Where Did We Go Wrong With Ethereum Scaling?

Coming off the heels of ETH Denver, the rollup ecosystem is buzzing over the several new and exciting ideas discussed in the Mile High City to address the growing state fragmentation issue in the rollup space.

Avi Zurlo is the chief product officer of =nil; Foundation.

At the event, leaders, builders and visionaries revisited Ethereum’s rollup-centric roadmap from 2020; where we’ve come as an industry since then; and how the new roadmap has led to an explosive growth for the L2 ecosystem. Indeed, the total value locked in layer 2s is up by over 230% in the past year alone.

With this growth came the natural next step in evolution: modular scaling designs. While modular blockchains (i.e. networks that specialize in performing specific functions) are serving near-term demand for cheaper transactions and providing entirely new application designs, thought leaders in Denver unanimously agreed that there are still outstanding challenges presented by modular scaling. These issues are particularly apparent when new rollups are introduced to the Ethereum ecosystem, which compound the problems of splitting up functionality.

Each rollup exists within a siloed environment

Addressing the current technical issues of Ethereum’s rollup architecture, Ethereum Foundation developer Justin Drake said it best: We have a fragmentation problem.

Where did we go wrong with modular scaling?

In a perfect world, Ethereum scaling solutions would maintain Universal Synchronous composability enabling a seamless exchange and real-time settlement of transactions on the network. In reality, however, each rollup exists within a siloed environment that has neither notion of other rollups state nor Ethereum.

See also: Ethereum’s Vitalik Buterin Writes on ‘Enshrinement’ of L2 Functions on Mainnet

This state fragmentation fundamentally compromises the principle network effects of the Ethereum ecosystem, introduces compounding complexity (and risk) of interoperability protocols and results in an objectively worsened developer and user experience. Making matters worse, price-sensitive applications are forced to run app-specific infrastructure to avoid congestion fees on general-purpose rollups, exacerbating the state fragmentation problem further.

So how did we get here?

Compromised network effects

Compromising on the principle…