[iskander]

This is a concerning aspect of Ethereum's strategy to push scaling to layer-2 networks: Ethereum is a heavily audited and tested protocol that runs an extremely decentralized network of diverse clients. L2s can be...an AWS instance running arbitrary buggy code. Much of the confidence in the "base layer" that people using Ethereum currently experience will be significantly undermined if mundane transactions wend in and out of different L2s.

[SilasX]

Yes! I got burned by Optimism in another way. They tell you to point your applications at etherscan.io for transaction data/history, but then, on November 11 last year, the pushed an update that deletes all transaction history up to that point, which you need for taxes!

They swore they'd have the history restored on Etherscan by Nov 18th, but they still haven't. Only recently they pushed a workaround that lets you download the transactions as a CSV, but that lacks the critical data from your transfers of non-ETH tokens. And then, an alternative source does have that data, but only as a binary blob you have to run through a decoder and parse out yourself.

The crypto tax software, of course, doesn't know what to do with it.

(Even if your local client cached the transactions, most, like MetaMask, left out the critical data above.)

68 days till the filing deadline in the US!

I asked the maintainers how they planned to do their own taxes, and one of them claimed that he was separately recording all sales in a spreadsheet. I had to inform them that the taxable events include more than just sales, and, even under the most aggressive interpretation of tax law, you need the other data to figure cost basis.

[3np]

Let this be a lesson: Maintain local self-hosted copies of any necessary data, don’t rely on third-parties maintaining it and keeping it available. Should be standard practice for anyone doing anything serious with cryptocurrencies but unfortunately users seem complacent enough that easily accessible tooling is still lacking in many places and you may have to DIY scripts for some parts.

Your situation is unfortunate but it sounds like no fault on Optimism or Etherscan here.

(BTW just to be clear: you’re talking about off-chain data that was never part of on-chain txes, and this binary blob comes from some Optimism operator? If it’s on-chain data its just a matter of doing the right queries)

[SilasX]

Okay... in a sense, yes, in hindsight, I should have planned for this. But there are a number of reasons I think this kind of response is too dismissive.

First of all, no matter how well you prepare, there is always going to be one level higher of system failure that you "should have planned for". In the npm-Linux-box-borking debacle, there were people insisting you should never have run npm except on fully disposable hardware with an instantly replaceable dev environment (which is the only thing that would have let you shrug it off).[B]

Got mugged walking home? Should have taken a safer route. Took a safe route? Should have walked with a friend. Still got mugged? Should have walked with two friends. For all n, should have walked with n+1 friends.

Second, it's painting with a tad broad of a brush to call me complacent on crypto. I've filed crypto taxes since 2017 and kept cost basis records from years before. I'm aware systems fail and (outside of this) have set appropriate backups and cached critical transactions to spreadhseets. Even here, even with nothing done by the Optimism team to correct their mistake, I'm not actually doomed, as I can file taxes based on an input-output analysis of my Optimism transactions as a good enough first pass, and correct later. The issue is unnecessary convenience.

In fact, as things stand today, I'm in exactly the "safe" position you thought I was -- "oh, it's there, you just have to query right". Indeed I do! Now that I've pulled the tx data from the alternate sources, I "just" have to yak-shave out a meaningful read of all the transactions. (Update: per sibling, you can download the transactions from a different tab but you still have to do some transformation.) But none of that takes away from the point that this is huge, avoidable inconvenience and flaky community relations.

Remember, even if I had cached them, I'd still be stuck having to manually import them into my crypto tax software, which is a failure from usability.

Third, there are reasons to expect optimistic.etherscan.io as a reliable source to point to.

1) When you set up e.g. Metamask, the Optimism site gives you exactly one URL to point to, with no alternatives or warning that one day it might be missing history. [A] The very fact that Metamask equates "nothing from that url" with "no transactions" means they were treating it as mission-critical.

2) The entire ETH community outside of Optimism relies upon etherscan.io for most of their own tooling ethereum projects. All sources for ETH projects say to connect there, as if it's inconceivable that there could be an outage or need for some fallback.

