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Read the whole Metis fundamental analysis report here.

What is Metis?

Metis is an L2 scaling solution on Ethereum that's best described as an EVM-equivalent, sharded Optimistic Validium featuring a Dynamic Bond Threshold staking design. Metis began as a “regular” Optimistic rollup (OR) but later transitioned to the validium model in April 2022, in which it no longer posts calldata to the Ethereum L1 but rather to a different DA layer. Recall, posting calldata is essential so that independent validators on the L1 can verify the validity of the data (state root) coming from the L2. 

The METIS token is used to pay transaction fees on the rollup, stake to become a sequencer, and for fraud challenge incentives. 

Pros

• Parallel sequencers
• No-code integration via a middleware layer powered by smart contract templates
• DAC (Decentralized autonomous company) infrastructure enables both blockchain and Web2.0 companies to build decentralized businesses on-chain while enjoying the decentralization and security of Ethereum
• Withdrawal period could (theoretically) take minutes (rather than days)
• Plans to inherit Optimism’s EVM Equivalence

Resources

• Whitepaper
• Bridge
• Chain explorer
• Governance
• Guides
• Farms
• TVL
• Charts
• Fees paid to L1

Metis 2023 Roadmap

The Metis platform is designed to prioritize security and decentralization for its users. While the Cannon fraud-proof system represents a significant advancement, it is essential to incorporate a decentralized sequencer to enhance the robustness of the system. To address this need, Metis aims to implement a decentralized sequencer pool, a critical step towards ensuring the security and liveness of the blockchain. These attributes are vital for fostering a resilient, decentralized financial network and infrastructure. By establishing a decentralized sequencer pool, the possibility of tampering or censorship by malicious actors is significantly diminished.

This implementation is notable for being the first instance of an Ethereum Layer 2 sharing the Sequencer's revenue with the community. More details on the white-listing process will be disclosed soon.

According to the schema proposed by Vitalik Buterin for categorizing rollups, Metis is currently classified as Stage 0. Upon integrating fraud proofs, the platform will advance to Stage 1, and after decentralizing the sequencer, it will be designated as a Fully Functional Rollup.

Metis is at the forefront of innovation by developing a unique Hybrid Rollup that merges the unparalleled scalability of the Optimistic Rollup architecture with the robust security provided by Zero-Knowledge cryptographic proofs.

Optimistic Rollups offer EVM compatibility, cost efficiency, and rapid transaction confirmations. However, they suffer from certain limitations, such as the absence of transaction finality, as they require a 7-day period for finality in case fraud proofs need execution. This constraint also affects users' ability to withdraw from Optimistic Rollups to Ethereum since it takes seven days for funds to be bridged.

Conversely, Zero-Knowledge Rollups excel in security, censorship resistance, and near-instant transaction finality. They are widely regarded as the future of rollups. However, they also present challenges, including slower transaction confirmations, increased complexity for developers, debatable EVM compatibility, and higher transaction costs compared to Optimistic Rollups.

By combining the strengths of these two architectures, Metis is creating Hybrid Rollups, offering the best of both worlds within a single rollup class.

In comparing various types of Ethereum rollups, Hybrid Rollups exhibit several advantages:

1. EVM Equivalence: Leveraging the Optimistic Rollup architecture, Metis provides an accessible coding environment for Ethereum developers.
2. Faster transaction finality: Implementing zero-knowledge proofs within the optimistic rollup architecture reduces transaction finality time from 7 days to approximately 4 hours.
3. Enhanced Security: Validity proofs guarantee the accuracy of off-chain transactions and prevent operators from executing invalid state transitions, relying on trustless cryptographic mechanisms for security.
4. Increased Throughput: Zero-knowledge proofs eliminate the need for extra data, allowing each transaction to contain only the minimum required information. This greatly increases throughput and helps reduce Ethereum's congestion.
5. Capital Efficiency: Users benefit from enhanced capital efficiency and can withdraw funds from Layer 2s without delays.
6. Decentralization: All transactions are processed in parallel, promoting verifier decentralization. This model stores data necessary for recovering the off-chain state on L1, ensuring security, censorship resistance, and decentralization.

The Hybrid Rollup is achieved by utilizing zkMIPS, a novel rollup architecture consisting of STARK-based provers/verifiers on MIPS, generated by Cannon.

The choice of STARK technology is based on its advantages, including cost-efficient proof generation, recursive proofs, and quantum safety.

Hybrid Rollups provide rapid confirmations and finality but impose a slight increase in cost. Consequently, the Smart L2 upgrade was implemented in May 2022, paving the way for the upcoming Hybrid Rollup architecture, which effectively combines the best features of both worlds.

In summary, the Hybrid Rollup operates 

as follows when a user makes a transaction in the network:

1. The Sequencer produces the blocks.
2. The Proposer submits the transactions and states.
3. The prover reads from L1 to produce the blocks and MIPS programs.
4. The Prover submits the zero-knowledge proofs once proof generation is completed.
   • If not submitted, the verifier initiates the fraud proofs process, and the sequencer potentially faces slashing.
5. Once the proof has been submitted, the smart contract is satisfied.
   • If not satisfied, the verifier initiates the fraud proofs process, and the sequencer potentially faces slashing.
6. Transaction finalized.

By combining the high-level scalability of Optimistic Rollup architecture with the security, censorship resistance, and fast finality offered by Zero-Knowledge proofs, the Hybrid Rollup presents a groundbreaking rollup architecture. This innovation lays the foundation for fostering open, trustless, and decentralized collaboration within the blockchain ecosystem.