Vitalik Buterin, the Co-founder of Ethereum [ETH], recently spoke up on the argument on whether development should be focused on first-Layer or second-layer functionalities in blockchains. He spoke about the tradeoffs that come with it and offered his opinion on what should be done.
He began by offering a definition of what first- and second-Layer Solutions are. Layer 1 solutions are those that are built into the layer of the blockchain itself, as opposed to Layer 2 solutions that are built on top of the blockchain without changing the rules of the blockchain itself.
A notable example of a layer 1 solution was the activation of Segregated Witness on the Bitcoin [BTC] blockchain, which required a change to the consensus rules of Bitcoin. A layer 2 solution would be the Lightning Network, a system of payment channels built on top of the Bitcoin blockchain.
Buterin stated that this contrast has mostly been observed in debates regarding the scaling of blockchains, in circumstances such as sharding or block size increases as layer 1 solutions and payment channels or Plasma on the layer 2 side. Towards the advancement of blockchains to the future, Buterin stated that:
“I do think that as blockchains become more and more mature, layer 1 will necessarily stabilize, and layer 2 will take on more and more of the burden of ongoing innovation and change.”
He went on to elaborate upon his reasons for saying so, with the primary reason being that layer 1 solutions require changes in the protocol, which in turn points to the governance of the blockchain.
Due to its decentralized nature, the blockchain is inherently difficult to govern. Even as a set of rules will help involved parties reach consensus, it is difficult to come to a conclusion without disagreement. On this, Vitalik stated:
“It has still not been shown that, in the long term, highly “activist” blockchain governance can continue without causing ongoing political uncertainty or collapsing into centralization.”
Vitalik argued that due to the constant change was seen in spaces like these, it is a “bad idea” to build features into the base layer of the blockchain. He described these as having a “high level of governance overhead” as those in charge would have to change it constantly to keep in line with developments in its respective space.
He illustrated this point with an example of the changes that needed to be made by Ethereum during the Byzantium hard fork last year to adopt elliptic curve operations. The fork enabled Ethereum to adopt technologies such as zero-knowledge succinct proofs and ring signatures, but are now rendered obsolete by the BLS-12-381 technology, bringing a need for another hard fork.
The path towards creating an environment for better testing of various proposed changes will be conducted using “layer 2 execution engines”, stated Buterin. This would function by utilizing technology such as zero-knowledge proofs to process transactions of assets sent to a bridge contract.
This will essentially allow for the base blockchain to become a layer dedicated towards data availability. Buterin said:
“…it’s the responsibility of the users of that specific execution engine to make sure that it is sustainable, and if they fail to do so the consequences are contained to within the users of that particular execution engine.”
This would effectively lead towards the movement of layer 1 to being a stable platform for layer 2 solutions. However, Buterin made the point that the first layer should be able to handle the data availability concerns required by layer 2 solutions. Moreover, he also stated that there is a “minimal level of complexity” required for the base layer so as to allow for the building of applications on top of it.
Even as base-layer upgrades need to be conducted and current ones need to develop with forward compatibility in mind, layer 2 will take up ” a larger and larger share of the innovation over time”, stated Buterin.
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