Layer2 track research report: Arbitrum, Optimism, Base, zkSync, StarkNet and Linea

Written by: MIIX Capital

Preface

Gas Fee and limited TPS are the biggest issues that affect the popularization and large-scale implementation of public chains, so Layer2 expansion solutions have emerged. Layer2 technology has gone through the development of state channels, Plasma, and Rollup. Each technological transformation is an iteration and improvement of the previous generation of technology.

Since the scalability of OP still does not meet the requirements and the withdrawal period is too long, the latest roadmap of ETH is centered around the upgrade route centered on ZK Rollup, including Optimism, which currently uses OP technology, is also actively exploring the OP+ZK hybrid proof solution. However, at present, Optimistic Rollups still occupy the largest market share, and the growth and development of zk-Rollups also needs time to verify.

1. Layer 2 Track Overview

Looking at the Layer2 track, the current competition is very fierce. The ranking of the mainnets that have been launched is as follows according to TVL:

The Layer2 part that is currently in the testnet stage is as follows:

Judging from the data, among the Layer2s that have been launched on the mainnet, OP technology still occupies most of the TVL. This is mainly because the good user experience and high TPS of OP technology allow this type of Layer2 to firmly occupy the first-mover advantage of the ecosystem.

2. Optimistic Rollups and zk-Rollups

2.1 Optimistic Rollups

Optimistic Rollups is a second-layer scaling solution based on optimistic verification, that is, the default submitted block is correct unless someone questions it. It also requires RollupOperator to aggregate many off-chain transactions into a batch, and then calculate the new state generated by the batch transaction (Xiaobai NavigationIf the balance,contractstatus, etc.) and generates an off-chain status update, and then submits the off-chain status update and related data to the main chain. This status is correct by default and does not require additional verification; however, after the status update is submitted, there will be a fixed challenge period, during which anyone can question the validity of the submitted status update by providing a fraud proof. The entire transaction related to the questioned status will be run through the EVM for verification. If the status update is proven to be wrong, the submitter will be punished (deducted from the deposit), and the on-chain status will be rolled back to the correct state; if no one questions the status update during the challenge period, or the question is proven to be wrong, the on-chain status will be updated according to the submitted status update.

2.2 ZK-Rollups

zk-Rollups is aZero knowledge proofThe second-layer expansion solution of . First, the RollupOperator component aggregates multiple off-chain transactions into a batch, and then usesZero knowledge proof The proof is generated by a simple token (such as zk-SNARKS or zk-STARKs) to verify the validity of the entire batch of transactions without having to check each transaction one by one. The proof and related data are then submitted to the main chain, which verifies the correctness of the proof to ensure that the transaction is valid. After the main chain verifies the correctness of the proof, the on-chaincontractThe status on the chain is updated according to the data in the proof. This means that even though the transaction is conducted off-chain, the status on the chain is still updated, ensuring data consistency.

Note: Zero-Knowledge Proof (ZKP) is a cryptographic concept that allows a prover to prove to a verifier that a statement is true without revealing any other information about the statement. In short, zero-knowledge proof allows a person to prove that he has certain information without revealing the information itself.

2.3 Comparative Analysis between ZK and OP

ZK and OP each have their own characteristics. I analyze them from the following five different perspectives so that you can judge them according to your own inclinations:

Verification method:

• OP verifies transactions through fraud proofs, assuming that transactions are valid by default unless someone submits evidence that a transaction is invalid. This requires continuous monitoring by off-chain users and nodes to ensure that RollupOperator does not do anything malicious;

• ZK verifies transactions through zero-knowledge proofs (such as zk-SNARKs or zk-STARKs). ZK generates a concise proof to ensure the validity of transactions in a batch without checking each transaction one by one.

Safetysex:

• OP assumes that the transaction is valid, and there may be someSafetyRisk, requiring off-chain users and nodes to actively monitor transactions to ensureSafetysex;

• ZK provides a higher level of verification based on zero-knowledge proof.SafetyValidity, as it requires generating a proof to ensure the transaction is valid;

Throughput and Performance:

• OP has a faster off-chain transaction processing speed, but because it needs to wait for the challenge cycle m of the fraud proof, on-chain verification may take longer;

• ZK requires a certain amount of computing resources to generate zero-knowledge proofs, but the on-chain verification speed is fast, and once the proof is generated on the main chain, it can be quickly verified;

Versatility:

• OP is fully compatible with EVM, many DAPPs can be directly migrated, the computational complexity is low, and it is suitable for general intelligentcontractperform and complex calculations;

