The "Merge" will take Ethereum from Proof Of Work to Proof Of Stake. ETH will no longer be mined. What are the positives? Lower energy consumption and greater scalability with the introduction of "Sharding" in 2023. What are the downsides? More centralization and less security. You must consider that already today stablecoins such as USDC, BUSD and USDT are easily censored by the companies that issue them. USDC and USDT (Erc20 and Polygon format) see a blacklist of addresses that cannot receive or send funds.
POSITIVE ASPECTS PROOF OF STAKE (MERGE & SHARDING)
-Less energy consumption (ETH will no longer be mined!): Merge
-More scalability (higher speed and lower fees): Sharding
NEGATIVE ASPECTS PROOF OF STAKE
-Less security
-More centralization (held by large nodes like Lido Finance but also by centralized platforms like Coinbase or Binance)
-Possibility to block funds and censor transactions (this point is highly controversial)
I made an introduction pointing out how Ethereum will change in the future, however in the article I would like to talk about Layer 2. Will they still be useful? Will they no longer have reason to exist?
ROLE OF LAYERS 2
What will be the purpose of Layer 2? I remind you that Layer 2 today allows you to scale Ethereum. If Ethereum drops fees, will Layer 2 still have a purpose? The answer is yes! The idea is to carry out the most "heavy" operations in terms of complexity on these scalability solutions, leaving consensus and security on the Ethereum mainnet. This will allow Ethereum, with the future integration of sharding, to scale up becoming cheaper and faster. There are two major categories of Layer 2 and in this article we will see what is the difference between ZK Rollups and Optimistic Rollups.
ROLLUPS (ROLLAR: ROLLING DATA OUTSIDE THE MAINNET)
There are two types of Rollups: ZK and Optimistic.
These are scalability solutions that allow you to move complex operations from the Ethereum mainnet to their chain. The peculiarity is that these data (deriving from the calculations carried out) are still stored on the Ethereum chain, therefore they maintain the security of the main chain. The consensus (security) mechanism of the rollups takes advantage of that of the Ethereum mainnet. Basically these data, called batches, are moved out of the main chain and processed. They contain the bare minimum of information to prove the validity of the transactions, this mechanism allows the decongestion of the network. The data is processed and compressed to be sent on the main chain. Some Layer2 (in reality it is Sidechain), while maintaining some points of contact with the mainnet, keep this data off chain on their network (this guarantees greater speed and low fees, at the expense of security). Polygon and Skale for Ethereum or Lightning Network for Bitcoin can be mentioned.
ZK ROLLUPS (ZERO KNOWLEDGE)
Each batch has a proof of validity which is sent to the main chain. This is to prove the validity of a transaction. They are called "zero knowledge" because having a validity stamp (proof of identity), it does not need to know what kind of data it is. This mechanism reduces the gas fees for block validation because the data is compressed. However, the speed is reduced compared to Optmistic Rollups (which assume that transactions are always valid, without verifying them). On the other hand, withdrawal times from the network are much faster, since the transactions are already verified. In general they are less suitable for complex operations. The best known examples that exploit this mechanism are: ZKSync, Starkware, Immutable X (NFT Layer 2), Hermez, StarkEX, Aztec and Loopring.
The Gods Unchained (a famous "play to earn") marketplace is based on Immutable X. As we have seen above, Immutable X is a ZK Rollups that allows you to perform low cost transactions. These solutions are fundamental on play to earn built on the Ethereum blockchain.
OPTMISTIC ROLLUPS
In this case the data (batch) does not send any data to the main chain because, being "optimistic", they assume that the transactions are always valid and not malicious. Batches are sent without testing and without performing any checks so this leads to greater speed. But how is security guaranteed? They include a "challenge period" during which, if necessary, the validity of this data can be challenged. If a malicious transaction is revealed, a fraud test is performed where the calculation is performed on the mainnet using the available data. Sequencers (which represent a kind of validators) have an incentive to perform well and validate correct transactions thanks to the rewards of staking in Eth. If they misbehave, by sending a fraudulent transaction on the Ethereum mainnet, they will suffer slashing (loss of a part of the Eth staked). The withdrawal times from the chain are longer than the ZK Rollups, precisely because the validity of these data is checked during the withdrawals. They are very suitable for dapps that take advantage of complex smart contracts. The best known examples are obviously Arbitrum and Optimism.
I remind you that Optmism and Arbitrum already have a lot of active dapps. A few names? Uniswap, Curve, Sushiswap, Synthetix Network, Aave, Balancer, etc They are all dapps originally born on Ethereum that have also moved to these Layer 2! Obviously there are also native dapps of the protocols. For example GMX (leverage trading dex) on Arbitrum or Velodrome and Rubicon on Optimism. There are also many NFT markets such as StratosNFT (Arbitrum) and Quixotic (Optimism).
These two markets look like Opensea forks and are practically identical to each other in the various sections of the site! However, I mentioned them just to emphasize that Arbitrum and Optimism are more alive than ever!
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