3) It would have been trivial to keep the transaction history up. There was already a server somewhere (etherscan-owned or otherwise) serving transaction history. All they had to do was configure it to be able to check transactions for being from before that switchover, and ping that (static) DB for a subset of them.

(Remember, this isn't, at least so far, an issue of cost: they do plan to get optimistic.etherscan.io back up as a reliable endpoint for the pre-upgrade txns, they just didn't think to upgrade a way that would facilitate such queries of already-existing immutable data.)

And, for the final kicker.

4) Optimism maintainers themselves didn't even think to locally cache all the transactions they'd need! (As in the one mentioned who only logged a proper subset of taxable events.) If the very people who live and breathe this stuff overlooked it, I think I can be forgiven for overlooking it, as they expect even casual users to join.

[A] https://metamask.zendesk.com/hc/en-us/articles/4403700785691...

[B] https://news.ycombinator.com/item?id=16438630

[EGreg]

You are right. Putting the responsibility on individuals and small organizations is asking for trouble.

But instead, capitalist society simply VC-funds a bunch of centralized entities that wind up with the solution, and don't give it to anyone else. Because after the IPO, Wall Street quarterly earnings demand that it extract rents forever, and you can only do that with closed source software.

Perhaps Web3 and Web4 will finally fix this situation. Open source protocols that can be monetized with cryptocurrency. Filecoin is a good example. It "just works". It may be slightly more expensive than AWS, but can become as resilient as you want.

[kfichter]

Heyo, chiming in from the Optimism team here. You should be able to get non-ETH token transfers (ERC20 or ERC721) via the Etherscan CSV export feature. You may have to make a dummy ERC20/ERC721 transaction to get the page to show up. If that isn't working for you, feel free to hit me up on Discord (I think we already have a thread together) and I can help get you whatever data you need.

See this random account for an example of exporting ERC20 transactions: https://optimistic.etherscan.io/address/0x9c1e0c67aa30c063f3...

[jkhdigital]

> The crypto tax software, of course, doesn't know what to do with it

I’m still trying to calculate proper basis and gains on transactions from 2018… tens of thousands of trades in various complex hedges across 7-8 different exchanges. I just aggregated everything in a single line item on my original return but of course I got audited T_T

[sizzle]

Were they on dexes or cexes? If centralized, don’t you get Tex reports? If not centralized, how will they ever know the extent of the trades?

[leppr]

If the history is completely gone, your government won't be able to find it either, so you can just fill in whatever you want to explain how balance A became balance B.

[AlexCoventry]

Of course it's not completely gone. Chain analysis companies, which tax authorities consult, will have backup copies.

[EGreg]

Wait, what do you mean? I can see all ERC20 transactions in our token (and others) from before Nov 2020

[SilasX]

I'm talking about the record on optimistic.etherscan.io, which they tell you to point to as the definitive blockchain for Optimism. I am looking at my transaction history right now, and it does not show any history from then in the human-readable part of the site.

They recently updated it so you can download a CSV with history from before then (but otherwise no interoperability with the interfaces ETH clients expect).

You're probably looking at a client's local cache of transactions (which I have as well), which doesn't help, since they have limited info within a transaction, and depend on you going to (you guessed it) the etherscan endpoints to see the rest.

[baxtr]

Side note: that’s the first flame war free / nuanced thread on crypto that I have seen on HN so far. Thanks for starting it!

[kristofferR]

The discussion here used to be way more thoughtful, it's only been bad the last year or so.

I think the degradation of crypto discourse here was mostly a knee-jerk reaction to NFTs. "NFTs are stupid, so all crypto is stupid, because NFTs are crypto" - that was likely the thought process behind all the toxicity seen here.

[rawtxapp]

I would disagree, in my experience HN has been pretty anti-crypto for a long time, starting with Bitcoin's announcement thread [1].

Personally, I think people are just tired, as a proponent I'm tired of arguing the same stuff over and over again, I can imagine the other side of that too. At this point, time will decide who's right and wrong, I think that what anyone of us thinks doesn't really matter in the grand scheme of things.

1: https://news.ycombinator.com/item?id=599852

[simias]

Yeah I'm an opponent and I feel the same. The talking points have been exhausted half a decade ago. On top of that as cryptocurrencies get more and more mainstream we have to deal with less sophisticated people who make it very hard to have a decent discussion in the first place, because you basically have to start by taking 20 minutes to explain to them what the basics even are.

