The all-new Autobahn Network
Dear Tixl Community!
Before Christmas, and after our most recent YouTube AMA, we wanted to give you a much more detailed update about what you can expect from the Tixl project in 2022. While we remain convinced that the Cross-Chain Bridge will play a very important role, we are still dedicated to bringing our Autobahn Network to life. We continue to work toward the goal of finally being able to host dApps on a high-performance network!
In addition, this article will provide some clarity about the role of the TXL token. The article will not cover much Cross-Chain Bridge-related information - we’ll provide more details about the Cross-Chain Bridge in January.
When we started Tixl, our goal was to create a layer 1 (“L1”) network with the capability of handling private, instant, and zero-fee transactions. Actually, when we started the project, the term layer 1 didn’t really exist. In the months that followed, it became clear that the regulatory environment did not favor private transactions. By the end of 2020, we showcased the ability to build a network with maximum speed and zero transaction fees for BTC, ETH, and ERC20 and released a proof of concept. It quickly became clear that a network that only allows transferring assets would not have a future up against generic smart contract networks as competition.
Over 2021, we spent some of our time exploring the EVM (Ethereum Virtual Machine) and spun up an internal testnet. This testnet combined a delegated Proof of Stake (dPoS) consensus with the EVM and an RPC API so that MetaMask wallet usage was supported. Our original plan was to release that as our own L1 by the end of 2021. We decided against it and will explain in the following chapters why and what’s next.
Our view on the Layer 1 (L1) market
To understand our decision, it is important to understand our view on the current L1 market. There is no question that Ethereum is dominating the L1 space. We don’t see Ethereum as the holy grail, but we appreciate that it has great decentralization and a good user experience with most wallets supporting it and allowing users to easily interact with smart contracts. Of course, gas fees have become an issue recently but, for everything else, it has done a good job so far.
What we don’t agree with is people considering Ethereum the one and only L1 out there and the prime focus being scaling Ethereum with L2s, and nothing else matters. Just because something has extensive adoption doesn’t mean there is no space for competition. We believe in a multi-chain future!
Solana, BSC (Binance Smart Chain), Avalanche, and others may not have the same level of decentralization as Ethereum but have joined the market with other benefits - such as faster transactions and/or lower gas fees.
It will be exciting to see the development of these different networks but we believe the below to be likely over the next 24 months (disclaimer: just hypotheses):
- Ethereum will stay one of the top L1s even though gas will not really decrease for L1 transactions. Ethereum L2s will get better. There will be zkRollups for specific use cases and Optimistic Rollups for generic ones.
- We will see other L1 networks co-existing with Ethereum. The ones with a substantial amount of funding behind them will not go away anytime soon. Even though they are not as decentralized as Ethereum, we don’t expect substantial hacks/forks over the next 24 months. The reason for this is that most of the nodes hosting those networks are controlled by the teams/foundations/labs behind them and they are not interested in attacking their own chains.
- Bridging will play an important role in this multi-chain future. We expect bridges with the most security and decentralization to win (that’s why we work on zero-knowledge for our bridge right now). There will be many bridges out there with billions of transactions daily.
- Fully generic zkRollups (no big trade-offs) will not launch (talking within the 24-month time frame). These will only launch for limited use cases (like certain parts of a Bridge… such as what we are doing).
What are the main use cases of the current networks?
What we can observe is that current networks (both L1 and L2) are used for two main use cases: DeFi (Decentralized Finance) and NFTs (Non-Fungible Tokens). Let’s look at the main player, Ethereum, for example. If we take the highest gas burners from ETH GAS STATION at the date this article is written, the most used smart contract (measured by gas spent) is from Opensea, with Uniswap second - so an NFT marketplace followed by a decentralized exchange.
The same can be observed on other networks. BSC, for example, gained a lot of its popularity through its exchange, PancakeSwap. Similarly, if we look up the gas spent at the time of writing this article, PancakeSwap is leading the list on Bitquery.
The extent to which a network is used for DeFi compared to NFTs depends on various factors. For example, some networks provide grants or rewards for projects launching in specific areas. As an example, Solana launched a $5m fund for people building on Solana in the category of NFTs.
What do users actually want?
When we look at the traction different networks are getting, it seems some users and use cases put an emphasis on decentralization and some don’t have decentralization as a priority. BSC and Solana are much less decentralized than Ethereum but have still been still adopted a huge number of users.
