Cross-L1 Vs Cross-L2
In 2020, most of DeFi activity was concentrated on Ethereum. While some enjoyed juicy yields of DeFi summer, few others were left out due to the high gas prices.
With the explosion in alternate Layer 1s like BSC, Polygon, Avax & Solana users began to jump ship to explore these chains amidst the whining of Layer2 and merge maxis.
Today given that L2s have arrived and have comparable UX to other L1 chains, it becomes extremely important as a user to understand what are the inherent trade-offs one needs to consider while jumping cross-L2s vs cross-L1s!
In our earlier post about “Cross-Chain Communication First Principles” we studied the broad assumptions for cross-domain ( Recall not everything is a chain) communication systems have to make, that are Liveliness assumption, Trust assumption, Synchrony assumption.
The 3 participants that we need to consider for our assumptions are:
- Domain A (where changes originate)
- Domain B (where changes are supposed to come into effect)
- Coordinator(s)
Importance of Consensus
Domains can have either the same underlying consensus mechanism or independent mechanisms, thus consensus becomes the pivotal property that defines our participants.
eg. Domains like Optimism and Arbitrum (layer 2s) share the underlying consensus mechanism with Ethereum, unlike Fantom and Polygon which have independent underlying consensus mechanisms altogether.
Depending on the consensus level integration of domains, coordinators can either take part in the same consensus or act externally.
Cross-L2 Communications
In cross-L2 communications, since domains communicating rely on the consensus of the parent domain they belong to the same execution environment which means that they can verify the state of one another. For example, Optimism and Arbitrum, rollups of Ethereum lie within the same environment and can validate each other easily.
Due to the verifiable nature of changes all we need is at least one honest coordinator to communicate these changes, hence can also be called a Trust-minimized communications.
Cross-L1 Communications
In cross-L1 communications, domains rely on different consensus schemes and cannot verify the state of one another. For example, it is not practical to validate the Solana state machine within the EVM, so Solana cannot share an execution environment with Ethereum.
Due to the non-verifiable nature of changes we need a more fault-tolerant system which is achieved by introducing multiple coordinators along with an honest majority assumption, hence can also be called a Trusted communications.
Impact
Cross-L2 communications(Ethereum and the L2s built over it) are Trust-minimized solutions but confine you to innovations of just one ecosystem and its scaling solutions.
Whereas cross-L1 communications(using a combination of multiple chains) are relatively Trusted solutions but allow you to explore varied ecosystems.
Curve, Aave & Sushiswap now operate across multiple ecosystems and are committed to expand to L2s and L1s equally. Now whether you are part of the cross-L1 or cross-L2 camp, you have access to your favourite dapps!
So where will you jump to next?