NFTs are really pushing this situation to the extreme. Between the NFT enthusiast who seem to think the technology is literal magic who can do anything you want it to and "haters" who will say stuff like "NFTs are just URLs of JPEG" which is absurd oversimplification and completely misses the point.

That being said I would argue that the fact that the discussion is not advancing and that we're left with "monkey jpegs" is to be blamed entirely on the cryptopeople who clearly fail entirely to deliver anything new. The killer "crypto app" has been a couple of years away since 2015 at least. The tech keeps getting more complicated as an attempt to address the fundamentals shortcomings of the blockchain, but it still fails entirely at being anything more than a vehicle for wild speculation.

The fundamental reality is that basically nobody would be using any of this if they didn't think it was going to make them rich. That was true five years ago, it's true now and I think it's going to remain true for the foreseeable future.

[iskander]

I'll try to engage without pulling us into familiar debates.

I have found, in a year of intensive use and research around the Ethereum ecosystem, here are a few things I like that wouldn't really work without an underlying immutable distributed ledger:

1) Creating limited editions of generative art.

2) "Forever" art like on-chain pixel and ASCII art.

3) Frankenstein-like adaptations of traditional fintech constructs into a decentralized implementation, such as AMMs.

Also, the more I learn about the zk-rollup space (STARKs and SNARKs) the more curious I get about the possibilities there. You can, for example, have digital treasure hunts where whoever finds the treasure can generate a proof without revealing the location. So far this is just cool without having an obvious killer app, but more than anything else in the crypto space I think there will be killer apps emerging from this technology.

By volume, I agree with critics that it's mostly bubble-chasing, gambling, and scams. It might be healthier for everyone if the tech & art experimentation were walled off from investments. At the very least, we probably shouldn't have crypto exchanges advertising -- really nothing interesting comes from luring Main Street to buy and store Doge on a centralized exchange.

[8note]

I don't know what the third one entails, or whether a distributed ledger actually enables it without also having a centralized legal entity, but the other two seem like they already exist without a distributed ledger.

The limited edition art is really just tracking receipts - you can do that over email if you want and it really doesn't have to be public. Non digital art does fine with private receipt tracking. You can also have a dedicated database that charges art owners a maintenance fee, and tracks who the current owner of each art piece. Basically free tier AWS.

For 2) forever art already existed without any ledger. People store copies of pictures they like because they feel like it. Not being on a ledger doesn't mean Nyan cat will disappear. The ledger might attempt to guarantee that unpopular works stay available, but I don't think you can guarantee that any particular ledger will continue to be active "forever".

They could do a hard fork that prunes out the unpopular art to save on space, and migrate everyone to that one, leaving the old one unhosted. Long term, you're not going to force people to keep spending resources to maintain stuff that nobody cares about

[simias]

>1) Creating limited editions of generative art.

I personally think that it's not really an interesting feature. Creating scarcity out of something that ought not to be scarce is just a way to infiltrate capitalism in every aspect of our lives. Hacker culture historically went completely against that (phreaking, breaking DRM etc...) but I concede that it's more of a philosophical/political argument than a technical one. I still find it utterly depressing.

I would also argue that there's usually a significant difference between ownership of a token on the blockchain and what the local IP laws says. IP law is messy and sometimes subjective, putting things on a blockchain can make things messier rather than simpler.

>2) "Forever" art like on-chain pixel and ASCII art.

So that one is interesting, but I would argue that it's only true if you consider that the blockchain is "forever". In order for that to be true it means that you have to believe that your blockchain of choice will be considered significant enough by a number of people across... well eternity really. This could be true for the "big" ones like Bitcoin and Ethereum, although I'd say the scene is way too young to be sure of that. It's as good a bet as any I suppose.

But here's the thing. We already have "forever" digital "art": the source code of the Linux kernel. There are countless copies of it across the globe, and it'll remain archived for the foreseeable future.

