No, L2s don’t solve the Trilemma

Layer 2 chains came in glory to tell you how good they are. In reality, they not only don’t solve the Trilemma, they actually are more prone to malicious behavior. Do we have a solution? Maybe.

Let’s start with the basics. What, in hell, are those layers?

Layers 1 and 2 solutions

By layers, we describe how the project is dealing with its architecture.

Layer 1 means it’s the very base level of the blockchain, where smart contracts are computed by the consensus committee at every block. They are “stateless” and their execution time is always 1 round.

Meanwhile, in Layer 2 we refer to blockchain networks built on top of other blockchains. These are “stateful”, using multiple blocks to run. The stuff is happening on top of Layer 1, we can’t directly observe them until they are submitted on it.

So, simplifying it to the maximum, in Layer 1 — there is one transaction, in Layer 2 — two transactions are submitted as one.

Why? Mostly to improve this famous part of the Trilemma called “scalability”. Adding Layer 2 is supposed to help with a high amount of transactions, to improve overall capacity.

What’s wrong with them?

Both solutions have their pros and cons. In Layer 1 we are letting validators deal with:

• hard forks, which is a radical change to a network’s protocol. It changes previously invalid blocks and transactions valid, or vice-versa. What sucks the most for the validators and developers is that the hard fork requires all nodes or users to upgrade to the latest version of the protocol software. That’s one of the advantages of layer 2 solutions, because they have extra layers boosting the main chain instead;
• miners can lose income during the move from Proof of Work to Proof of Stake, a sacrifice made for better and more effective system;

In Layer 2 on the other hand:

• enhancing scalability by providing faster routes creates an issue with nested blockchains/sidechains, which compromise the safety provided by the original blockchain.
• the issue with decentralization.

The Blockchain Trilemma remains unsolved.

Any hopes for The Blockchain Trilemma?

Actually, yes. My big hopes are in something called Pure Proof of Stake, an evolved version of PoS, that keeps Layer 1 without compromising scalability. How?

The protocol proposes an egalitarian concept and is built on Byzantine consensus. While still we are based on the influence of the staking capacity of the holder, the protocol itself chooses users randomly, bringing fairness and decentralization to the table. But that’s not all, this randomization, regardless of the stakes, increases security. Not knowing anything about who matters in generating the next block, it’s almost impossible to provide an attack on the user — it’s simply too late once it is revealed. It is fast since it doesn’t require any collaboration among nodes. So the last one — scalability — checked!

Summary

For now, Pure Proof of Stake is used only in Algorand, since it was invented by its founder, cryptographer Silvio Micali, rewarder by the Turing award in 2012. His goal was to solve the Trilemma and avoid the trillions of dollars spent on fees by day-to-day users. And currently, it seems like this solution serves the public the most.