• ZK technology is still under development, and its application in general smart contracts and complex computing is currently limited;

cost:

• OP has lower off-chain transaction costs;

• ZK requires certain computing resources to generate zero-knowledge proofs, which may lead to higher off-chain transaction costs;

总的来说，Optimistic Rollups 和 zk-Rollups 分别具有各自的优缺点，Optimistic Rollups 更适合处理复杂的能合约场景，具有较好的以太坊兼容性；而 zk-Rollups 在Safety性和隐私保护方面具有优势。虽然由于 OP 技术的固有弊病，以太坊有围绕 ZK 技术进行扩容的发展趋势，但是技术迭代不是一朝一夕，OP 技术的 Layer2 同样在研发 OP+ZK 混合证明技术，OP 和 ZK 谁能主导未来还未成定论。

3. Layer 2 track data analysis

ZK or OP has always been the focus of discussion or debate, but ultimately it depends on the market's choice. Below we will look at the detailed status of the Layer2 track from the perspectives of transaction volume, TVL, TPS and other data dimensions.

3.1 Layer2 on-chain transaction volume far exceeds the main network

The total daily transaction volume of Layer2 has greatly surpassed that of the Ethereum mainnet. It is expected that with the continued development of Layer2, this trend will continue in the future, especially after the Dencun upgrade. In the future, Ethereum transactions will be divided into traditional transaction calldata storage and Rollup transaction blob storage. It is expected that EIP-4844 will expand the overall capacity of Rollup by 3-5 times. The author predicts that as the Dencun upgrade approaches, the ETH/BTC exchange rate will also rise, so it is worth paying attention to the changes in the data on the Layer2 chain.

3.2 TVL and Market Share

In terms of TVL, Arbitrum has a stable market share of about 50%, and at its peak it was able to occupy a market share of about 65%. The second and third places are OP and Base, all of which are Rollups based on OP technology.

Although Arbitrum TVL reached a record high of $8.48 billion on December 9, 2023, its market share has been declining, mainly due to the strong rise of OP and the dilution of multiple Layer2 mainnet launches. OP's $2 billion circulating market value also exceeds Arbitrum's $1.3 billion circulating market value, and in terms of total circulating market value, OP is only about $1 billion less than ARB. The market is more optimistic about OP's future than Arbitrum, and its pricing is also slightly higher.

Base’s TVL has increased recently, mainly due to the Seamless of the Base chain. Coinbase announced the launch of the Seamless Protocol governance of the Base ecological lending agreement.Token SEAM will become the first and currently the only Base ecosystem native project traded on CoinbaseTokenTherefore, a large number of users have generated expectations for interactive airdrops on the Base chain project.

3.3 Layer2 Profitability and Trend Analysis

In the past three months, compared with other projects, Linea has generated more Gas, mainly because Linea's technology is still in the iteration process, and the overall Gas Fee is not ideal. From the peak point of view, zkSync Era contributes more Gas, mainly from the expected interaction of airdrops.

目前 Layer2 的整体盈利模式并不清晰，作为公共基础设施很难对用户进行额外收费，因此 Layer2 主要依靠融资以及发行代币进行开发运营。

Comparing the price of issued tokens and Ethereum: OP is stronger than Ethereum and other Layer2. I think it is mainly because its narrative (OP+ZK and OP Stack) is more complete and has more capital support, which makes the market have higher expectations for it and estimates that its subsequent upward space is also broader. As the Dencun upgrade enters the countdown, OP and the leading projects of native issued tokens are receiving high attention from the market.

2.4 Comparison of the latest TPS data

Due to the hot inscription market on the chain, the real-time TPS of various Layer2 projects has also hit new highs. The maximum TPS of zkSync Era has risen to 62, and Arbitrum ranks second with 58. Base and OP did not benefit from this inscription market, and their TPS did not have new adobe data. However, the current TPS level is still difficult to withstand the simultaneous interaction of billions of users in the future, and Layer3 may be a solution that must be faced in the future.