Looking at NFTs. As an example, the most valuable NFTs, e.g. CryptoPunks or Bored Apes are still on Ethereum, even though a trade of an NFT on Ethereum costs between $50 and $200 in transaction fees. We think this is because people value the safety of their NFTs, and the more decentralized a network, the safer the NFTs.
On the other hand, however, if we look at BSC as an example, it has only 21 nodes running the network as of the date of this article. It is unclear whether some of these nodes may even be hosted by the same people/organization(s). Still, PancakeSwap, which is only DEX running on BSC, has a TVL (Total Value Locked) of over $5b dollars and huge daily trading volumes. That means that many wallets also take the risk of trading on a less decentralized network in return for lower gas fees and better usability.
Over the next 10 years, it will be interesting to see what users actually prefer and what matters the most. But in any case, as often said: Tixl does not want to be in competition to any other network, we want to make them better, offer the best user experience and connect all blockchains.
Our solution: Launch Autobahn Network as an Optimistic Rollup that can be deployed as a scaling solution to any EVM L1
We decided to launch the Autobahn Network as an Optimistic Rollup or L2 — early in 2022. That being said, our vision remains unchanged: We want high-performance networks and maximum interoperability by connecting blockchains.
This Autobahn Network can be deployed to different L1s which need scaling (most L1s with growing prices and usage will need scaling solutions!). With our Cross-Chain Bridge, we have the perfect connecting piece to a) get liquidity in our Network(s) or Rollup(s), respectively, and b) connect all networks and Rollups. Having the Cross-Chain Bridge is a huge network USP. As Messari stated recently in their report: “The most popular L1 <> L2 / L1 <> L1 / L2 <> L2 bridge protocols will have higher daily volumes than the most popular centralized exchange within five years.”
We will provide regular status updates regarding progress starting the first week of January. By using our Autobahn Network knowledge and existing code base, the goal is to launch as quickly as possible in 2022.
But first, some more details.
What is an (Optimistic) Rollup?
“Rollups are solutions that perform transaction execution outside the main Ethereum chain (layer 1) but post transaction data on layer 1. As transaction data is on layer 1, Rollups are secured by layer 1. Inheriting the security properties of layer 1 while performing execution outside of layer 1 is a defining characteristic of Rollups.” (Source: Layer 2 rollups — by ethereum.org).
Actually, you can replace “Ethereum” in the definition above with any other L1 network. The Ethereum community may see it as the one and only L1 blockchain for the future but any other L1 could also be extended with Rollups as a L2 scaling solution (as mentioned above, this will become necessary for most L1s with growing prices and usage).
Ethereum’s Optimistic Rollups with the highest TVL and usage are Arbitrum, Boba Network, and Optimism. Most recently, Boba Network’s launch was a huge success. So the question is, how can we compete with the Autobahn Network, and which USPs can we deliver?
USPs of the Autobahn Network Rollup & TXL Use Case
The Autobahn Network Rollup will come with the following primary USPs:
Decentralized Sequencer (dPoS)
The Autobahn Network will launch with a centralized sequencer, but we will then use our existing delegated proof of stake codebase to decentralize it as soon as possible.
As with existing Rollups, the Autobahn Network will use the native L1 token as payment for gas. However, in the background, L2 fees will be collected and swapped to $TXL. $TXL tokens staked in the Autobahn Network will receive a portion of the transaction fees earned by the network through an on-chain distribution governed by the community. The timing and the specifics of the fee-sharing arrangements will be shared in a Tixl community governance proposal and subject to a community vote after the launch, e.g. 20% will be burned, 80% will be distributed to $TXL stakers.
Trustless on-ramp and fast exit
The native bridge for the Autobahn Network Rollup will be the Cross-Chain Bridge. Our goal is to make our Cross-Chain Bridge trustless as soon as possible. In parallel to the Autobahn Network development, the Cross-Chain Bridge team is already working on a trustless solution utilizing zero-knowledge proofs. Of course, it will be usable for all networks including the Autobahn Network Rollup(s): L1 <> L1, L1 <> L2, and L2 <> L2.
The opportunities for a broader audience to bridge into the Autobahn Network with just a few clicks and, soon, a growing number of major networks, make the Autobahn Network Rollup much more interesting for developers than competitors with just a few connectors.
Why do we want to launch the Autobahn Network as an Optimistic Rollup instead of L1?
Why Rollup and not L1?
