The Development and Prospect of Plasma
Jack from Web3.com Ventures
Introduction
In 2023, the Layer 2 ecosystem on Ethereum has achieved significant development, the number of Layer 2 projects has surged, and the TVL of L2 solutions has exceeded $13 billion. There are various signs that crypto users and capital are increasingly confident in L2 solutions.As more developers join L2, the limitations of the Ethereum main network, especially the congestion problems, will be solved.
For users new to the crypto space, L2 scaling solutions are crucial to enhancing the functionality of the Ethereum network. They are designed to handle transactions off the main chain, thereby reducing computational load and improving overall performance. These solutions ensure that transactions are ultimately completed on the Ethereum mainnet, maintaining the security and immutability of the network.
This article mainly discusses Plasma, a noteworthy L2 solution mentioned by Vitalik at the recent Istanbul conference. This concept was proposed by Ethereum’s co-founder Vitalik Buterin and blockchain researcher Joseph Poon. Its architecture consists of a hierarchy of interconnected blockchains. The root chain is the main blockchain that oversees sub-chains responsible for processing a specific subset of transactions, which allows parallel transaction processing and greatly enhances scalability. For Plasma, each sub-chain operates independently, and the data is aggregated into blocks and submitted to the root chain for final confirmation after transaction.
Why Scaling Matters
Scaling solutions are critical to unleash the potential of the blockchain technology by increasing their scalability and efficiency. As the adoption of blockchain and cryptocurrencies continues to grow, the limitations of L1 networks in terms of scalability is becoming increasingly apparent. Ethereum, in particular, has faced challenges with its infrastructure’s ability to handle growing demand, leading to the development of L2 solutions to improve network performance without compromising security or decentralization.
Generally, L2 networks run on top of existing Layer 1 networks, leveraging their security while significantly increasing scalability and efficiency. They process transactions off-chain and then submit compressed data back on-chain, effectively offloading transaction volume. This approach enables faster transaction processing and the ability to manage more users, addressing inherent blockchain limitations such as scalability, transaction finality, and limited throughput.
The development of L2 solutions includes many types such as nested blockchains, state channels, sidechains, and rollups. For example, a nested blockchain consists of a main chain and a secondary chain that executes transactions. State channels enable direct interaction between parties in a blockchain network, enabling fast processing speeds. The side chain is connected to the main chain and independently handles large-volume transactions. Rollups perform calculations outside the main chain, thereby achieving higher throughput and minimal transaction costs.
These L2 solutions bring benefits such as improved security, increased transaction speed and scalability, and lower transaction fees. In this case, the main chain can focus on security and decentralization while processing calculations faster and more efficiently. This not only improves user experience, but also paves the way for wider adoption and more innovative applications of blockchain technology.
What is Plasma
Plasma is an L2 scaling solution designed to enhance the scalability of public blockchains. It operates by creating a hierarchy of interconnected blockchains, or “sub-chains,” anchored to the Ethereum mainnet. These sub-chains execute transactions off-chain that significantly increase transaction throughput while reducing costs. A key feature of Plasma is its use of state commitments and Merkle roots that makes it able to summarize the state of off-chain transactions and are regularly published to the Ethereum mainnet. This process ensures security by allowing the main chain to verify the state of the Plasma chain instead of processing each individual transaction.
Plasma offers several advantages, including high transaction throughput, low transaction costs, and the ability to customize the Plasma chain for specific use cases. However, Plasma does not support general computation, which means it cannot execute complex smart contracts. It relies on one or more operators for data storage and management, and users must regularly monitor the network or delegate this responsibility to ensure the safety of their funds. Additionally, withdrawals from the Plasma chain may be delayed due to the challenge period required to prevent fraudulent activity.
Compared with other L2 solutions such as zero-knowledge rollup and optimistic rollup, Plasma has data availability issues that prevent users from challenging invalid transactions if the operator withholds data. This is not a problem in ZK-rollups and optimistic roll ups because they require operators to publish transaction data on Ethereum, allowing anyone to verify the state of the chain and create fraud proofs.
In the past few years, despite the emergence of Plasma projects such as Plasma Cash and Minimal Viable Plasma, Its limitations, particularly in data availability and smart contract support, have led mainstream scaling developers to turn to more versatile and secure L2 solutions such as optimistic rollups.
Outlook
Following Vitalik Buterin’s recent advocacy for Plasma-based scaling solutions, there is renewed interest in Plasma’s potential to solve scalability challenges in blockchain networks.
The most recent discussion highlights the underappreciated potential of Plasma, especially given advances in cryptographic validity proofs like ZK-SNARK. These developments address significant challenges Plasma has faced in the past, such as client-side data storage for payments and compatibility issues with the Ethereum Virtual Machine (EVM). Buterin claims that these proofs of validity can facilitate instant withdrawals from the latest state, overcoming obstacles such as non-latest owner scenarios and the double-spend risk associated with fungible tokens.
Plasma’s current prospects are twofold. On the one hand, it provides an undervalued design space with the potential to circumvent data availability issues and significantly reduce transaction fees. On the other hand, Buterin admitted that Plasma may not be suitable for all web3 applications, especially those where assets do not have clear economic owners, such as collateralized debt positions or liquidity pools on automated market makers DEX.
In summary, the re-exploration of Plasma-based scaling solutions, driven by Buterin’s insights, reflects the dynamic evolution of blockchain scaling solutions. While Plasma offers a viable alternative to Rollup, its application is better suited to specific use cases, highlighting the need for a diverse toolkit of scaling solutions in the decentralized technology space.
