The road to Ethereum expansion - a brief chat

In short: Ethereum scales via Rollups and Data Availability Sampling (DAS). But what does this mean?

First, let me point out that the Ethereum roadmap is constantly evolving, so anything you read now is likely out of date. Especially all those 2018/19 articles about sharding and "Ethereum 2.0" (yes, those are out of date). For now, here I will briefly describe the state of affairs in February 2022.

Rollups

Rollups are layer 2 and fully inherit the security, decentralization, liquidity, and network effects of Ethereum. Currently, multiple rollups have been launched, and application-specific rollups such as dYdX, zkSync 1.x, and Loopring have matured and been optimized. Smart contract rollups such as Optimism, Arbitrum, and StarkNet are in the early stages and are awaiting continuous optimization.

Today, optimized rollups are able to achieve $0.10 transaction fees at 4,500 TPS. Certain highly optimized Rollups, like dYdX, can even scale to 12,000 TPS. Like dYdX, Immutable X, and Loopring have effectively zero transaction fees because it leverages the features of account abstraction. But this is just the beginning, and now it’s like smart contracts in 2016.

So the next question becomes — how can we push Rollups further?

1. Rollups and application developers themselves will continue to optimize. We’ve seen Optimism reduce transaction fees by 30% in January, with another 30% cut coming soon. Arbitrum also cut their fees in January, and Arbitrum Nitro is expected to cut fees by 50%. This will continue into 2022. Aave developer Emilio described how they reduced transaction fees on optimistic rollups by 10x to $0.16-0.25 through optimization. These are some examples - the costs of Rollups will continue to decrease over time and as they mature.

2. Unlike L1, the more activity there is, the cheaper the cost of Rollups becomes. Therefore, as Rollups mature, there is more activity, and token incentives, we will see cheaper rollups.

The Surge

The Surge is an upgrade to Ethereum that consists of multiple steps that will open the floodgates for Rollups. First, we will have intermediate steps like EIP-4488 or blob-carrying transactions. These will bring transaction fees down by 5x or more, more than the two points above. At least one of these intermediate steps will likely be implemented around the end of 2022.

The final phase of The Surge is danksharding — a data layer built specifically to speed up Rollups. This integrates Data Availability Sampling (DAS) and brings a new paradigm to blockchains. With data availability sampling, the more decentralized your network is, the more capacity there is for Rollups. As bandwidth improves and Ethereum becomes more decentralized, capacity will continue to increase. Over time, there will be enough capacity to have millions of TPS in Rollups (enough to make the whole TPS and transaction fee obsession no longer a topic). In the future, we will sit there and laugh about how we used to worry about gas fees. Danksharding will be rolled out over time, with the first steps likely to happen in 2023.

Statelessness and zkEVM

With The Surge, Rollups will have massive scale and ultra-low transaction fees. But Ethereum L1 will still be expensive. But this doesn't matter, because end users will all use the Rollups system. Of course, Ethereum L1 will also scale, first through statelessness, and then zkEVM in a few years. Even then, the cheapest fees will continue to be on Rollups, which is why most people will only use Rollups.

Original article: https://polynya.medium.com/how-ethereum-scales-simplified-9f42f43b6bb5