking is prone to higher conflict rates and retry rates in scenarios with frequent write operations, it is not as suitable for high-frequency concurrent scenarios as pessimistic locking. Here, Aptos optimizes this through preprocessing and transaction transaction splitting.

Linera – Microchains

If Sui Network and Aptos have made good use of Diem’s Move language features, then Linera has inherited Diem’s consensus mechanism. In fact, Linera’s technical architecture can be traced back to Facebook’s initial FastLianGuaiy project, which was more like the predecessor of Diem/Libra. It provided specific design concepts and in-depth technical details for fast, secure, and low-latency large-scale payment scenarios.

Linera has done a lot of research on overall architectural scalability, mainly through the implementation of Microchains. Users maintain Microchains on the client side, forming a Multi-chain network. Microchains can be made public or private, and asynchronous messaging is used for communication between Microchains. The entire network uses the same set of validators and DPoS consensus for security and execution, and validator nodes are responsible for message delivery and state synchronization. In addition, validator nodes also undertake the operation and maintenance of public Microchains.

In a sense, Linera’s technical architecture and concepts are similar to the popular cloud-native design. Microchains correspond to many mirrored containers, and Apps correspond to instances of the mirrors. This architecture performs well in terms of elasticity and fault tolerance, just like cloud-native infrastructure. Of course, how to securely and efficiently solve the communication and synchronization between Microchains is a different core problem that Linera, as a public chain, needs to face and solve.

Just as cloud-native architecture gradually occupies the selection of traditional application architecture over the past decade or so due to its advantages, we believe that investing in Linera is our firm expectation. Linera, based on mature solutions such as Diem/FastLianGuaiy, and with unique innovative technologies, will eventually surpass Ethereum in certain application scenarios.

Conclusion

I don’t know if it’s an illusion, but after reviewing and revisiting the innovative technologies of these public chains, I find that the Rollup As A Service framework that is currently popular in Ethereum Layer 2 and the SDKs of Cosmos and Substrate from Polkadot are so similar (Optimism’s OP Stack, Arbitrum’s Orbit, Polygon’s zkSupernet, Starknet’s Appchains, and zkSync’s Hyperchains). Even some ideas of the new staking mechanism Restaking are similar to Polkadot’s staking DOT through slot auctions and Cosmos 2.0’s ICS. The rise of Layer 2 is closely related to the strength of Ethereum. However, the exploration of new public chains is equally important, or even more important. The innovation and breakthroughs in the technical and conceptual exploration of new public chains will greatly improve the basic service capabilities of the entire Web3 industry.

As past public chains accumulate more mature experience for the industry, it is more likely that more powerful new public chains will emerge from the exploration of innovative public chains. Just as Satoshi Nakamoto was able to creatively propose the decentralized blockchain network Bitcoin by combining proof-of-work mechanism, UTXO model, public-private key cryptography, P2P network, and chained blocks, we have every reason to believe that based on the innovative technologies of the aforementioned new and old public chains, a public chain that combines the strengths of many will emerge in the world of Web3, with the mission of achieving mass adoption. We can see that innovative public chains, especially those in the Cosmos series (such as Sui Network) and Diem series/Move language series (represented by Linera), will continue to explore the possibilities of blockchain in different dimensions, challenge Ethereum’s position, and extend the ceiling of public chains!

Reference

https://developer.bitcoin.org/reference/

https://ethereum.org/en/developers/docs/

https://polkadot.network/development/docs/

https://docs.substrate.io/

https://docs.cosmos.network/main

https://ibc.cosmos.network/

https://cosmos.network/cometbft/

https://docs.sei.io/

https://docs.solana.com/

https://docs.near.org/

https://docs.avax.network/

https://developers.flow.com/

https://monadlabs.substack.com/

https://developers.diem.com/docs/welcome-to-diem/

https://aptos.dev/

https://docs.sui.io/

https://linera.io/developers

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