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Ethereum Rollups in March

• zkSync Era (zkEVM) mainnet alpha goes live just days before Polygon’s own zkEVM launches
• Taiko (zkEVM) alpha-2 testnet: uses Sepolia testnet
• Immutable zkEVM announced, using Polygon zkEVM, gas to be paid in $IMX
• Optimism two-step withdrawals in Bedrock upgrade, improves bridge security
• ARB token airdrop takes place with 600k addresses qualifying for the free ARB tokens. 
• Scroll, an Ethereum L2 network that uses zk-rollups technology, raised $50M
• ConsenSys opening its EVM-equivalent zkEVM rollup to public testnet on March 28th

Learn all about different rollup tech, tokenomics, potential airdrops, and more with CryptoEQ's rollup library, including: 

Arbitrum Optimism Polygon zkEVM Starkware zkSync Scroll Aztec Loopring Fuel Boba Metis Zero-knowledge proofs and tech in general zkEVMs in general  

zkEVMs Launch!

Optimism and Arbitrum have long been the forerunners in Ethereum's layer-2 landscape, capturing the market's attention with their optimistic rollups and airdrop incentives. However, zero-knowledge rollups (ZKRs) are gaining traction as Polygon and ZkSync unveil their EVM-compatible, ZK-rollup solutions on the mainnet.

Layer-2 projects generally record transactions on a separate chain (the layer-2) before "rolling up" these transactions into a single one and settling them on Ethereum (the layer-1). By sharing gas costs among all transactions, fees are reduced. However, layer-2 networks differ in their approaches to processing and settling transaction bundles on Ethereum.

Ethereum co-founder Vitalik Buterin has previously expressed his belief that ZKRs will ultimately triumph as Ethereum's preferred scaling solution, citing advantages such as the absence of a seven-day withdrawal period.

Over the past week, Polygon and zkSync have launched their respective zkEVMs on the mainnet. Polygon's zkEVM offers EVM-equivalent rollup, allowing existing EVM-compatible smart contracts to function without altering languages or tooling. On the other hand, zkSync Era's EVM-compatible rollup requires projects to use its LLVM-based compiler, enabling additional features such as native account abstraction, hyperchains, and data compression.

While zkSync Era has no plans for a token launch, speculation about a future airdrop persists as the network aims to decentralize. Meanwhile, Polygon's zkEVM is anticipated to share fees with MATIC stakers, and it has implemented a Proof Of Efficiency (POE) consensus mechanism to enhance decentralization and network security.
 

zkSync Era

Matter Labs has opened public access to its Layer 2 network, zkSync Era, marking the first zkEVM launch on the Ethereum blockchain. Initially tested internally during its baby alpha phase in October 2022, the network granted whitelisted access to development teams in February. Now, the zkSync Era is accessible to everyone.

Major Ethereum projects, including Uniswap, Curve, Balancer, Maker, SushiSwap, Circle, and Argent, are already building on zkSync Era. One of its key features is native support for account abstraction, which enhances crypto wallet functionality and simplifies user onboarding. It also offers a unique level of data availability, publishing state differences rather than transaction inputs, enabling data compression, more frequent oracle updates, cheaper privacy, and better integration with off-chain storage extensions.

Although zkSync Era will not launch with a token due to its centralized nature, Matter Labs CEO Alex Gluchowski anticipates decentralizing the sequencer in about a year. Once the prover and core virtual machine engine is stable, a decentralized sequencer mechanism with validators and some form of the stake will be introduced, with a dedicated team already working on this aspect.

To safeguard the network at launch, Matter Labs has implemented a 24-hour transaction confirmation delay to provide a buffer in case of issues. This delay will be reduced over time as the network proves its stability. The plan is to gradually hand over control of zkSync to its community, following the model of zkSync Lite. After a year or more, the network is expected to become decentralized, with a security council established to oversee emergency protocol upgrades.

Users have been bridging to the new network at a rapid pace. ~188,000 addresses have deposited assets worth almost ~$76 million:

Source: Dune Analytics

ARB Token, Orbit, and Governance

In March 2023, the much-anticipated Arbitrum token, ARB, was officially announced by the Arbitrum Foundation, with an airdrop taking place on March 23, 2023. The introduction of the ARB token signifies Arbitrum's transition into a DAO, with token holders governing both Arbitrum One and Arbitrum Nova. Furthermore, the foundation unveiled an L3 developer toolkit called Orbit, which is expected to resemble Optimism's OP stack and its vision for a flourishing ecosystem of 'Superchains.'

