Metis Runs Decentralized Economy
In the past few months, the price of ETH has surged, and the usage of the Ethereum network has significantly increased. The main culprits for this trend have been the renewed interest in NFTs and the consolidation of DeFi applications, along with the outstanding growth of the cryptocurrency market. This has resulted in a number of “not so pleasant” consequences for DApp developers in the Ethereum ecosystem: mainly, the network’s inability to accommodate the increase in usage leading to high gas costs (even more if you want your transaction to be validated in the next few blocks). At the time of writing, the average gas fee in the Ethereum mainnet is approximately $15.
This new scenario we are facing in the Ethereum ecosystem has shifted layer 2 improvements overnight from a “nice to have” feature to an “utmost requirement” for Dapps to be able to operate sustainably in terms of performance and cost.
Fortunately, we already have several consistent layer 2 platforms and protocols to help us in this quest. One of the most promising foundational constructions to build layer 2 solutions are optimistic rollups. Many projects are built upon them, but how can we choose the layer 2 solution based on optimistic rollups that best fulfill our needs? This publication is an attempt to answer that question, making a comparison of the three promising layer 2 solutions based on optimistic rollups. Let’s jump right into it!
In order to be able to compare different layer 2 solutions based on rollups, we first need to make a quick detour to understand what optimistic rollups are. Rollups are solutions that bundle (or “roll up”) sidechain or off-chain transactions into a single transaction that is then committed to L1. To secure all of these bundled transactions, and to make them individually verifiable, a cryptographic proof is generated from the bundle.
A requirement for rollups to work is to have some kind of Ethereum-compatible independent blockchain, with a reduced number of nodes or with additional features for high-performance, that is responsible for handling signature verification, contract execution, etc. This makes the independent blockchain able to verify the validity of the transactions that are afterwards bundled for their commitment in the main Ethereum chain. L2 rollup sidechains are responsible for verification and contract execution, while the L1 exclusively stores immutable transaction data.
In Optimistic Rollups, participants are “optimistic” about the validity of the transaction being performed in the sidechain. There is no need for additional computation by aggregators to commit sidechain transactions into the main chain.
And how can we be sure that sidechain transactions are actually valid?
Optimistic rollups use fraud-proofs to ensure that all transactions are legitimate. If someone notices a fraudulent transaction from an aggregator, the rollup can be challenged by sending a fraud-proof to run the transaction’s computation and verify its validity. This means that instead of performing a verification for every single transaction, like in other rollup solutions like ZK-rollups, we only perform the proof computation if we have suspicions that a transaction is fraudulent.
This significantly reduces the gas costs compared to ZK-rollups, and opens the door to the ability of achieving x10-x100 improvements in the transaction throughput. After an invalid block has been committed and a fraud proof is finalized, the chain in layer 2 can be rolled back and resumed from the previous non-fraudulent block.
After this brief introduction to rollups, we have all the foundations we need to tackle our layer 2 comparison. For this comparison, I selected three of the layer 2 solutions that, in my opinion, have a more interesting set of features for DApp developers (i.e. the ones I would personally consider to deploy my own applications).
All of them share (more or less) the same building blocks:
Despite having building blocks in common, the three solutions differ significantly in the way they implement the rollup protocol. Let’s have a look at each of them in detail to get up to speed for our comparison.
Optimism leverages all the existing tooling in the Ethereum ecosystem, and modifies it to implement their optimistic protocol and layer 2 solution.
VM and client: Metis uses an EVM-compatible virtual machine, the Metis VM (MVM). The MVM differs significantly in terms of functionality and features to all the VMs from the projects above. In the MVM, computing and storage at L2 are completely decoupled. Metis introduces the concept of Decentralized Autonomous Companies (DACs). DACs are independent entities in the system that can represent, for instance, large scale enterprises that perform many of their day-to-day operations over the platform). DACs are key for the operation of Metis. When a new DAC is instantiated in the system, a new storage layer is specifically created for the DAC. Thus, DACs have their own storage with a view of their chain interactions.
Metis’ L2 computing layer (i.e. block mining, consensus, cross-layer communications, etc.), on the other hand, its shared by all the DACs in the network, but it includes an interesting feature: the fact that all of the computing processes are implemented as individual services (following a microservice approach) allows the computation layer to be scaled up and down according to the overall network’s needs and throughput.
Furthermore, the MVM introduced the role of providers that can sign up and contribute computing power to make Layer 2 construct truly decentralized (these providers can be seen as the sequencers from the Optimism platform). The provider will be incentivized based on the blocks produced. Finally, a really powerful feature included in the MVM and the Metis client which other L2 platforms lack is support, not only for contract execution, but for decentralized storage linked to the computation of smart contracts.
Thus, Metis integrates with the IPFS network through an IPFS resolver in the MVM which allows contracts to point at immutable data stored in IPFS. This can be used, for instance, to point to confidential data stored in the IPFS network.
This verification method where both sequencers and verifiers need to be collateralized, this addresses one of the key issues we identified in the verification process of the Optimism platform, which is the lack of stake of verifiers in the generation of fake fraud proofs. The well-oiled coordination of collateralized sequencers and verifiers (i.e. L2 Rangers) also shortens the proofing window to enhance the network efficiency.
Protocols such as the one proposed by Optimism, transactions can’t be considered final until the window of verification has passed, and verifiers have had enough time to send all the proofs. This is a direct consequence of verifiers not being collateralized.
Despite being an incentive for detecting invalid state updates, there is no large penalization for misbehaving as a verifier. Thus, in order to prevent potential misbehaviors, the finality window is increased to “allow everyone to speak”. In Metis this is not needed because verifiers are collateralized, and a misbehavior from their side will be translated in a loss of funds. Verifiers as well as sequencers have “skin in the game”, and this enables a reduction of the finality window, and this is the reason for Metis being able to validate transactions in hours instead of the 7 days other protocols such as Optimism need.
So without further ado, let’s put all of our contenders side-by-side for a last general view of the situation:
As depicted in the table (and as described in our explanations from above), the three platforms are perfect fits to deploy your DApp in a performant L2 solution backed by the Ethereum mainnet as a L1.
The specific decision will be potentially determined by your performance, scalability, flexibility, and feature requirements. Metis is the most feature-rich platform from the three we’ve described: it supports decentralized storage by default, and includes additional performance and security schemes.
The decoupling of storage, their use of DACs, and their dynamic DBT scheme, makes it a perfect fit for corporations (large or small). Optimism is a great option for Ethereum maximalists, as it uses every tool from the Ethereum ecosystem (no need for new concepts). Finally, Arbitrium’s permissionless staking for state history verification makes it a really efficient and interesting proposal that allows faster verification times than standard rollup constructions preventing delay attacks (although still a bit slower than Metis due to the flat architecture it uses).
In conclusion, there is no single right answer, but a consistent roaster of optimistic L2 platforms from which to choose. I hope this comparison helps you make a more informed decision of the L2 to choose if you are planning to deploy a new DApp, or migrating from L1 to L2.
This article was written by Alfonso de la Rocha