Layer1's New Ethereum is a Better Ethereum?

Ethereum's position as a blockchain infrastructure seems to be unshakable, but it also faces problems such as high costs, low efficiency, and deviation from the original intention of decentralization. The formation and solidification of vested interest groups on the platform have gradually made innovation difficult. A group of Ethereum community members launched a new improvement project CUN, which inherits and transforms Ethereum and proposes solutions in terms of compatibility, performance, decentralization, etc. Their supporters in the crypto industry are increasing rapidly.

Bitcoin has become a totem, and Ethereum is the blockchain infrastructure that is currently changing the way the Internet operates, but Ethereum will also be changed.

When Satoshi Nakamoto invented Bitcoin in 2008, blockchain was just a technical means to ensure the stable operation of the Bitcoin system. When Vitalik Buterin created Ethereum in 2013, blockchain became truly independent of Bitcoin and became the next generation network technology that changed the operating mode of the Internet.

Unlike Bitcoin, which emphasizes more on monetary attributes, Ethereum has begun to develop into a new digital network that can deploy a series of applications and transaction blockchain network systems through smart contracts.

However, as Ethereum became successful, its flaws also began to emerge: high fees, low efficiency, deviation from the original intention of decentralization, etc. Competitors began to emerge, which can be generally classified into two routes: "replacement" and "inheritance and improvement".

The rise of Ethereum

After the birth of Bitcoin, a large number of AltCoins (Bitcoin alternatives) emerged. They created their own independent virtual currency systems by modifying or even directly applying the open source Bitcoin source code and using the same blockchain technology as Bitcoin.

Most competing coins are simply imitations of Bitcoin and are called altcoins. Ethereum, by building a Turing-complete Ethereum virtual machine, enables smart contracts and decentralized applications (Dapps) to be built and run in this blockchain network, thus standing out from many competing coins and becoming the representative of the "second generation blockchain".

Ethereum’s several explosive developments are all the applications of smart contracts in different scenarios.

ICO (Initial Coin Offering) is the main way to raise funds for blockchain projects. Ethereum itself raised more than 18 million US dollars through ICO in July 2014 for project development and deployment. However, after Ethereum went online, it became the main platform for ICO. Its ERC-20 standard makes token issuance very simple. In 2017, a large number of blockchain projects used the ERC-20 standard to issue tokens to raise funds, which set off a huge bubble and was also the first large-scale application of Ethereum's smart contracts.

DAO (Decentralized Autonomous Organization) is the ideal model for many people, and blockchain solves the credit problem between people, making DAO possible. At present, there are a large number of DAO organizations in the Ethereum ecosystem. They form different groups based on different concepts and agreements, enriching the Ethereum ecosystem.

DeFi (Decentralized Finance) has always been considered the most likely field for blockchain to land. Ethereum's smart contracts can be transformed into automatically executed financial contracts, escrow funds, and automatically transfer funds according to agreed conditions and specific events. Currently, DeFi is one of the most widely used applications on Ethereum.

Collectible tokens such as CryptoKitties once enjoyed a brief period of glory, but in 2021, NFTs (Non-Fungible Tokens) that use the Ethereum ERC-721 standard became the hottest project, even breaking out of the circle of popularity and leading to the explosion of the concept of the Metaverse.

Public chain ecosystem competing with Ethereum

Similar to Bitcoin, after Ethereum became the largest blockchain operating platform, competitors began to emerge, and mainly continued the two routes of "replacement" and "improvement".

One route is the "Ethereum alternative" route. For example, Polkadot, Solana, and Dfinity are trying to establish a new consensus mechanism, and some projects even establish new programming languages ​​to solve problems such as throughput and efficiency, as well as decentralization and cross-chain.

Polkadot is mainly aimed at solving the cross-chain problem: data information of different blockchains cannot be interoperable. In order to break this state of data isolation, Polkadot attempts to create a network protocol that allows all blockchains connected to this architecture to better complete information exchange with each other. Among them, the parallel chain is mainly responsible for data calculation and transaction information processing. Through multiple parallel chains, the horizontal expansion of the blockchain can be achieved, that is, the performance problem of the blockchain can be solved.