My point here is that if something is significant enough it won't be difficult to convince a bunch of people across time and space to archive it. People do that for old videogames, music albums, usenet posts etc... And unlike the blockchain you can actually curate it, you don't have to archive the neighbor's sandwich picture collection. I'd argue that this curation power is a feature, and the fact that the blockchain just stores everything forever is a bug. It actually means that the bigger the blockchain grows, the less likely it is that people will want to store personal backups of it.

So I don't think the blockchain does anything novel here, and I don't think it does it better. Forcing arbitrary people to store arbitrary data forever regardless of value or interest is just wasteful.

>3) Frankenstein-like adaptations of traditional fintech constructs into a decentralized implementation, such as AMMs.

I think the oracle problem is really going to make "DeFi" a tough sell. There is, in fact, a lot of trust in our financial system, and being able to use a central authority (the justice system) to settle issues makes things a whole lot simpler and efficient.

In general I firmly believe that trust is usually a good thing that makes systems more efficient and this obstination of cryptopeople to get rid of it is more based on political ideology than pragmatism. Trust, but verify. But trust.

[fleddr]

I would consider myself an informed skeptic that is selectively pro-crypto.

I would first clear the air by saying this: yes, making money is an important use case of the current crypto industry, if not THE use case. I find it puzzling how people frown upon that. Making money (or at least getting paid) is the number one activity the average person spends a lifetime doing. Many in bullshit jobs that add no value.

You can have all kinds of opinions on how this money is made (speculative), but the crypto community doesn't care. It's their money, not yours. I would personally not touch 95% of crypto with my money, but take no issue with people that go all-in. Live and let live.

As for NFTs, it's funny how you say some discussion participants simplify it too much (just right-click) and then come to sweeping simplistic conclusions yourself: bored apes and crypto people failing to deliver anything new.

This suggests you're keeping track. If so, can you tell me about recent trading volume? The top 10 projects? Which celebrities, artists, musicians and sport teams released popular ones? On which platform? Which are hot upcoming releases? Out of the many issues with NFTs (no infinite storage, copyright acknowledgement, mint duping, etc), which teams are working to address these issues, and what are the solutions? Do you know which non-JPEG NFTs got traction, like unique physical access and lifelong memberships? Which gaming companies are experimenting with NFTs, and I'm talking AAA titles?

I could make that list a whole lot longer. I suspect you don't know the answers, but that's not a personal attack. The point is that the space is vast and extremely fast. This idea that nothing has happened in crypto in 10 years is because you're not looking.

The discussion is not advancing because people don't spent a second learning about crypto or keeping track.

[8note]

All an NFT is at heart a JSON blob like

{ Id: some unique namespaced string (aka, the part that is a non fungible token) Owner: reference to who currently owns it Payload: data that defines the content of the NFT }

You can put this in a database if you want, or use a block chain as your data storage. I expect many of those teams you mentioned are solving their NFT issues by moving their NFTs from block chains onto postgres tables, or putting them in databases from the start. The listed problems have somewhat straightforward solutions by doing so, and many companies have offered NFT marketplaces based on databases for years and years like the Steam marketplace for gaming. They work fine at scale, too. I expect that most popular digital ownership systems do not use a block chain as their back end, though I do not know what the top 10 are {apple, amazon, google, the us government?}. The most advanced team solving the listed problems is without doubt YouTube though.

What block chain NFTs have over database NFTs is hype. There's a lot of wealthy people with money tied up in crypto investments that want to be able to.

The other feature is that the audit history of changes to the Owner field is guaranteed to be public instead of optionally public, and that guarantee is what of questionable value when "crypto people don't deliver anything new" is mentioned.

----

If somebody's managed to make solve identity using a block chain that's quite interesting re: "unique physical access".

I'd expect the block chain to be uniquely incapable of guaranteeing unique access to anything, since access is based on knowing a password, and it's easy to make copies of a password. At best id expect a blockchain to guarantee limited access to people who know one at least one of a set of possible passwords, and a bouncer controls unique access by doing a separate identity checks.

Is this some facial scan? Dna +epigenetics check? Is it trivial to link all your accounts together? What kinds of attacks has it been tested against? Can your twin get in if he knows the right password and borrows your id? Can your spouse get in if you're in the hospital? Next of kin when you die?

