There has been much talk of scaling solutions for Ethereum. Much publicity has been given to scaling solutions such as Optimistic Rollup and ZK rollup and to a lesser extent to Matic Network which is a layer 2 network on the Ethereum Blockchain. It is important to have a proper understanding of the differences between these scaling solutions in order to be properly informed, as 2020 brings blockchain and cryptocurrency closer to the realization of mass adoption. Layer 2 scaling solutions are needed for Web 3 decentralized applications (Dapps). Layer 1 blockchains are unable to scale sufficiently and thus the need for layer 2 solutions. Vitalik Buterin has stated that the Ethereum Blockchain will use layer 2 applications to scale. An infographic showing what web 3.0 is can be seen below (Singh, 2018).
Different Scaling Solutions for the Ethereum Blockchain
Currently, as of the last hard fork, Optimistic Rollup (OR) is able to scale Ethereum smart contracts and Dapps up to 250 TPS currently with 2000 TPS being the goal (Eth Gasstation, 2019). Both Optimistic Rollup and Matic move transactions off-chain onto layer 2 sidechains. It is estimated that OR could have about 8-10 sidechains which would enable it to scale Dapps and smart contracts up to approximately 20 000 transactions per second once it achieves its optimum capacity (TPS).
Matic, on the other hand, can currently do 10 000 TPS during beta Mainnet testing. Theoretically, a single Matic is sidechain is capable of 65 000 TPS. An article written by Prime ICO states, “Matic plans to achieve 65,000 TPS (transactions per second) on a single Matic chain. Combining these chains under a sidechain tree architecture could achieve several millions of TPS” (Prime ICO, 2018; Matic Network, 2019). To clarify, Matic can have as many sidechains as is required by a project or an institution.
In an article written by Alex Gluchowski (Gluchowski, 2019), he states that Optimistic Rollup will prepare users for ZK Rollup and make the following fixes to Optimistic Rollup
ZK Rollup will still take some time to develop and to be available.
In contrast, Matic which is due to be launched in Q1 2020 will enable instant transaction, virtually unlimited TPS (as will be clarified in the next section), Ethereum Blockchain layer 1 security – “Plasma chains are relatively secure because they are connected directly to the Ethereum mainchain and use Ethereum as a source of universal truth” (Schwarz, 2019). The main issue at the moment is scaling for web 3.0 applications. Another issue is fees – Matic fees are about 100 times less than Ethereum gas fees.
Source: Artwork for Cover and above by Twitter: Smartmen6
Why 250 000 TPS Needed for financial Institutional Viability
In a recent interview on RT, 28 Dec 2019, Aly Madhavi an industry blockchain expert explained that 70% of banks surveyed are looking at doing a form of digital currency, and 50% of them are working on proof of concepts. He stated that banks are preparing to deal with assets as they start to digitize and tokenize.
One interesting point he made was that a couple of years ago Ali Pay in China did 256 000 TPS on Singles Day. He stated that to “have financial systems (institutions, corporations) with a blockchain layer we would need to have at least that sort of throughput to be viable in most countries” (RT, 2019 Video). In other words, to satisfy the requirement of major institutions wanting to build on the blockchain for mass adoption purposes – they would not be comfortable to invest huge amounts of capital into something less than 250 000 TPS capability.
Matic can meet this requirement and go way beyond as is illustrated by the simple chart below. It can also be argued that not all projects will need such high throughput, but many probably will as the blockchain begins to become a part of the global economic infrastructure. Decentralized finance (Defi) promises to play a major role in 2020 and there are approximately 196 Defi apps currently built on the Ethereum blockchain (DeFi Prime, 2019).
Aly Madhavi, additionally, stated that another to watch carefully in 2020 was the gaming sector. A website that tracks Dapps, State of the Dapps, shows that the Ethereum Blockchain has vastly more Dapps on it than any other blockchain (https://www.stateofthedapps.com/platforms/ethereum) If you scroll down and click “493” next to games the site will show all the games built on the Ethereum Blockchain. EOS has 55 games, Steem has 9 games, POA has 5 and NEO has 11 (State of the Dapps, 2020). Games themselves moving forward will need very high throughput and the Ethereum Blockchain with layer 2 Matic can provide the needed TPS in the very near future (Q1, 2020).
In summary, there are many layer 2 scaling options that will be used; however, Matic is currently perfectly positioned to provide the enhanced scalability option, which will likely be required by some larger corporations or institutions, to the Ethereum Blockchain.
Furthermore, Matic is not only for the Ethereum Blockchain, it can also be integrated into other blockchains. Two are examples of other blockchains working with Matic at the moment are Harmony one and Elrond to enhance their scalability performance. Also, approximately 40 new projects have built on Matic and will begin using the network after Mainnet. Many other Dapps on the Ethereum Blockchain are likely to integrate after Mainnet as well.
For those interested in building / integrating with the Ethereum / Matic network you can contact a member of the team at https://matic.network/about/ where individual team members contact information can be found, or at [email protected]
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References
Defi Prime. (2019). Ethereum DeFi Ecosystem. Retrieved from https://defiprime.com/ethereum
Matic Network and Elrond Engage in Joint Blockchain Infrastructure Research
Eth Gasstation. (2019, December 3). What is optimistic rollup? Ethereum's latest layer 2 scaling solution. Retrieved from https://ethgasstation.info/blog/what-is-optimistic-rollup-ethereums-latest-layer-2-scaling-solution/
Gluchowski, A. (2019, November 26). Optimistic vs. ZK Rollup: Deep dive. Retrieved from https://medium.com/matter-labs/optimistic-vs-zk-rollup-deep-dive-ea141e71e075
“Harmony and Matic team up — to set new industry standards in blockchain scalability and Dapp…” by Marianne Sørensen https://link.medium.com/GvIyeEbBS2
Matic Network. (2019). Matic FAQ. Retrieved from https://docs.matic.network/faq/
Matic Network and Elrond Engage in Joint Blockchain Infrastructure Research
Prime ICO. (2018, September 11). Matic ICO review – Scalable and instant blockchain transactions. Retrieved from https://primei.co/matic-ico-review
RT VIDEO Tesla takes on China & France’s Foray into fin tech. Retrieved from https://youtu.be/5Zg-SrCpi6I?t=1087
Schwarz, C. (2019, June 19). Ethereum 2.0: A complete guide. Retrieved from https://medium.com/chainsafe-systems/ethereum-2-0-a-complete-guide-3739a74be61a
Singh, N. (2018, December 19). 35+ web 3.0 examples Of how blockchain is changing the web. Retrieved from https://101blockchains.com/web-3-0-examples/
State of the Dapps. (2020). State of the DApps — Blockchain apps for Ethereum, Steem, EOS, and More. Retrieved from https://www.stateofthedapps.com/platforms/ethereum