Especially for new networks, there are huge advantages in launching as a Rollup because you “solve” the biggest problem from new networks “automatically”: Trust and/or decentralization. L1 trust and/or decentralization is a major asset and we believe it is a worthwhile trade-off to accept some less relevant drawbacks like the flexibility you have as an independent network. In particular, for smaller projects that launched in 2019, when fundraising from initial token sales was not as easy as in 2017, 2020, or 2021, it helps ease certain pain points so the team can focus on the high-performance network itself.
This market is changing very quickly and, for Tixl (being one of those projects launched in 2019), it requires very agile development to enable us to compete (including pivoting, when necessary). We are aware of this fact and believe that L2 networks, combined with smart bridging technologies, have everything we have wanted from the start - great user experience with low gas/high-speed transactions and interoperability - and is the smartest, most promising approach going forward.
Another important factor relevant to our decision is that - as a Rollup - the time to market for the Autobahn Network v1.0 will now be considerably shorter and this will benefit every $TXL investor. The launch of a fully decentralized L1 Autobahn Network Mainnet would have been months (or years) away. What is true for L1 networks is even more true for L2 Rollups: This is not a “the winner takes it all” market. There will be tens or even hundreds of Rollups with huge TVLs in the future.
Why Optimistic Rollup and not zKRollup?
zkRollups are fully trustless and thus more decentralized than Optimistic Rollups, but there aren’t generic zkRollup solutions available at this stage. zkRollups only exist for very specific use cases, while Optimistic Rollups are the way to go for a generic scaling solution.
Interoperable Smart Contracts move to the Cross-Chain Bridge
Tixl’s vision has always been to achieve interoperability and connect blockchains. We prepared for that by developing our own, DAG-based layer 1 network with layer 2 capabilities — with a perfectly working show-case for sending/receiving BTC, ETH, and ERC20 tokens. Full network interoperability would have been achieved using the mechanism of Smart Contracts, allowing bridging processes between networks in a secure, fast and reliable manner. So when we spoke about our vision of interoperable smart contracts, the core of those were always the bridging mechanisms built-in.
We have now decided to separate the bridging technology of the old Autobahn Network from the network itself.
The Cross-Chain Bridge carries out the job of connecting networks to the Autobahn Network perfectly. Consequently, we have decided to officially assign the “Interoperable Smart Contracts” to the Cross-Chain Bridge as well.
This being said: Our previous interoperability vision to be able to interact with dApps on the Autobahn Network with your funds on wallets in different chains has not changed at all.
With startups, you sometimes need to make decisions quickly, and be very agile, to ensure the best chance of success for the project in an ever-changing environment. We have a fantastic team that immediately recognizes market changes or challenges. As our investors, you are a huge reason we work so hard to make Tixl a success and we thank you for your trust in us.
When you invest in a startup, you are not investing in product A or B, but in a team you believe will create something successful. It is our deepest desire to continue to build, improve and bring our vision to life. As you know, we are the largest token holders and are fully invested in the best mid-and long-term performance of the TXL token. The TXL founders have not sold a single one of their team tokens. We are committed to the project and have put both our reputations and livelihoods on the line to give it every chance of success.
We believe that crypto mass adoption with come from an improved user experience in a multi-chain future. Working on a) a L2 scaling technology that works easily for different Layer 1 networks and b) a Cross-Chain Bridge that connects them all will contribute to this by offering fast, low-fee transactions in a decentralized and secure environment where all rollups and networks are connected.
If you go one step further: Imagine if you could connect your Ethereum Wallet to an Autobahn dApp, or use your Binance Smart Chain tokens on a Polygon DEX. Or pay with your Ethereum USDC in an e-commerce or onsite shop that only accepts Autobahn Network tokens. Or play Polygon-based play-to-earn games with your NFTs being in your Wallet on another chain.
High-performance Blockchains need to be connected and the user should not need to concern themselves where the tokens are and go — he/she should just connect the preferred wallet of choice and pay/play/trade/etc in whatever dApp/network they choose.
With the Cross-Chain Bridge v1.0 and v2.0, we have not only showcased our competencies in, and desire for, smart, secure and efficient bridging solutions, but have also proven the economic viability by reaching a very high 8-digit $TVL quickly, with thousands of bridging transactions happening. The Cross-Chain Bridge will provide a kick-start for the Autobahn Network with sufficient connected liquidity in several chains right from the start.
See you in the Tixl Discord Founders Chat! And, if not: Merry Christmas to you and your families and we wish you a great start to a healthy, happy, successful, and crypto-green year in 2022!