[lhl]

Over the past few years, my personal experience/perception is there's been less and less people with a technical grounding in crypto/blockchain who bother to engage on HN (on CT, it's often dismissively referenced as "the orange site") because not only is there such a strong anti-crypto attitude, but usually it's based on pretty shallow or often wrong comprehension of the tech/mechanisms.

I agree that it's pretty pointless to argue though. Even when blatant misinformation gets cleared up, or clear examples of how the tech is actually being used are outlined, most of the conversations then end up at "well, I don't see the value of it so it still must be useless." ¯\_(ツ)_/¯

[BoorishBears]

Hasn't time already proven the skeptics right?

The biggest sources of skeptism were around logistics and value as a currency:

Is there a cryptocoin that has successfully solved logistics without disastrously failing as a currency?

Even if you ignore the environmental aspect... has any coin that has achieved scale not experienced deflation that would make the Great Depression look like a hiccup?

To me the skepticism has always been "you can't have a functional decentralized currency". Some people take that at face value and proudly proclaim "people will accept your BTC/ETH/etc."

But most people mean it in the sense we think of currencies belonging to non-failed states: aka being a somewhat stable store of value. More widely used for payment of productive economic output than fraud and speculation...

-

I see crypto as I see Tesla, maybe there way a point but it's long buried under the mania.

Disclaimer: Due to that mania I keep some as hedge, but again, imagine saying I keep dollars under my pillow as a hedge that next year they might have 10x'd in value...

[rawtxapp]

Has it?

Bitcoin is bigger than ever before. It's far more valuable, it has far more users, processes hundreds of thousands of transactions moving billions of dollars worth of value every day on-chain alone, has very healthy L2 layer growth (1ml.com), has hundreds of exchanges worldwide, it ticks every 10 minutes and will keep ticking for the foreseeable future. We have a small country that adopted it as a legal tender with more countries coming on the Bitcoin standard potentially this year.

People only see the fiat currencies and forget that we've run on gold standard for thousands of years and fiat currencies are barely 50 years old and riddled with financial crises left and right. Bitcoin is digital gold, strictly better than gold. But anyways, we'll see what happens in the future.

[8note]

Strictly better than gold is not true.

Gold can be traded without leaving an audit trail, and without a per transaction cost.

[BoorishBears]

Does that answer anything I brought up?

You know, the whole "relatively stable store of value paying for productive output rather than speculation and fraud?"

We moved off the gold standard for a reason (and it's not all geopolitics...)

[iskander]

No problem!

After a year of playing around with crypto I think I'm appropriately both skeptical and excited, which is hopefully a good starting point for non-trolling conversations.

[gillesjacobs]

That's an issue with all cryptocurrency infrastructure though: projects need to be proven to demonstrate robust value and it's probably one of the most adversarial spaces in software. History has shown that hacks and exploits of projects hurt the price of the native taken but do not really damage the long-term earned trust.

[rawtxapp]

Exactly this, it's a very adversarial environment with huge stakes for those that can exploit it. Even projects that have been around for months, years can get exploited which is why I'd recommend waiting a long time before putting non-trivial amounts into any smart contract or crypto related projects.

That's also a big plus for Bitcoin, because it's been around the longest and because it's so much simpler than more complex chains like eth, it's as secure as it gets.

[jkhdigital]

> That's also a big plus for Bitcoin, because it's been around the longest and because it's so much simpler than more complex chains

I’ve always understood this on a basic level, but reading an entire exploit debrief with intricate technical details really hammered this point home for me.

[8note]

A simple exploit is that somebody got ahold of a wealthy person's private key, isn't it?

[dan-robertson]

Are the stakes that huge for potential exploiters? It seems that exploits can write off a bunch of value from the exploited but, at least for big and quickly noticed exploits, it is hard to launder the gains into the ‘legitimate’ part of the ecosystem with big exchanges and suchlike.

[rawtxapp]

I think last year alone had more than a billion dollars worth of crypto hacked on defi, there's some trackers out there [1]. On one hand, you have amateurs that leave their private keys on cloud services and try to cash out while living in a place like NYC, on the other hand, you have people who know what they are doing or perhaps live in places that actively encourage those activities [2].

