Layer 2, Rollups, and Building Onchain (with Base)
May 11, 2024
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Jesse Pollak, head of protocols at Coinbase and founder of layer 2 rollup tech, discusses Ethereum's history, upgrades, challenges, winning developer mindshare, rollups and bridges interactions, and the debate on hyphenating 'onchain'. Noah Citron from a16z crypto shares insights on building onchain products and the importance of aligning decentralized products with Ethereum's values.
Decentralization is upheld by prioritizing open-source development to attract top developers.
Social consensus in roll-up governance ensures stable functionality by prioritizing communal agreement over individual decisions.
Deep dives
Decentralization Concerns and Embracing Ethereum Values
Addressing concerns about being taken seriously due to decentralization initiatives coming from a big centralized corporation, the team behind base emphasizes the importance of living Ethereum values by prioritizing open-source development to attract top developers. This ethos aims to build trust among developers and create a thriving ecosystem based on decentralization concepts.
Layer Two Rollups and Scaling Ethereum
Exploring the concept of layer two rollups as a technology for scaling layer one blockchains like Ethereum, layer twos are analogized to carpool lanes on a highway, allowing for batch processing of transactions in a more efficient manner. By compressing and batching transactions before publishing them to layer one, layer twos significantly improve speed and cost efficiency.
Evolution of Ethereum's Scaling Approach
Ethereum initially planned to scale through methods like sharding, but the realization that blockchains excel at ordering and retaining information efficiently paved the way for innovations like rollups. Rollups focus on ordering transactions effectively on Ethereum while allowing multiple rollups to process transactions, aligning with Ethereum's decentralized vision for scaling.
The Importance of Social Consensus in Defining the Functionality and Governance of Roll-Ups
Social consensus plays a critical role in determining the state and functionality of roll-ups, emphasizing the necessity to rely on communal agreement rather than individual entities like bridges. In a roll-up system, adherence to a shared consensus is vital to govern efficiently, surpassing the influence of separate entities that may lead to conflicting outcomes. The podcast underscores that executing functions correctly within a communal framework defines the stability of roll-ups, focusing on the overarching social agreement over individual decisions.
Optimism's Governance Model and its Influence on Collaboration and Innovation
The podcast delves into optimism's innovative governance model, highlighting its two-house system that integrates token holder democracy with a council of longstanding participants dedicated to long-term tech goals. This collaborative setup fosters a balance between market-driven decision-making and community involvement, promoting checks and balances within governance structures. The focus on continuous evolution and thoughtful design in governance reflects optimism's commitment to enhancing human-centered problem-solving using blockchain technology.
Welcome to web3 with a16z, a show about building the next era of the internet by the team at a16z crypto, that includes me, host Robert Hackett.
Today’s episode covers the bustling area of “layer 2” rollups, a technology for scaling “layer 1” blockchains such as Ethereum. Joining us is Jesse Pollak, who previously led engineering for Coinbase’s retail side and who now is the company’s head of protocols where he founded and leads the popular layer 2 rollup Base.
We’re also joined by Noah Citron, an engineer at a16z crypto who works on many open source projects and protocols, and who closely tracks developments in this area.
Our conversation digs into the shifting history and future of Ethereum, the arrival of upgrades like EIP-4844, experiments in futarchy, and the difference between leading — and innovating — inside companies versus within decentralized communities. We also discuss the challenges of winning developer mindshare, how to refine business metrics and measures, understanding the tangled interactions between rollups and bridges, and whether you should ever hyphenate the word “onchain.”
As a reminder none of the following should be taken as tax, business, legal, or investment advice. See a16zcrypto.com/disclosures for more important information, including a link to a list of our investments.
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