The relay bridge is essentially a special kind of parallel chain, but its responsibility also includes linking other blockchains with different structures. The relay chain is a center of Polkadot. Its main function is to verify the blocks given by each parallel chain and give a final proof of certainty. Polkadot currently has certain advantages over Ethereum in terms of scalability and cost, but its basic construction logic is still within the scope of Ethereum.

Solana aims to become a high-performance public chain: its biggest feature is the PoH (Proof of History) mechanism adopted by the main network, which allows each node to generate a local timestamp without waiting for the entire blockchain network to synchronously update data and data status, thereby improving overall efficiency.

PoH plus Tower BFT, Turbine (block propagation protocol), Gulf Stream (memoryless transaction forwarding protocol), Sea Level (parallel smart contracts), Pipeline (transaction verification), Cloud Dispersion (horizontally scalable account database), and Archives (distributed ledger storage) make Solana a strong rival to Ethereum.

The formation of the “Ether system”

"Ethereum alternatives" do have many advantages, but there are also competitors that have emerged by adopting the "imitating or changing Ethereum" approach.

BSC (Binance Smart Chain) adopts the PoSA (Proof of Stake Authority) consensus algorithm, combining the functions of the Delegated Proof of Stake (DPoS) and the Proof of Authority (PoA) mechanism. It is built on a network of 21 verification nodes, and the second-level block time can establish a high-speed infrastructure for the DeFi protocol. The word "smart" in BSC is reflected in the functions related to smart contracts: BSC supports smart contract writing functions, is compatible with the existing Ethereum Virtual Machine (EVM) and all applications and tools under its ecosystem, and developers can easily migrate and deploy Ethereum DApps.

Thanks to the support of funds, users and other resources provided by Binance, the world's largest cryptocurrency exchange, BSC has quickly attracted a large number of users and project parties that are eager to expand their user base.

In 2018, the Polygon team began to create a Layer 2 solution on Ethereum, with the goal of reducing the cost of Ethereum and meeting the needs of scalability. Unlike traditional Layer 2 solutions, Polygon combines different expansion solutions, such as zkRollups, Optimistic Rollups, Validium, etc., to achieve one-stop Layer 2 aggregation. By providing easy-to-use Polygon SDK development tools, the development threshold is greatly reduced.

In May 2020, Polygon launched Matic, which consists of two components: one is a PoS sidechain variant called the "commit chain" that can support smart contract development, and the other is a Plasma-based entry ramp for routing Ethereum to Matic sidechain transactions. The Polygon PoS chain is between the sidechain and a pure second-layer expansion solution. It inherits the security of the main chain, packages batches of transactions together, and batches them before returning the data to the main chain.

Currently, Polygon brings together applications and infrastructure such as DeFi, NFT, wallets, oracles, decentralized autonomous organizations, etc., including Aave, a major DeFi lending protocol, SushiSwap, a decentralized exchange, Curve, an automated market-making service provider, 1inch, an on-chain aggregation exchange, etc.; NFT projects include Opensea, the world's largest NFT digital art exchange, and Decentraland, an NFT virtual game; oracles include leading oracle projects Chainlink, AP13, etc.; digital wallets include applications such as MetaMask, Maizi Wallet, and Fortmatic.

What are the problems with Layer2?

Projects such as Polygon have relatively solved the problems of Ethereum's inefficiency and high cost. They chose the Layer2 expansion solution: most transactions are placed in the Layer2 protocol under the Ethereum chain, and are submitted to the Ethereum network by packaging and aggregating transactions. The Ethereum Layer2 solution relies on the security of Ethereum's main network, which actually further strengthens users' dependence on Ethereum. More importantly, in addition to the "congestion" and high fees caused by the sharp increase in usage, Ethereum, like the mainstream platforms in the web2.0 era, is gradually "oligopolizing" and forming a monopoly position by relying on its ecological advantages, which deviates from the original intention of blockchain decentralization and community participation.