2.5 Comparative Analysis of Top Projects

From the active address point of view:

In the past three months, the total number of active addresses of zksync Era has remained relatively stable, with an average daily number of active addresses of around 200,000; while after the issuance of Arbitrum and OP, Arbitrum has maintained around 150,000 daily and OP has maintained around 60,000 daily. We can see that the ecological stickiness of Arbitrum is significantly higher than that of OP, but the market pricing of ARB is lower than that of OP. The main reasons are:

1. OP Stack has a lot of capital and developer support;

2. OP, as the Layer2 officially supported by Ethereum, will switch to OP+ZK hybrid proof in the future;

From the perspective of transaction volume and TVL:

Arbitrum is far ahead, zkSync ranks second, and StarkNet has a significant increase in new users this month because of the official confirmation of the airdrop snapshot. The author speculates that ZK's zkSync and StarkNet may announce the airdrop details at the end of this year or in Q1 next year. According to historical experience, during the airdrop period, the TVL of Rollup projects in the ecosystem will have a short-term large increase, which will have a significant bonus to the native projects that have already issued tokens in the ecosystem, and the coin price is likely to rise.

4. Research on Layer2 Track Ecosystem

In the top 10 market share, Optimism and Arbitrum of the Op Rollups system account for more than 80%. In comparison, the Zk Rollups system is slightly insufficient. However, as an important component of the Layer2 ecosystem and a highly anticipated potential solution, Zk Rollups and Op Rollups have developed independently and learned from each other in the competition. Below, we will combine the current market performance and select Arbitrum, Optimism, Base, zkSync, StarkNet and Linea as the targets for detailed interpretation:

4.1 Arbitrum Ecosystem

As a Layer 2 scaling solution, Arbitrum uses Optimistic Rollups to increase throughput and reduce Gas Fees. It does this by bundling multiple transactions into a batch and then submitting them to the Ethereum mainnet. Arbitrum is compatible with Ethereum smart contracts, which means it can be used with existing dApps and DeFi protocols.

At present, Arbitrum's ecosystem quality is higher than other Layer2, and its native ecosystem is more. Because Arbitrum has led and experienced the hot Layer2 market, compared with other projects, the native projects in the Arbitrum ecosystem are more well-known (such as Radiant Capital, GMX, Camelot, Treasure DAO). In terms of the number of daily active users, Arbitrum is the Layer2 with the highest user stickiness after removing the airdrop expectations. Next, we will discuss the development status of the native ecology of each Layer2, especially the Layer2 that has not issued tokens:

GMX

Arbitrum's ecosystem includes GMX, Radiant Capital, and Camelot in the DEFI category, but Arbitrum's DeFi ecosystem is more unique, and many DeFi projects are built based on the GMX liquidity pool.

Recently, the overall transaction volume of GMX has rebounded with the overall market rise, and the price of the currency has also shown a positive correlation with it. walletBy adding 50x leverage trading through GMX integration, the author expects that if the market continues to rise, it may lead to an increase in GMX chain transaction volume, thereby promoting the organic rise of GMX tokens.

Treasure Dao

Treasure Dao is a non-DeFi project within the Arbitrum ecosystem. It is a lightweight casual game that focuses on creativity and playability.

Since 3A games mainly focus on industrial production capacity and require a lot of funds, I believe that in the competition with traditional Web2 games, lightweight creative games may be the key to breaking through. It can quickly iterate to find the best economic model and can also bring instant fun to users, rather than heavy upgrades,Gold Farming, as this is often unsustainable.

4.2 Optimism Ecosystem

Optimism is also a Layer2 expansion solution that uses optimistic Rollups technology to increase throughput and reduce Gas Fees. It is also the first to allow a large number of users to obtain Ethereum's security guarantees in the process of bridging funds from L1 without paying high gas fees. It is designed to be compatible with Ethereum smart contracts and supports the Ethereum Virtual Machine (EVM). Optimism also provides a feature called "Fraud Proof" that allows users to challenge invalid transactions.

Due to the weak innovation ability of the OP ecosystem, compared with Arbitrum, the OP ecosystem is slightly weaker, and the market has not yet launched a large-scale native project in the OP ecosystem. However, it has made considerable progress in infrastructure construction, such as the modular code base OP Stack and OP+ZK hybrid proof, which are strongly supported and promoted by capital. At present, the native project that has issued tokens in OP is mainly Velodrome, and most of the others are non-native projects, and the ecological construction performance is average.

4.3 Base Ecosystem

Base is a Layer2 network built by Coinbase, a crypto giant with a market value of $20 billion. It mainly uses Optimistic Rollup developed on the Ethereum network using OP Stack technology. Its network node providers mainly include Blockdaemon, QuickNode and Blast, Safe Wallet, block browsers Etherscan and Blockscout, and data indexers The Graph and Covalent. Base has many native projects, including Aerodrome developed by Velodrome, Seamless Protocol, friend.tech, etc., which have become the leading projects of Base.

