Review of the 5 key points and future trends of the EthCC conference

The EthCC conference was great. I have never talked to so many energetic people who are passionate about the development of L2 expansion, AA, MEV and ZK technology. If you missed the conference, this article summarizes the 5 key points of the conference and future trends.

1. Data availability is coming

Until recently, the only data availability (DA) solution was Ethereum. This solution is not ideal for many reasons, but the main reason is cost. Today, DA is the largest cost of most rollups.

Crucially, DA is not a fixed cost that can be amortized across a larger user base. DA is variable and scales linearly with usage. As a result, only large rollups with huge amounts of capital have users today.

This is all changing. I'd guess that in the next 6 months, there will be 6 other viable solutions. EigenLayer, Celestia, Avail, and Espresso Systems are all creating their own products. This is a good start, but it's just the beginning.

Competition in the data availability layer will significantly lower the barrier to entry for new rollups. In the next 18 months, we will see a large number of new applications emerge on ZK or OP Stacks.

In other words: low-cost DA + modular blockchain = fast takeoff

2. Rollup interoperability

The interoperability problem between Rollups may never be solved. OP Stack, ZK Stack, and Arbitrum Orbit are all tools for launching specific application rollups using modular, interoperable components. They support interoperability between application rollups, but not with each other.

Personally, I’m a big fan of these “stack” architectures. I’ve long subscribed to the theory of application chains pioneered by Cosmos. The vision outlined by Optimism’s “Superchain” and the ZK Credo manifesto feels like an extension of that philosophy. That’s all good.

There seems to be a consensus that we won’t be interacting between L2s for some time. There are some technical reasons (contracts need enshrine to be on Ethereum) and some strategic reasons (teams want to operate within their own ecosystem).

To be honest, I’m not even sure if this is a bad thing. But without interoperability, L2 does look more like a “walled garden” than before. Depending on your perspective, this can be a problem or an opportunity. But there are clear winners: builders and market makers.

3. Builder Centralization

If L2s don’t interoperate and no one trusts bridges anymore, then there’s an opportunity for large hedge funds to step in. Users still need to perform cross-chain trades, and these entities can help make it happen. Basically, market makers are now bridges.

There are two other driving factors for the inevitable rise of large centralized builders.

(1) Adoption of intents

(2) Shared sorting on rollup

Each of these changes will drive the need for abstraction, which is what builders excel at.

Intents allow users to specify complex cross-chain preferences, all of which can be executed instantly. Dapps do this by passing user preferences to market makers/builders. DEXes like CoW Swap and UniswapX are already doing this. I expect more to come.

Shared sorters also require large builders with deep pockets. That’s because sorters are dumb pipes. They can only guarantee inclusion, not execution. In order to achieve the SS promise (composability, cross-domain MEV), we need the intervention of centralized builders.

Again, I’m not sure this is a bad thing. My take is that the community feels the benefits of large, centralized builders outweigh the drawbacks. As long as we have decentralized, commoditized validators, this is an acceptable compromise.

4. Enshrining Returns

Ethereum has historically been very conservative about what it includes in the protocol. Many key functions (block construction, staking delegation) have been outsourced.

However, this may be starting to change. In a talk about account abstraction, Vitalik himself admitted that a certain degree of enshrining may be necessary. I have seen similar views in other areas of Ethereum, such as L2 prover/sorter separation.

One of the big questions that people are discussing privately is whether EigenLayer will be enshrined. EigenLayer founder Sreeram Kannan has publicly stated that this is his goal for the protocol. Ethereum has clear benefits and clear risks.

As is often the case, the devil is in the details. The specifications of the implementation are important. In a conference talk, mikeneuder.eth outlined how an enshrined change to Ethereum called PEPC would achieve similar results to enshrining EigenLayer.

5. We are back

If you were not able to attend the Paris conference this week, I can tell you that this was not your typical bear market conference, characterized by low attendance, apathy, and varying “blockchain not bitcoin” solutions.

This meeting was truly different. Key issues were being identified, and viable solutions were not only being proposed, but also being implemented. The architecture was also moving in the same direction. In other words, things were moving forward.