🤔 Why Scaling Issues? 🤔
As the premier smart contract blockchain, there are tens of thousands of dApps all competing with each other for computational resources. All of these users are competing with each other to have their transactions included in Ethereum blocks. In their bid to get their transactions first, they will inevitably bid up gas prices. It’s also the fact that these transactions are clogging up the network in general. As they wait to be included in the blocks ETH 2.0 is being worked on but is still some time away. We need immediate solutions.
🤓 Potential Solutions? 🤓
These are solutions that will take the strain off of the main Etheruem chain and hence reduce the transaction bloat. These include the following: – Payment Channels – Sidechains – Plasma However, each of these solutions have their own challenges that make them far from ideal. We need more attractive options.
📈 Optimistic Rollups 📈
Optimistic rollups are one of the most exciting layer 2 solutions that are currently being worked on. You may have seen it being mentioned by many folks in the Ethereum community as a gamechanger for scaling. This is an off-chain aggregation of transactions all within an Ethereum smart contract. In this smart contract, users can transact with security guarantees You have two types of rollups, and these are zk-Rollups & optimistic Rollups One of the problems with zk-rollups is that currently it is a lot harder to port over current Ethereum smart contracts from the main chain to ZK-rollups. It will be some time before it can realistically help Ethereum scale smart contracts Optimistic rollups are a bit different in the way they deal with invalid transactions. ZK rollups eliminate invalid transactions through the use of these zero knowledge proofs. With the optimistic rollups, there is a challenge period where anyone can submit a fraud proof
📈 Optimism 📈
This is a project working on Optimistic rollups that is backed by Andreesen Horowitz They have been working on optimistic rollups since June of 2019. They have come a long way since and have received backing from a number of high profile VC firms. This was led by none other than Andreesen Horowitz who helped them raise $25m. The Optimism devs have been hard at work and are aiming for a mainnet launch this March. This has of course led to a great deal of excitement in the Ethereum ecosystem
💳 EIP 1559 💳
EIP 1559 is now on the cards for a launch in July of this year. It will make gas fees that much more manageable and will remove the gas fee bidding for inclusion There will be something that is called the “base Fee” which will be burned. This of course means that ETH will be burned and which will reduce the outstanding ETH and make it a deflationary asset Although miners are not too happy about the upgrade, they are likely to go ahead with it according to game theory.
📜 Disclaimer 📜
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading Forex, cryptocurrencies and CFDs poses considerable risk of loss. The speaker does not guarantee any particular outcome.