Analysis of Ethereum Layer 2 Asset Bridge Solution: Arbitrum, zkSync and DeGate Bridge

The Ethereum Layer 2 ecology will usher in a situation in which a hundred flowers bloom. How to communicate between Layer 2 and Layer 1 may become a core issue. Since its birth in 2015, Ethereum has rapidly grown into the most active-zce and busiest blockchain. Whether it is in terms of the richness of applications, the scale of assets on the chain, or the transaction volume, security and other indicators, Ethereum is the current The undisputed king of the public chain. With the rapid development of the Ethereum ecology, especially the complete detonation of DeFi, the originally designed throughput is seriously insufficient. According to the daily transaction data statistics of etherscan.io, the current Ethereum TPS is around 17 (contract operations account for a large proportion of This value has been reduced), the gas fee of tens or even hundreds of dollars and the long transaction waiting time have become the main reasons for restricting the further development of the Ethereum ecology and entering the mainstream world. For a long time, the entire Ethereum community has been working hard to solve the problem of throughput and high handling fees. One of the main solutions is Ethereum 2.0, which will greatly increase the number of transactions per second and will be released as soon as the end of 2021; Such as the EIP-1559 proposal, it is hoped that the billing method of transaction fees will be adjusted to achieve the purpose of reducing Gas fees in disguise. At the same time, a voice emerged: Is it really necessary to put all transactions on the main chain for calculation and processing? Transfer the transactions that should be processed on the Ethereum main chain, that is, Layer 1 (L1), to Layer 2 (L2) for processing, and then transfer the results from L2 back to L1 for confirmation. We call this solution Ethereum Layer 2. The theoretical TPS of L2 has reached 2000-4000, which has surpassed the processing capacity of Visa - 1700 transactions per second. Therefore, many believe that the L2 scheme is the key to Ethereum winning mainstream users. THORSwap launched a cross-chain exchange aggregator that supports Ethereum: Golden Finance reported that the decentralized cross-chain transaction protocol THORSwap launched a cross-chain exchange aggregator that supports Ethereum, supporting more than 8,300 ERC-20 tokens, allowing users to trade in THORSwap Native encrypted assets are traded on the platform without using third-party bridging tools. The protocol currently holds approximately $361 million in total value locked (TVL). [2022/8/23 12:43:47] Currently existing L2 schemes mainly include the following: Optimistic Rollups: Data on-chain, fraud proof. The application team includes Optimism, Offchain Labs Arbitrum rollup, Fuel Network; ZK Rollups: data on-chain, zero-knowledge proof. Application teams include Loopring, Starkware, Matter Labs zkSync, Aztec 2.0; Validium: off-chain data storage, zero-knowledge proof. Application teams include Starkware, Matter Labs zkPorter; Plasma: data off-chain storage, fraud proof. Application teams include OMG Network, Matic Network, Gazelle, and Leap DAO; State Channels: application teams include Connext, Raiden, and Perun. The chain belongs to the L2 scheme. The total locked position of the Ethereum L2 network is 5.04 billion US dollars: Jinse Finance reported that L2BEAT data shows that as of June 2, the total locked position on Ethereum Layer 2 was 5.04 billion US dollars. Among them, the expansion program Arbitrum has the highest amount of locked positions, which is about 2.5 billion US dollars, accounting for 49.74%. Followed by dYdX, the lock-up volume is 965 million US dollars, accounting for 19.15%. Optimism occupies the third place, with a locked position of 908 million US dollars, accounting for 18.03%. [2022/6/2 3:58:54] Among many solutions, Rollups is gradually gaining market recognition and becoming the most reliable expansion solution for Ethereum. On the one hand, this solution directly inherits the consensus mechanism and security features of L1. On the other hand, it will not compromise the security and sovereignty of L1. In fact, Vitalik said bluntly that Rollup is one of the long-term expansion solutions of Ethereum that can be realized the fastest. The biggest difference between the two solutions of Rollups, Optimistic Rollups and ZK Rollups, is that they use fraud proofs and validity proofs respectively to ensure the correctness of the post-state root in batches . For the Rollups solution, how to deposit assets from L1 to L2, and then withdraw them from L2 to L1, and further, how to extract assets from one L2 network to another L2 network is a core issue, and we will take on this responsibility The infrastructure is called a Bridge. We studied the implementation principle of the native bridge of the current mainstream Rollup scheme, and selected a representative from each of the Optimistic and zkSync schemes for comparison. The total pledge amount of the Ethereum Beacon Chain network has exceeded 11 million ETH: Jinse Finance reported that according to the latest data from the Ethereum official website, the total pledge amount of the Ethereum Beacon Chain network has exceeded 11 million ETH. There are 11,036,841 ETH, and the total number of verifiers is 328,806. According to coingecko data, the current price of ETH is $3,274.22, with a 24-hour drop of 3.6%. [2022/4/1 14:31:25] Arbitrum The Arbitrum protocol uses its communication capabilities between L1 and L2, theoretically, it is possible to transfer any form of Ethereum assets (including Ether, ERC20, ERC721, etc.) , L2 transfer. When transferring assets from L1 to L2, the assets are deposited into an Arbitrum bridge contract on L1, and then an asset of the same amount is minted on L2 and deposited into the specified address; when transferring assets from L2 back to L1 , the assets will be destroyed on L2, and then the same amount of assets will become available in the bridge contract of L1. In addition, when redeeming assets from L2 to L1, there is a key difference that after users send transactions, they must wait for the end of a challenge period before they can finally be executed on L1. This is determined by the Optimistic Rollup security model. It is worth noting that the official recommendation is to use the "Retryable Tickets" mechanism for communication between L1 and