How to migrate NFTs to Layer 2 and make them cross-Rollup friendly?
NFTs exploded into the spotlight in 2021, with the entire community buzzing about them. The sale of Beeple's NFT artwork for a startling $69 million, while the tokenized first tweet of Jack Dorsey sold for $2.9 million, were two of the most memorable events.
The Ethereum blockchain is home to a huge number of NFTs. As per the opensea.io data, their monthly sales volume only on Ethereum Blockchain has surpassed $3 billion in the month of September 2021.
While NFT trading may provide significant profits for dealers and open up a new horizon for the art and creative sectors, there are a number of basic issues that must be addressed before widespread adoption can occur.
In this blog, I've outlined these fundamental problems, as well as a new proposal by Vitalik Buterin, co-founder of Ethereum, on how to migrate NFTs to Layer 2 and make them cross-Rollup friendly.
So perhaps it will help you have a better knowledge of the current NFT landscape and what innovations are likely to emerge in the future months.
The “Gas” Fees Problem:
NFT adoption rates continue to rise, indicating that the technology is gaining traction. But rising gas fees of the Ethereum ecosystem can stymie the growth of these non-fungible tokens.
Users must pay ‘Gas’ to sell and buy NFTs, as well as to mint NFTs, on most exchanges. The fee is determined by the quantity and type of computations required to verify transactions; the more complicated the computations, the higher the gas fee.
Read more about NFTs and how it works here.
Through cross-rollup portability, moving NFTs to Layer 2 can dramatically lower Ethereum’s gas consumption. As the NFT ecosystem is still young and primarily non-financial in nature, it’s important to keep the costs low.
So that’s the background story behind this proposal.
Can We Migrate to Layer-2 with Single Rollup?
According to Vitalik Buterin, the transition of NFTs to Layer 2 can also be accomplished using a single rollup platform (Like Arbitrum), however, this method may not be well suited for NFTs.There could be three major problems related to Security, Size, and Interoperability.
- Security: All present EMV-capable rollup platforms may have vulnerabilities as well as centralized sequencing. So it’s dangerous to commit a whole ecosystem to a single rollup while it’s unclear how the rollup will progress beyond these features.
- Size: The sheer size of NFTs makes it impossible for a single rollup to efficiently handle them.
- Interoperability: NFTs need to interoperate with other parts of the Ethereum ecosystem. It should not be a world that is closed off.
Cross Rollup portability: How to do it?
The Ethereum founder proposes an approach that involves the registration of NFTs in the base chain and the creation of a wrapper NFT with the capacity to “hop” between different rollups as a solution to this issue.
The transfer of an NFT to a wrapper management contract that specifies its destination and the initial owner will be part of this procedure. After that, the wrapper management contract will be used to generate a wrapper NFT by specifying the source and serial number.
Below is a flowchart where NFT (X) is transferred from Rollup (A) to Rollup (B). In the Lockbox contract storage, NFT(X) is recorded with Serial Number(R), Initial Owner(01), and Source Rollup as (A).
To withdraw the NFT from Lockbox, someone needs to create a wrapped NFT at Rollup (B) with the same credentials( R, 01, A) already saved in the Lockbox contract storage.
After verifying the stored information, the Lockbox Contract will unwrap the NFT(X) for the new owner (02).
To withdraw the NFT from Rollup (B) there will be a time delay of ~ 1 week for the Optimistic Rollup to verify the receipts. This process is for unwrapping the NFT.
But, as of now, the only option to do numerous hops faster (for trading purposes) is to wrap them in multiple layers.
Below is the process where I have shown how the owner of Wrapped NFT(X) can auction it before the 7-days time period.
How to do Cross Rollup NFT transfers?
The process is almost the same. Here, on Rollup (B) the owner of Wrapped (X) has to send it to the Wrapper manager again but this time with a different receipt: “The NFT with initial owner O1, serial number R & source rollup A was just transferred to rollup C, with the desired new owner O2.”
To claim it, anyone can create a Wrapped asset in Rollup C, with the same credentials stored for Wrapped X in the Lockbox contract specifying the original source Rollup as Rollup A.
Now this Wrapped X on Rollup C can be freely traded. But to withdraw it you need to publish the entire chain of receipts for cross Rollup transfers (Here just two ).
Have a look at this flowchart-
The chain of transfers leaves behind a chain of receipts and every single receipt is mirrored to Rollup A. This can be proven in the long term using ZK-SNARKs. But
What about the Gas Fees optimization?
Along with the above two concepts, Vitalik also proposed another Idea for Gas optimized issuance of NFTs on the base chain. The process is described below :
Here functionality will be added to the Lockbox contract. It will be generating a whole set of serial numbers that can be transferred to Rollups. Basically, ‘Stem Cell’ NFTs will be created and these will be transferred to rollups in batches.
Stem cell NFTs are those NFTs that are not yet differentiated or have no value still assigned to them.
So now instead of issuing NFTs on rollups, we will assign meaning to the Stem cell NFTs. This can easily be done by passing a ‘Meaning Hash’ in the same way we passed Owner Information.
So basically the owner will assign meaning to the Stem Cell NFT and turn it into a differentiated one. And the receipt verification will be ZK-SNARKed. In this process, all NFTs will be rooted in the base Ethereum chain and not in rollups.
Conclusion :
Although I am convinced that NFT will forever revolutionize the world of art and design, there are still a number of obstacles to overcome before mainstream acceptance.
New inventions from a partnership of many businesses and communities are required in a new era of the “digital double” — a virtual economy that replicates the physical world.
Before this new metaverse takes shape, we’ll see a lot of upgrades and suggestions like these. Till then keep playing with this ever-evolving space.
Hey, don’t forget to join us on our various platforms and be a part of our community!
Twitter | Telegram | Linkedin | Instagram | Facebook Group
