Keynote: The REAL state of L2s

Summary

The video discusses the evolving landscape of decentralized systems, particularly focusing on the transition from centralized to permissionless frameworks. It highlights the importance of governance, exit mechanisms, and system security, with examples like dydx and zk-rollups. The speaker emphasizes that the stage designation for systems is not fixed and can change as they evolve. Challenges such as complexity, cost, and talent requirements are discussed, along with the difficulties rollups face in meeting stage one criteria. The talk underscores the need for better incentives and the ongoing refinement of these decentralized systems.

Takeaways

• 😀 The importance of permissionless systems: The ability for users to exit if a centralized proposal fails is a key factor in ensuring decentralization.
• 😀 Centralized vs Decentralized: It's not about whether a system is centralized or decentralized, but whether it allows users to exit in a permissionless way if necessary.
• 😀 Evolution of criteria: The criteria for 'Stage One' systems are not fixed and will evolve as technologies and systems develop.
• 😀 Close monitoring of systems: Projects like Optimism and Arbitrum are closely evaluated, with the possibility of losing 'Stage One' designation if new information emerges.
• 😀 Stage One designation isn't permanent: Systems may lose their 'Stage One' status if they no longer meet the evolving criteria.
• 😀 Challenges in reaching Stage One: Complexity, time, cost, and talent are major obstacles for projects trying to build towards Stage One.
• 😀 High cost of building Stage One systems: Reaching Stage One can be expensive and requires significant investment in time and resources.
• 😀 Early examples: dydx was one of the first projects to build on ZK rollups and was close to meeting Stage Two criteria despite being a Stage One project.
• 😀 Governance issues: Stage Two systems require a more robust governance process, which some projects struggle with.
• 😀 Rollup-as-a-service providers: Many rollups today are launched by service providers rather than the teams directly building the technology, complicating the process of meeting Stage One criteria.

Q & A

What is the main focus when discussing whether a system is centralized or decentralized?

The main focus is not whether the system is centralized or decentralized, but whether users can exit the system in case of a failure. For example, dYdX was centralized at one point, but it allowed users to exit when issues arose, which is critical in permissionless systems.

Why is the 'stage one' designation for decentralized systems not permanent?

The 'stage one' designation is not permanent because the criteria for these stages are not set in stone and can evolve over time. If new information surfaces or certain factors are missed, a system might lose its stage one status.

What challenges do projects face when building toward 'stage one' in the context of decentralized rollups?

Projects face several challenges when building toward stage one, including complexity, high costs, time requirements, and talent shortages. These factors make it difficult for projects to meet the necessary standards, especially as many rollups today are launched by service providers rather than built directly by the teams behind them.

Why is governance an important consideration for achieving stage two status in rollups?

Governance is critical because the process required to achieve stage two status demands a more sophisticated and robust governance structure. Systems like dYdX, which were built earlier, were close to meeting stage two requirements, but governance failures prevented them from attaining this status.

What role do rollup-as-a-service providers play in the development of decentralized rollups?

Rollup-as-a-service providers launch many of the current rollups, which means the systems are not always built by the teams behind the rollups themselves. This adds an additional layer of complexity as these providers need to be incentivized to meet the high standards required for stage one.

How does the evolving nature of decentralized systems impact the criteria for their development?

The evolving nature of decentralized systems means that the criteria for their development are not fixed. As these systems advance and new insights or challenges emerge, the criteria for achieving certain stages or designations may change, requiring continuous adaptation.

What was the significance of dYdX in the context of zk-rollups?

dYdX was one of the first projects to implement a zk-rollup, which was a significant achievement in the field of decentralized finance (DeFi). While it was a highly centralized system at first, it was still one of the pioneers in creating rollup-based decentralized applications.

Why is it difficult for rollup projects to meet the requirements for stage one?

It is difficult for rollup projects to meet the requirements for stage one due to the complexity of the technology, the high costs of development, the extensive time required, and the need for specialized talent. Additionally, many projects are launched by service providers rather than the original teams behind them, which complicates the process further.

What does the speaker mean by 'you can't have this stage designation forever'?

The speaker means that the designation of stage one or other statuses is not guaranteed indefinitely. If new information or developments arise that show the system is no longer meeting the criteria, it can lose that designation. The status is dynamic and can change as systems evolve.

How do evolving systems and criteria affect the governance of decentralized projects?

Evolving systems and criteria mean that governance structures must adapt over time. As the systems and their requirements change, governance must be flexible enough to accommodate these changes and address new challenges. This is particularly important for systems aiming to reach higher stages like stage two.