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Exploring Layer 2 (L2) and its future

Layer 2 networks will maintain significant roles

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TL;DR: 

Layer 2 networks will maintain significant roles, including fast pre-confirmations, MEV mitigation strategies, EVM extensions, and user-focused conveniences.

Introduction

The rise of Layer 2 (L2) solutions in blockchain technology has captured significant attention, particularly in Ethereum's evolving ecosystem. At its core, Sushi embodies Ethereum's essence, while embracing a multichain approach in practice. As an early and proactive adopter of L2 technologies, Sushi is among the first decentralized exchanges (DEXs) on Arbitrum, expanding its presence across eight L2 platforms.

This article delves into the fundamentals of Layer 2, its evolving role in Ethereum's latest development roadmap, and Sushi's integration into these networks.

What is Layer 2?

Layer 2 refers to technologies aimed at scaling applications by handling transactions off Ethereum's main chain (Layer 1). These solutions offer faster, more efficient transactions and retain the main blockchain's security model. L2 technologies primarily address Ethereum's scalability issues and high transaction fees. Some most often see Layer 2 technologies include:

Side Chains: Independent blockchains running parallel to Ethereum, providing faster and cheaper transactions. E.g., Polygon.

Rollups: Systems that execute transactions outside the main Ethereum chain. They bundle multiple transactions together and then post the consolidated transaction data back on-chain, effectively reducing the load on Ethereum.

  • Optimistic Rollups: A type of rollup that assumes transactions are valid by default and only runs computation, via fraud proofs, if a transaction is challenged. This allows for faster processing times at the cost of a longer finality time. E.g., Arbitrum, Optimism.
  • ZK Rollups: A rollup variant using zero-knowledge proofs for transaction validation, enhancing privacy and scalability. ZK Rollups provide immediate finality and do not require a challenge period as in Optimistic Rollups. E.g., Polygon, Linea, Scroll, Metis.

Layer 2 and the Latest Ethereum Roadmap

Buterin's recent initiative reintroduces certain functionalities back to Ethereum's main chain, proposing an "enshrined zkEVM" (zero-knowledge Ethereum Virtual Machine), potentially affecting Layer 2 projects like Polygon, Linea, Scroll, etc.

The future of Ethereum envisions light clients becoming more powerful, using zero-knowledge cryptography to verify transactions on the main chain, leading to an integrated zkEVM. This marks a continued commitment to a "rollup-centric" roadmap for Ethereum, balancing innovation with the utility of Layer 2 networks.

Many people wonder: What role will existing Layer 2s play if the Mainnet incorporates its own ZK-EVMs? This question is addressed in this blog from Ethereum titled, 'If we enshrine ZK-EVMs and make them a protocol feature, then what is the ongoing role of “layer 2 projects”?' where the answer is thoroughly explored:

“The EVM verification functionality, which layer 2 teams currently implement by themselves, would be handled by the protocol, but layer 2 projects would still be responsible for many important functions:

  • Fast pre-confirmations: single-slot finality will likely make layer 1 slots slower, while layer 2 projects are already giving their users “pre-confirmations”, backed by the layer 2’s own security, with latency much lower than one slot. This service will continue to be purely a layer-2 responsibility.
  • MEV mitigation strategies: this could include encrypted mempools, reputation-based sequencer selection, and other features that layer 1 is not willing to implement.
  • Extensions to the EVM: layer 2 projects could incorporate substantial extensions to the EVM that provide significant value to their users. This includes both “almost-EVMs” and radically different approaches such Arbitrum Stylus’s WASM support and the SNARK-friendly Cairo language.
  • User and developer-facing conveniences: layer 2 teams do a lot of work attracting users and projects to their ecosystems and making them feel welcome; they are compensated for this by capturing MEV and congestion fees inside their networks. This relationship would continue.”

To summarize, Layer 2 networks will maintain significant roles, including fast pre-confirmations, MEV mitigation strategies, EVM extensions, and user-focused conveniences, signifying Ethereum's ongoing commitment to a rollup-centric development trajectory.

Sushi's Layer 2 Deployment

Sushi's diverse deployment across Layer 2 (L2) projects, each focusing on distinct technologies, aligns perfectly with the ongoing development of the Ethereum ecosystem. It's logical to anticipate further integration into L2 as Sushi continues to evolve.

Current Integration

Arbitrum: Enhances Ethereum's capabilities, offering a scalable and cost-effective trading experience.

Optimism: Provides low-cost, high-speed Ethereum L2 blockchain, reducing transaction fees and latency.

Polygon: Expands Ethereum's functionalities, enabling a robust DeFi ecosystem.

Base: Developed by Coinbase, offers innovative features for a streamlined trading experience.

Linea: Powered by Consensys, provides high-speed and secure transactions with zkrollup technology.

Scroll: A zkEVM designed by Ethereum developers, enhancing scalability.

Metis: A permissionless L2 network ideal for decentralized applications.

Boba Network: A multichain L2 solution, facilitating a diverse and efficient trading environment.

Conclusion

Sushi's integration with a variety of L2 solutions reflects its innovative approach in the DeFi space. By adopting these technologies, Sushi not only boosts the efficiency and scalability of its platform but also contributes significantly to the ongoing evolution of the Ethereum ecosystem. 

Explore the efficient and cost-effective trading with Sushi on L2 platforms. Visit Sushi now!