Community Update #03 - Rollup Choice

Comparing Optimistic Rollup Frameworks

Habitat Community Metrics 💚

  • ≈ 1100 Twitter Followers

  • ≈ 400 Email Subscribers

  • + 500 Members in Telegram & Discord

  • + 800 $HBT Tokenholders

Liquidity Metrics 🧼

Ethereum reached a new All-Time High of $ 2.146,55 🥇

…meanwhile, our HBT-ETH Pair also reached a new Milestone: “Two-Milly”

You can still benefit by providing Liquidity to the Pool, check our dedicated /LP page.

New Community Proposal

https://github.com/0xHabitat/improvements-and-bugs/issues/7

Liquidity providers are currently unavailable to vote on features as their HBT tokens are staked, this proposal aims to allow HBT-ETH LP tokenholders to vote.

Please Vote !

Next Steps 👟

  • Finishing the revamped MVP

  • Rolling out a Testnet

  • Onboarding a UX/UI Designer

  • Rebranding the Habitat

Optimistic Rollup Comparison 🧶

We created a biased high-level comparison to enable all users, devs and investors a better understanding of Habitat and how it is different to Arbitrum and Optimism.

Habitat uses the Nutberry Tech-Stack, which was created by Habitat Co-Founder and Tech Lead Pinkiebell. He researched and experimented in EVM for quite some time.

The Rollup Basics

Layer 2 Solutions, in our case “Optimistic Rollups” are designed to help increase Ethereum’s throughput and decrease latency + reduce gas fees for all users of the network in times of high congestion and increased usage.

So how do we roll-up?

A transaction is received on the Mainnet, where the transaction data is stored. After the actual smart-contract computation is done on the rollup, the results of this computation are sent back to L1.

This computation is the “heavy” part of the transaction, it makes the process slow, costly and increases demand on the Ethereum Mainnet. By handling the actual computation off-chain, Rollups take away this pressure and offer an effective execution-layer for the ever increasing number of transactions on the chain.

Transactions are collected off-chain, batched and getting ready to be submitted by an Operator. These parts of the rollup respond to the user with a receipt which guarantees the execution and ordering of the transaction.

Difference to Side-Chains

The key difference to other scaling solutions like Polygon or xDAI is the security responsibility.

While Rollups use the Ethereum Mainnet security and always store the data on-chain, side-chain solutions have to care about their own consensus mechanism and security, thus risking the assets of the users, once operations are stopped.

Reminding ourselves of the famous Scalability Trilemma, scaling Ethereum should not come at the cost of higher centralization and decreased security, therefore we use solutions which offer a healthy balance - say hello to Rollups…

Comparing Arbitrum, Optimism & Habitat

There are very different Rollup designs out there, this high-level comparison will focus on “Optimistic Rollups” like Optimism, Arbitrum and the Habitat in-house solution called NutBerry.

Arbitrum

arbitrum.io // twitter.com/arbitrum

Optimism

optimism.io // twitter.com/optimismPBC

Habitat (NutBerry)

0xhabitat.org // twitter.com/0xhabitat

Exploring the Topics

EVM-Compatible

All 3 solutions offer full EVM-compatibility for Smart Contracts written in Solidity or Vyper. ✅

General Purpose

Arbitrum & Optimism

Both projects aim to provide a generalised solution, which means that any Layer 1 solidity smart contract can work on these without much additional effort, just like on the Ethereum Mainnet right now.

At the same time all space and throughput on this chain is also shared by all participants. This could cause the same issues we tried to escape from…chain congestion, sequencing and gas wars through front-running and other well-known problems of the mainnet.

Reminder: L1’s main limitation is computation first. Limitations of rollups are data throughput and computation second. That means looking at different possible adoption rates, generalised solutions might quickly end in the same state as Ethereum.

NutBerry (Habitat)

Habitat’s solution provides a toolchain for application specific rollups, it doesn’t host your contracts inside a rollup chain, it is your rollup. Most applications are standalone in functionality, like governance platforms, games, marketplaces, social protocols and more.

It’s still possible to integrate existing Layer 1 protocols into the rollup or any other functionality that may not be possible in hosted rollups, like Optimism & Arbitrum.

Imagine the application specific rollup chains/shards are like islands and jumping from one to another may take longer, but they are still sovereign and provide platforms with full freedom to built the protocols they need.

This way, we avoid the “noisy neighbours” and gas wars with random projects. Also, NutBerry perfectly places itself within the sharding vision of ETH2.0 - which are basically the setup, while functionalities will still differ.

Complexity

As we just learned, Optimism and Arbitrum aspire to be a generalised solution - imitating the Ethereum Mainnet in a 1:1 manner. With the generalised nature of these rollups, it also attaches the commonly-known struggles and troubles of the L1 with it.

Habitat (Nutberry) focusses on the applications itself and leaves out all the overhead. Only the core functionalities of the application are scaled with the rollup. This takes away many complexities, as developers know their “Home-Turf” and can just keep working on their application, instead of fiddling with the scaling implementation, migration and new deployments.