The Optimism team has recently announced the OP Stack, which will allow for the permissionless creation of L2s using a codebase contributed to by Optimism, Coinbase, and other developers. This presents an opportunity for anyone to build modular chains, but it also empowers Optimism's competitors. While the goal of OP Stack is to allow chains to conduct atomic transactions while sharing sequencer sets, there is no guarantee that all chains will opt into this shared security model. This poses a risk to Optimism in that a general-purpose rollup built on its tech stack could potentially steal liquidity and users from the mother chain, and there is no guarantee that these chains will share fee income with Optimism.

In contrast, Offchain Labs, the development team behind Arbitrum, has taken a different approach. Arbitrum Orbit is a development framework designed for creating Layer 3s (L3s). L3s function as "L2s for L2s," meaning they are rollups that settle on another L2 rather than an L1. While maintaining the security guarantees of an L2, L3s have the potential to deliver a significant increase in scalability, as throughput compounds at each layer of the stack. They are granting IP rights for the creation of L2s to the Arbitrum DAO, while allowing for the permissionless creation of L3s with the Orbit program. This approach separates IP between permissioned L2 deployments and permissionless L3 deployments, giving Arbitrum and L3 developers the best of both worlds. The DAO has the ability to dictate terms and may even elect to prohibit L2 competitors from forking Arbitrum tech, which provides a direct value accrual model for ARB token holders. L3s built on Arbitrum must pay fees to Arbitrum sequencers, which is a unique capture mechanism that generates economic benefits from open-sourcing code.

For instance, if an L3 has a 10x increase in throughput compared to an L2, and an L2 boasts a 10x increase in throughput relative to an L1, then the L3 would offer a 100x increase in throughput over the L1. This substantial scalability enhancement makes L3s ideal for high-throughput use cases, such as order-book exchanges, gaming, or other applications requiring rapid and low-cost transactions. Furthermore, Orbit will be compatible with Arbitrum Stylus, an upcoming upgrade that will enable developers to build dApps using conventional programming languages, including C, C++, and Rust.

Significantly, Arbitrum will be the first L2 to implement "self-executing governance," ensuring that governance occurs entirely on-chain, eliminating the need for manual intervention by the core team.

Additionally, Arbitrum is establishing the "Arbitrum Security Council," a 9-out-of-12 multisig mechanism that will possess the authority to modify the rollup in case of security emergencies. The DAO will determine the composition of the Security Council. Token holders will also control the rights to Arbitrum's intellectual property, as DAO governance has the power to approve the creation of other L2s that settle on Ethereum, built using Arbitrum's technology.

These L2s can either be governed by ARB holders (a governed chain) or have their own independent governance system (an ungoverned chain). It is important to note that DAO governance does not need to approve the creation of L3s that settle to Arbitrum itself.

ARB's total supply will amount to 10 billion tokens, with 1.15 billion allocated for the airdrop targeting users who bridged to Arbitrum. An extra 110 million tokens will be airdropped to DAOs that contributed to Arbitrum's ecosystem growth prior to the token launch, akin to Optimism's approach. Overall, ~55% of the supply is designated for the community, while the remaining portion is reserved for investors and team members.

Source: Offchain Labs Source

• dApps (via airdrop) - immediately vested
• Users (via airdrop) - immediately vested
• Investors - 4 year unlock, 1st unlock next year
• Team + Advisors - same as Investors
• DAO Treasury - immediately unlocked but not circulating

*Update post airdrop*

The Arbitrum Foundation recently engaged in a pre-emptive sale of ARB tokens for stablecoins, prior to obtaining approval from the governance community for the organization's budget. The foundation acquired 750 million ARB governance tokens, valued at approximately $1 billion, without the consent of token holders.

For operational expenses, the foundation converted 10 million governance tokens into fiat currency and allocated 40 million tokens as a loan to Wintermute, a prominent market maker in the financial markets sector. The tokens are intended to finance a "special grants" program designed to promote growth within the Arbitrum ecosystem.

Proposal AIP-1 seeks to enable the centralized Arbitrum Foundation to bypass full on-chain governance when allocating grant funds. This proposal served as a procedural formality to inform the community of decisions already made, including the establishment of a foundation to administer the DAO's decisions and disburse funds. The contentious aspect of this situation lies in the fact that the Arbitrum Foundation sold these tokens before the vote's conclusion, rendering the governance process effectively irrelevant.

The foundation's rationale for this course of action is that certain parameters must be established before genuinely decentralized governance can be achieved. Furthermore, they assert that the special grants are essential to the project's long-term viability in the face of competition.