Seamless

Seamless has already issued tokens, and users can bet on the expected tokens of Aerodrome and Friend.tech. Seamless does not have unique innovative features, but because its token is listed on Coinbase, it has attracted people's attention to the native projects within the ecosystem.

Friend.tech

Frien.tech obtains the opportunity to communicate directly with KOLs by buying and selling KOL tokens, but it turns out that this mechanism is still unsustainable.

Fren Pet

Fren Pet is a pixel-level game of the pet development type, which operates pet development through various token economics. At present, Fren Pet, as a Web3 game, also focuses more on token economics and ignores the fun of the game itself.

4.4 zkSync Ecosystem

zkSync is a Layer 2 scaling solution that uses zero-knowledge proofs to increase throughput and reduce Gas Fees. It is designed to be compatible with Ethereum smart contracts and supports the Ethereum Virtual Machine (EVM). zkSync also provides a feature called "zkPorter" that allows users to aggregate transactions and further reduce Gas Fees.

Unlike other DEX ecosystems that have formed a strong Matthew effect, the competition among DEX on zkSync is particularly fierce. There is currently no eye-catching lending business, so many developers and VCs are betting on the zkSync ecosystem.

Dmail Network

Dmail Network is an email-related application on zkSync, which won the first prize in the ETH hackathon. Currently, Dmail Network UAW is mainly due to the increase in the number of interactions brought about by the expected airdrop.

Tevaera

Tevaera is a gaming platform similar to Treasure Dao on Arbitrum, but its game quality is poor and it is still in the development stage and needs continued attention.

4.5 StarkNet Ecosystem

StarkNet is a Layer 2 scaling solution that uses zk-rollups to increase throughput and reduce gas fees. It is designed to be compatible with Ethereum smart contracts and supports the Ethereum Virtual Machine (EVM). StarkNet also provides a feature called "validium" that allows users to perform more complex calculations off-chain.

Due to technical reasons, StarkNet's TPS is relatively limited and the Gas Fee is relatively high, resulting in the backwardness of the entire ecological construction. However, thanks to the development environment within StarkNet, many innovative projects are being incubated:

• StarkWare was the first to propose using recursive technology to vertically expand the Ethereum mainnet and proposed Layer 3;

• Decentralized sorter Madara;

• Dynamically upgradeable NFT standard StarkSheet;

• Ekubo was the first to fully propose a solution for the implementation of Uniswap V4 hooks (Ekubo is currently helping Uniswap improve the V4 version);

• Full-chain games, full-chain game engines;

It is precisely because of the lack of user interaction experience that the entry threshold for speculative users has been greatly increased, which makes it an industry Builder that focuses on the opportunity ecology and is worthy of early exploration in the uninhabited wasteland.

4.6 Linea Ecosystem

Linea is a Layer 2 scaling solution that uses zk-rollups to increase throughput and reduce gas fees. It does not use a transpiler or custom compiler to generate ZK proofs for Solidity smart contracts, but uses compiled Solidity bytecode. Not only does it reduce the surface risk of vulnerabilities and hacker attacks, but the innovative prover design they provide ensures faster transaction speeds and lower gas costs.

Linea and Metamask belong to Consensys and have extremely large traffic entrances. Due to its use of ZK technology, the user experience is relatively poor and it is temporarily lagging behind the more similar Base launched in the same period (Base chose OP).

The overall innovation capability of the Linea ecosystem is insufficient. Its only native project is the Lending protocol Mendi Finance, and its non-DeFi projects have always lagged far behind the construction of other Layer2s.

5. Summary

The Layer2 war is still going on, and all Rollups are exploring many decentralization and expansion solutions during operation, including decentralized sorter networks, modularization such as ZK Stack and OP Stack, Layer3, OP+ZK hybrid proof technology, account abstraction, and so on.

From the current perspective, the expansion plan of the EVM ecosystem will eventually move from the mainnet to Layer2, OP to ZK, and Layer2 to Layer3, but the Layer2 track is still in its very early stages. Each Rollup has its own way of surviving in the fiercely competitive market: Arbitrum's rich and unique DeFi ecosystem, StarkNet's strong innovation and innovative projects, Optimism's capital support, zkSync's strategic vision, Base's strong innovation and resources, etc.

As the Dencun upgrade approaches, the EVM era centered on Layer2 is about to begin. It is a potential market with excellent opportunities for investors and an excellent opportunity for developers to attract the next billion users.

The article comes from the Internet:Layer2 track research report: Arbitrum, Optimism, Base, zkSync, StarkNet and Linea

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