Capital Efficiency

Usually some kind of locked capital (stake) is required if the Optimistic Rollup uses crypto economics for fraud proofs / protecting the chain. If one single operator needs to keep millions worth of ETH locked up to defend the Rollup in a bad situation, this is likely playing out to be very inefficient.

Arbitrum

Present Setup - For now, no real value is staked - a Validator/Aggregator simply “vouches” for inclusion and the user solely needs to trust them. No Capital required.

Future Setup - The user can choose which model to trust, either: on-chain confirmation, validator is staking on transaction or the vouching-model as explained above.

Arbitrum recommends 1 ETH or 2% of the locked capital on the Rollup bridge for each assertion being made as part of the fraud challenge.

Optimism

Present Setup - Single Sequencer aka Relayer++

  • Relayer sends tx’s to mainnet

    • commits to inclusion & ordering

      • due to crypto-economic guarantees

    • users need to trigger a judicator contract if transaction is ignored

      • much pain, bad User Experience

Future Setup - “Wen multi-sequencer and permission-less?”"
Going forward everyone should be able to setup a Sequencer/Operator for the Optimism L2.

–> Both Setups rely on crypto-economic guarantees, like a miniature POS system

Nutberry

Challenges: https://github.com/0xHabitat/habitat/issues/54

Nutberry relies on time rather than capital - this is also prone to fraudulent behaviour, but still a theoretically more efficient solution as we only rely on patience, rather than a big stake and various operators.

Ease of chain validation for the User

What does it take to verify and participate in chain validation?

To verify and check transactions for Optimism and Arbitrum, the user has to download and install native applications on his local setup. This process can be quite complex and may be only managed by technical people.

Nutberry utilises Javascript, so the Habitat Node program can run within the browser of every user - easy. This drastically increases the possibility of observing any fraudulent behaviour by the operator. Projects/Communities can easily run their own node setup within a browser to make sure the Habitat and their members stay save.

Deep L1 Integration Possible

Defines if direct (synchronous) interactions with contracts between L1 and L2 are possible. Ideally interacting with other contracts in a synchronous matter.

  • Optimistic & Arbitrum
    Can relay messages from L1 to L2 + vice versa only asynchronously.

  • NutBerry
    Provides no in-house functionality.
    Can be extended with synchronous and asynchronous functionality between L1 & L2.

Deep L1 Integration Example: Uniswap Trade
NutBerry allows to make swaps on each block submission in a trust-less manner and all the computational effort that is needed to distribute the trade positions can be done on L2. Thus providing trust-less functionality to existing contracts on L1 and still save a lot of gas.

Technical Risk Factor

The actual risk correlates with the complexity and all fancy features which are added on top may be helpful in the first place, but could add exotic errors later on.

  • Arbitrum is using it’s own EVM called AVM along a truebit style verification game with multi-round fraud proofs.

  • Optimism uses their OVM - which is still basically the same as EVM with an additional translation layer. Using single-round fraud proofs.

  • NutBerry does no translation nor has its own virtual machine.
    It has single-round fraud proofs.

All chains have not been “battle-tested” in realistic environments with thousands of users and millions of transactions. Testnet’s can bring an idea of the load to carry, but reality keeps the final review for later.

Nutberry strives to be as minimalistic as possible by keeping the design as direct and simple as possible. Therefore cutting out unnecessary parts which could break easily in the process.

Denial of Service Ability

Can a malicious actor temporarily or indefinitely impact the progress of the chain?
How easy is it to defend or recover from attacks?

Optimism - There are not enough public information on this topic yet.

Arbitrum - The chain can be temporarily and constantly impacted by the nature of crypto economics and multi-round fraud challenges. While burning stake is one argument against malicious actors, this doesn’t cover realistic point of views. Thus, bad actors with enough capital can overwhelm honest validators.

NutBerry - Only relies on patience, rather than a big stake and various operators. This impacts chain finalisation and may incur the costs of running fraud challenges on L1.

Bonus: Community Scope

One large difference between Arbitrum+Optimism and the new contender Habitat is their approach to community-ownership of the Tech-Stack.

Arbitrum+Optimism are supported by numerous Venture Capital Firms and raised multiple rounds of venture capital in the millions for the initial development. No token is to be released by the two generalised chains. Both plan to slowly white-list participants to deploy contracts and roll-out the code and blue-prints for the original infrastructure step-by-step.

Habitat launched their own token $HBT to involve and bootstrap a broader community and slowly start the initial development of the infrastructure. The token shall be used to govern the parameters of the rollup and decide about additional feature-sets for the application-specific optimistic rollup. The plan is to add value by solving coordination issues in the Ethereum Community, which is involved from the very beginning.

FINISH LINE 🏁

Thank you for reading through!

That was a lot of information and we are happy you took the time to observe and learn! If there are any open questions or confusions, feel free to reach out via Telegram or Discord, as linked below in the Footer 👇🏼


Stay in Touch & Get Involved

🐦 - Follow our Twitter
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🧨 - Take a look at the Telegram Group
🌱 - Check the Habitat Evolution Page

Habitants, see you again next week!