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I’m not worried nobody will care about rollups

Great article here: [I’m Worried Nobody Will Care About Rollups | by Haseeb Qureshi | Dragonfly Research | Jul, 2021 | Medium](https://medium.com/dragonfly-research/im-worried-nobody-will-care-about-rollups-554bc743d4f1)

I have raised similar concerns in the past, about how rollups may not be enough, and we’ll need a variety of solutions.

Kudos to the author for concluding a validium and rollup hybrid is the solution that’s significantly superior to centralized sidechains/L1s, but with even lower fees – this is the “third option” that many often tend to ignore. This solution is called volition – Immutable X is set to be the first example, with zkSync 2.0 + zkPorter following later this year.

However, I want to address the wooly mammoth and the blue whale in the room.

**1.** **Centralized chains do not have a sustainable economic model**: Polygon and BSC can offer arbitrarily low fees because the chain isn’t yet running at capacity. Any arbitrarily low gas price will be accepted by validators as first price auction mechanism hasn’t kicked in. Indeed, we have seen as both chains have gotten closer to capacity, the gas prices have started to rise as some users engage in bidding. Of course, the solution has been to increase gas limits, but this is obviously not sustainable. Eventually, both chains will reach hard limits of keeping a distributed ledger in sync across multiple nodes, or the EVM/client (in both cases, Geth forks). Even if you improve the VM to be more parallelized and further centralize the network, state growth will hit unsustainable levels in the long term. Meanwhile, given your only selling point is low fees, there’ll be a complete imbalance between transaction fee revenues collected by the network, and very high block subsidies issued to validators to keep the network secure in the face of rising costs. These chains necessary have delegated-type proof-of-stake protocols which have high inflations, that can lead to several orders of magnitude difference between revenues and issuance. Case in point: Polygon PoS is currently collecting ~10,000 MATIC in transaction fees daily, while distributing over a million (please correct me if I’m wrong – seeing conflicting data online).

Now, the argument here would be, over the long term, these two values will converge as the network matures. But they cannot! Either the network will become even less secure, or the transaction fees have to go up. There’s no other way.

In the short to medium term, centralized high-TPS chains can be subsidized by speculators. However, this is not sustainable long term, and I believe these chains will either capitulate to increasing transaction fees, or implode. Indeed, Binance Smart Chain has already done this, with significantly higher gas prices now than were originally promised. Techniques like state expiry will help. You can also basically become a validium-esque L1, with zk-SNARKing the VM, and using a separate data availability chain with erasure coding and data availability sampling. But this is basically only drawing parity with a validium, while still being thousands of times less secure and decentralized than a validium that commits state root diffs and zk proofs to Ethereum.

I don’t see any path for high-TPS chains to survive. They’ll always lose to validiums, in every respect.

2) **Data shards**. The most disappointing part of the article is that it seems to completely neglect the other half of the puzzle – data sharding. This is as important as rollups, which is why I always call the solution [“rollups + data shards”](https://www.reddit.com/r/ethfinance/comments/odhztu/convergent_evolution_how_rollups_data_shards/). Perhaps we need a catchier name for it.

With data shards, rollups can get to tens of thousands of TPS in the medium term (by 2023), but millions of TPS in the long term (2030s) as more shards are added and each shard is enhanced alongside with Moore’s and Nielsen’s laws – not to mention new techniques that may be invented in the future. zkPorter is a fantastic short-term solution, but with data shards, you’re going to get this sort of scalability with a rollup itself, without the need for any compromise. Indeed, the developers of zkPorter themselves [acknowledge this](https://medium.com/matter-labs/zksync-2-0-hello-ethereum-ca48588de179):

>The current consensus is [Eth2 data sharding](https://vitalik.ca/general/2021/04/07/sharding.html) will arrive [by the end of 2022](https://ethereum.org/en/eth2/shard-chains/) to provide an exponentially larger data availability layer without sacrificing decentralization. **zkSync’s zkRollup technology combined with Eth2 data sharding is the endgame, hitting 100,000+ TPS without sacrifices on any of the 4 factors.**

I do think volition and validium like solutions will continue to exist, but for a majority of meaningful, valuable transactions, I’m not worried that nobody will care about rollups long term.

Keywords: long term. It’s going to be a bumpy road, and people will be distracted by hyped and unsustainable short-term solutions, but rollups + data shards are the blockchain industry’s only viable route to critical adoption. Until a better solution emerges.

Reposted on my blog: [https://polynya.medium.com/im-not-worried-nobody-will-care-about-rollups-d5c0ba86c559](https://polynya.medium.com/im-not-worried-nobody-will-care-about-rollups-d5c0ba86c559)

*All my content is in the public domain, please feel free to share, repost, adapt as you please.*

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7 Comments

  1. Great article that also explains the differences between the solutions simply. Polygon has stated they plan to move to ZK rollups and optimism as well. So maybe it won’t be an “either / or” but a suite of tools that DEVs have access to

  2. >”rollups + data shards”. Perhaps we need a catchier name for it.

    I call them rollards.

    I agree that either rollups alone or sharding alone would mostly be kicking the can down the road (consider also the security angle). Rollards for a decent long-term.

    … but then you get Cardano folks laughing in your face at all this bonkers levels of complexity and additional layers of indirection “just to scale Ethereum” when Cardano does it all out of the box … yada yada

    No network has been tested, stressed and utilized to the level Ethereum has. Other projects can promise as much as they want, none of them suffered real tests so far. Vitalik had a great post on Magicians about rollups and the future (edit: here you go [https://ethereum-magicians.org/t/a-rollup-centric-ethereum-roadmap/4698](https://ethereum-magicians.org/t/a-rollup-centric-ethereum-roadmap/4698)) — it’s been a known fact that rollups alone won’t be a final answer, but it takes people who are capable to both understand the tech and have the vision for a realistic roadmap and future demand.

  3. If you look at **DeFi**, which is all about **application-to-application transactions**
    (that are triggered by a **user-to-application transaction**)

    Then you will notice that these **DeFi operations** are made possible because of **composability**

    The problem with **rollups** (even powered by an increased data availability) is that they cap out several orders of magnitude too soon than what is needed:

    100k tps for a **zkPorter** powered by data sharding is far from enough for a global financial system.
    Adding extra zkPorter instances does not scale this ecosystem
    (!) Because composability is broken between L2 instances

    Consider that **even tokens are smart contracts** (ERC-20)
    and a **DEX swap implementation** requires composability across 2 token contracts.

    Having token contracts in different L2 instances will remove to ability to implement the swap **atomically**.
    It could be implemented **sequentially** but **latency** (communication between 2 L2 instances)
    and additional **complexity** for DEX developers in case second part of the swap fails -> rollback first part of the swap.
    => Atomically > sequentially (because above)
    => Composability on the consensus layer > on application layer (because more generic, dApp devs don’t have to worry about implementing it for every smart contract combination)

    **Grouping** all things that need be able to atomically compose is not an option because the interoperable ecosystem that is a global financial system is too large.

    **It should be possible that all digital assets and financial products can work together seamlessly (ie. atomically)**

    [https://www.radixdlt.com/post/what-is-defi-composability-and-why-does-it-matter](https://www.radixdlt.com/post/what-is-defi-composability-and-why-does-it-matter)

Bitcoin Doesn’t Make Remittances Cheaper | by Luis Buenaventura {bloomX} | Cryptonight

Are we expecting higher inflation over the next several months?