L2. The operation mode of the retryable ticket is roughly as follows: the transaction initiated by L1 to L2 is first stored in the inbox, with transaction parameters such as calldata, callvalue, and gas info. When the transaction fails for the first time, it will be put into L2's "retry buffer", which means that within a period of time (usually a challenge period, that is, about a week), anyone The note can be redeemed by re-executing the transaction. There is no time limit for retrying transactions from L2 to L1 and can be done at any point after the dispute period ends. The Ethereum domain name paradise.eth was purchased by a mysterious buyer for 420ETH: On October 9, an unknown wallet purchased the Ethereum domain name paradise.eth for 420 ETH (approximately $1.5 million), which is the largest sum so far Such sales. It was initially speculated that the buyer might be cryptocurrency venture capital firm Paradigm. However, the company told Bradley Millegan, Director of Operations at Ethereum Naming Services, that the company was not the buyer in the deal, raising questions about who the mystery buyer was and for what purpose. But it appears to be some kind of prank or joke. As Millegan pointed out, the records for this ethereum domain were set up with some weird links. First, the buyer sets the email to @mcdonalds.com, then sets the associated image to the SushiSwap Logo. (The Block) [2021/10/12 20:23:17] This mechanism design is mainly to deal with such a scenario: when a user wants to deposit a certain token from L1 to L2, these tokens will first be stored in In the bridge contract of L1, an equal amount of tokens are minted on L2 at the same time. Assuming that the transaction on L1 has been completed, but the transaction on L2 fails due to insufficient handling fees, this will cause a serious problem: the user’s token on L1 has been transferred out, but the token has not been received on L2. In fact, These tokens are locked in the L1 contract. Through the retryable ticket mechanism, the user (or anyone else) can re-execute the transaction within a week with enough fees, and finally get the token on L2. The following are the basic steps of the Arbitrum native bridge: Dynamic | 35,004 unconfirmed transactions on Ethereum: According to Etherscan.io data, there are currently 35,004 unconfirmed transactions on Ethereum, and the number of unconfirmed transactions has been relatively stable recently, and network congestion has not improved further signs. [2019/1/19] L1 -> L2 users initiate Deposit transaction assets from L1 into the L1 contract, and the transaction is deposited in batches in the Inbox. The transaction is executed in L2, and the minted assets are transferred to the specified address. If the transaction fails, the transaction will be Stored in the retry buffer of L2, the user can initiate a retry within a challenge period L2 -> L1 user initiates a Withdraw transaction in L2, the L2 chain will package the transactions collected within a certain period of time, generate a Merkle tree, and Publish the root node as an OutboxEntry to the Outbox of L1. Users or anyone can perform Merkle verification on the root node and transaction information. After the challenge period is over, the user can complete the transaction in L1. If the transaction fails, the user can initiate a retry . In terms of bridge implementation, the main difference between zkSync and Arbitrum is that when withdrawing, the verification of the transaction uses an effective proof based on zero-knowledge proof instead of a fraud proof. The basic steps are: L2—>L1 users in L2 Initiate a Withdraw transaction: encode the transaction data into a byte string, sign the byte string with the correct zkSync private key, generate an Ethereum signature or provide an EIP-1712 signature for the transaction description, and send the transaction through the corresponding JSON RPC method Transaction to L1: The transaction enters the block created by the zkSync operator and is published to the zkSync smart contract on L1 to verify the block: After a few minutes, the ZK proof that proves the correctness of the block will be generated, and the proof will pass a The verification transaction is published to L1 until the verification transaction is completed and the Withdraw transaction is completed. It can be found that the zk Rollup scheme is significantly better than the Optimistic Rollup scheme in terms of exit time, but since it will take time for zk Rollup to be fully compatible with EVM, it is expected that Optimistic Rollup will still become the mainstream L2 scheme in the early stage. It is precisely because of this that using a third-party bridge to solve the problem of the long exit period of Optimistic Rollup and bring users a better experience has become the goal of some teams. The goal of DeGate Bridge is to help reduce the threshold of Ethereum asset migration to the greatest extent in the early stage of Rollup ecology, and to implement large-scale applications based on the second-tier infrastructure of Ethereum Rollup. We believe that under the current infrastructure conditions, an excellent and sufficiently good liquidity solution needs to have: First, it can automatically adjust the liquidity distribution of different layers through the market. Second, a non-advance payment scheme with zero capital freeze that can maximize capital efficiency. Third, the lowest Gas consumption and the best user experience are also crucial. DeGate Bridge achieves a fast channel for cross-layer asset transfer based on optimizing the stablecoin AMM curve and the trading market. Limited by the incompleteness of the oracle machine that provides the L2 state, the first phase of DeGate Bridge will be realized through centralized custody of assets , when a mature oracle service appears on Ethereum L2, DeGate Bridge will turn to a decentralized way to realize the bridging of assets. In this section, we will conduct actual tests on the native Bridge and Degate Bridge that have been launched on the production or test network, and mainly examine the following indicators: gas cost of the bridge up and down; timeliness of the bridge up and down; operation complexity; we are testing Unified use of ERC20 tokens instead of ETH (ETH does not require Approve, and the handling fee is cheaper). At the same time, we fit the handling fee based on the ETH price of $4000 and the Gas Price of 100Gwei.

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