The year is 2050. Ethereum has taken over the world. Bitcoin Maxis have all moved home to live in their parents basement. Unicorns and Rainbows are the only legal design scheme and Vitalik statues dominate the global landscape. Optimistic **rollups have handily won the L2 wars of the roaring 20s. In late 2021 CryptoNYC moved to Maker Island (Manhattan) and in 2023 half departed to Uniswap island (the Brooklyn of rollups) to start a satellite entity.
What’s it like living on Maker Island? Our benevolent overlords take very good care of us! Similar to Neal Stephenson’s Franchulates in his revolutionary 1992 book Snow Crash, the world has been carved up into Rollup Islands.
In the world of Snow Crash , Burbclaves are the idealized gated communities. These secure neighborhoods are very orderly and uniform. Each Burbclave is built by a corporation, like the TMAWH’s Developmental Corporation, by leveling “any mountain ranges and divert[ing …] any mighty river that threatens to interrupt this street plan [which has been] ergonomically designed to encourage driving safety” (12). Most Americans now “parallel parked their bimbo boxes [or minivans] in identical computer-designed Burbclave street patterns and secreted themselves in symmetrical sheetrock shitholes with vinyl floors and ill-fitting woodwork”(191). This “cookie cutter” mold for housing and the residents of a Burbclave, helps to create an order and a sense of security within the Burbclaves. In fact, one of the primary appeals of Burbclaves, as well as some franchises, is that it is “a city-state with its own constitution, a border, laws, cops, [and] everything” (6). Thus, the Burbclave protects its inhabitants and attempts to maintain social order.
When Vitalik coined the term scalability trilemma he noted that we can only have two out of three desirable characteristics of blockchains.
Since the scaling wars of 2017 many scalability solutions have come and gone: state channels and plasma held early promise but are mostly abandoned. With the rise of DeFi I want to propse an alternate look at an L2 trilemma similar to the CAP theorem in distributed computing. L2s can have two of the following: composability, decentralization or scalability.
CZ has cleverly carried out an all out assault on the Ethereum mindshare of the crypto ecosystem
Binance Smart Chain is a brilliant clone of Ethereum that uses Proof of Authority rather than PoW. CZ controls all the validators, but the fees are 95% less than Ethereum and nearly instantaneous. BSC chooses speed and composability. All of the DeFi apps on BSC can live on L1 and call each other allowing the permissionless innovation we’ve become so fond of in the Ethereum world. In exchange you get decentralization theatre and live on Binance island. If you’re used to transacting on Binance.com this might be an upgrade.
Other L1 chains have made different compromises. NEAR, Polkadot and Cosmos have gone with sharding while Solana uses an innovative model (Proof of History) which allows it to scale with hardware. It’s unclear if any of these strategies can give us all three pieces of the trilemma.
A Rollup Centric Ethereum
Ali Atiia has an insightful twitter thread which points out that once people move to rollups, there’s very little reason for them to care about L1.
It's cheaper & better UX to skip L1.— Ali Atiia (@aliatiia_) March 9, 2021
If data availability is the only thing tying them to Eth, that tie will be severed eventually.
The only way they'r *all* forced to continue using Eth as a settlement layer is if there is valuable sticky logic on L1, i.e. execution.../5
As CZ showed us with BSC, most people don’t care about decentralization, all they care about is decentralization theatre, low fees, and number go up. Most people don’t live in Manhattan for a reason, and those who can, do. L1 might be the place where the wealthiest transact, and everybody else is happy to live on L2. Large ETH projects have spend years building a brand, or as Vitalik would say, legitimacy. They can use that credibility to create their own rollups and move people to them, while partnering with the other big players who issue assets (Circle/Tether) to issue native assets on L2? What’s the difference between L1 USDC and L2 USDC? Does anybody know or care?
Initially my mental model for rollups were that they are analogous to parachains, or shards. This would mean they would suffer from the same problems of congestion if everybody moved to the same one. In theory with parachains or shards, you want to separate everyone onto their own shard, however in practice everyone wants to be on the same shard (Manhattan) as all the other big players so they can do native (not cross shard) contract calls and maintain composability. In a sharded world everybody CAN’T move to the same shard or it defeats the purpose. In a rollup world we get a 100-500X scalability improvement so we can have a lot of the same projects on the same rollup.
Normal users aren’t going to be the ones doing the sequencing of transactions on a rollup, they just want cheap swaps on Uniswap so they can do their farming for 1/100 of the cost. Maker has been around since 2017 and created the first DeFi primitive so when Maker rolls out Maker Island who wouldn’t want to live there? Maker will do a bizdev deal with Circle and bring them onto the platform. A few months later they’ll get in touch with Andre and bring him and the whole Iron Bank crew onto Maker Island™. Sushiswap will want to move onto Maker Island but they won’t be allowed to by Maker’s sequencer so they’ll have to start their own island. Everybody knows that Sushi forked Uni’s code anyways so they’ll get no sympathy from the community.
But Optimistic rollups don’t allow withdrawals for two weeks you scream! That’s ok, on Maker Island they’ll take care of that for you!
As Maker Island gets gentrified, and everything just works the way you were used to in the centralized world, you get all the benefits of a centralized authority controlling you and keeping you safe, with the fun of number go up. Isn’t that what we all wanted anyway? Your parents tell you about how when they were growing up people used to live on L1s and talk about how difficult it was and how composability allowed for innovation and decentralization but isn’t everything better now? You remember a time when cross-rollup transactions were talked about or moving things back to L1 but that was so long ago now…
But isn’t everything better now that you never have to leave Maker Island?
The dystopian vision I encountered when I first read Snow Crash looms large in our future. How do we solve the L2 Trilemma? Can we have a scalable Ethereum that doesn’t turn into franchulates? Can we build the Metaverse without deferring power to benevolent corporate overlords? Stephenson warned us, will we listen?