The Layer2 solution that relies more on Ethereum should not be the best choice for the crypto world. Layer2 strengthens Ethereum's "monopoly" without changing the defects of Ethereum itself. The new network should be faster, safer, lower cost, more privacy-oriented, and easy to meet new opportunities in the crypto market, such as NFT and Metaverse. Most importantly: this network should belong to the crypto community.

Currently, some people who hold the view of changing Ethereum have put forward the following claims:

1. By inheriting Ethereum, it solves the compatibility issues between different blockchains such as Ethereum and the Ethereum system. It also solves the cross-chain asset problem through a cross-chain bridge.

2. Improve consensus through new mathematical logic and enhance network communication efficiency.

3. Build a new Layer 1 network instead of a Layer 2 network, while ensuring security, reducing dependence on the Ethereum main network and thus avoiding centralization.

4. By inheriting Ethereum and designing it as modularly as possible, the problems of ecological migration and network upgrade can be solved.

5. There are no founders or core developers, and they believe that DAO governance should ultimately be used.

Changing Ethereum at Layer 1

CUN is a new Layer 1 network. In terms of consensus mechanism, CUN chose to adopt PoA consensus with access mechanism in the first phase (origin network), and adopted PoS+PoA to achieve access consensus with pledge voting mechanism in the second phase (Cape of Good Hope network). In the third phase (new generation network), the consensus network will shift to PoS+PBFT consensus.

In the early stage of network launch, CUN Origin Network is a Layer 1 network with a mainnet Coin, with PoA as the access mechanism. By electing multiple trusted nodes to participate in the launch and maintenance of the network, a node set is formed. The nodes need to pledge part of CUNP. Block collection, packaging, consensus and verification are all performed by the nodes in this set.

When the size of the Origin Network nodes and the amount of CUNP held by the community have accumulated to the point where they can be used for staking voting, CUN will move from the Origin Network to the Cape of Good Hope Network. The Cape of Good Hope Network is a transitional network evolving towards a new generation of networks, with PoA+PoS as the access mechanism.

One difference of the Cape of Good Hope network is the introduction of the PoS mechanism. In this stage, nodes added by the PoS mechanism are community nodes. In this stage, a large number of community nodes will be added to the network, and more long-term participants in the CUN ecosystem will be added through the staking incentive mechanism. By combining the PoA+PoS consensus, the stability and high performance of the network will be improved while expanding decentralization.

CUN's new generation network uses PoS as the access mechanism just like Ethereum, but CUN proposes to use an improved PBFT-type algorithm to achieve Byzantine fault tolerance in the main chain consensus stage, and implement DAO governance at this stage.

“The communication complexity of the widely used PBFT consensus protocol is O(n^2), and the number of nodes will continue to increase in the later stages of network development. When the scale reaches more than 100, the consensus efficiency will decrease quadratically. To address this problem, CUN will improve BFT consensus in the transition phase to enhance its scalability, security, and performance.”

According to this formula, when the number of nodes is expanded to N=84, the number of PBFT communications will reach 13944 times, while the number of three-layer PBFT communications is 152 times. At present, the multi-layer PBFT algorithm can also significantly improve the main chain consensus efficiency at the theoretical value of 1000 nodes, which is equivalent to the current number of Solana.

It is worth noting that CUN is one of the few networks among the current followers of the Ethereum technology route that has proposed upgrading the main chain consensus layer. Compared with the Layer 2 solution, which is a transitional solution for Ethereum, it is an evolution of the Layer 1 solution.

The idealistic colors of the CUN community have some characteristics of the Bitcoin era. Among these supporters are CTOs of technology companies, exchange practitioners, university professors, charitable organizations, industry organizations, and sociologists, but they have not disclosed their identities, perhaps because they are unwilling to add more personal colors.

At present, it is impossible to make a definite judgment on the future development of this emerging network, because sometimes success is not entirely determined by technology, but we hope that reformers will succeed. Bitcoin also tells us that the Internet should belong to the community, not any single institution or individual.