1: https://cryptosec.info/defi-hacks/

2: https://www.bbc.com/news/business-59990477

[teempai]

Ethereum actually has almost no client diversity. The vast majority of nodes run the geth client (go).

Regarding the security aspects of L2s: they will of course not be anywhere near as robust as ethereum itself, but over time they’ll get better. However, they also don’t need to be as robust as ethereum given they effectively benchmark against the ethereum chain so while things could go wrong, the amount of damage will be very contained and as the ethereum mainchain scales the damage radius becomes ever more contained. Finally the bridges that are being implemented to move assets from ethereum to the L2s can implement emergency withdrawal mechanisms which allow users to get their assets out even if things go wrong.

Not perfect, but the tradeoff seems reasonable to me given the performance enhancement and the diversity of functionality that can be offered via many different environments.

Disclaimer: I’m quite possibly biased due to my company working on L2s.

[kristofferR]

> Ethereum actually has almost no client diversity.

I think that is slightly misleading, all the client diversity efforts is focused on Ethereum 2.0 now, as the old clients will be dead soon. [1]

This is the most updated stat I've found: https://twitter.com/sproulM_/status/1481109509544513539 (read the rest of the twitter thread too!)

Still not great though, but better at least.

[1] https://clientdiversity.org/

[sophrocyne]

For those interested in data supporting diversity comment (~82% geth) - https://www.ethernodes.org/

Re: GP comment - From a "trust" perspective, there is a distinct difference to call out between the integrity of data on the platform, and the trustworthiness of the platform itself (i.e., the ability for centralized control of all data)

In an instance where an L2 is compromised, the potential impact is limited to the integrity of data that individual L2 was contributing to the overall platform.

Those transactions which demand absolute integrity will naturally tend to occur on L1, for this reason. Risk mitigation strategies will develop for those operating on L2 + bridged chains.

[iskander]

>In an instance where an L2 is compromised, the potential impact is limited to the integrity of data that individual L2 was contributing to the overall platform.

I think distinction is only meaningful as long as L2s remain a niche curiosity while the majority of transaction volume resides on L1. If the L2 plan succeeds and almost all volume passes through an L2 and one of the major L2s has a bug like in this post, then a large fraction of all ETH could end in the hands of hackers.

The ledger would accurately reflect the moment that a bad actor lifted e.g. 5-10% of the ETH supply off an Arbitrum or StarkNet bridge. Technically the L1 is uncompromised but a lot of money would be "redistributed".

[sophrocyne]

Certainly a possibility, but this is one reason I’d be inclined to believe there will be some significant demand for direct L1 transactions, and a diverse set of L2 layers.

[iskander]

Diverse L2 layers sounds like hell.

Where's your ETH?

Evenly sprinkled between StarkNet, zkSync, Arbitrum, and the thirty competitors that will pop up in the next few years.

[sophrocyne]

Are you envisioning homogenous L2s, or those more specialized in nature? I envision the latter, which would mean the number that any individual entity is exposed to would be limited.

But your point does highlight the UX implications of too much fragmentation, and it’s a worthwhile consideration

[jrochkind1]

What kinds of transactions do not demand absolute integrity, but still make sense to use a blockchain for? (I don't know much about these sorts of things, I'm actually asking for examples)

[mattdesl]

Security of zk rollups may be sufficient for a lot of activity - trading, DeFi, games, art, DAO/access tokens, escrow, crowdfunds, all the web3 stuff.

The L1 may eventually be a primary settlement layer for protocols like zkSync and StarkNet (and any other protocols and rollups built on Ethereum L1). At some point it may not be common for users to interact with L1—ie. users of Argent and Sequence wallets may only be holding assets on L2.

zkSTARK/SNARKs has pretty dramatically changed the L2 landscape and new direction seems to be moving away from optimistic rollups like in the OP. This is just my understanding, somebody please correct me if I’m wrong.

[baby]

I just spent 20min to look for that debate between some of the big players:

* the optimistic side: https://medium.com/offchainlabs/optimistic-rollups-the-prese...

* the zk side: https://blog.polygon.technology/zk-and-the-future-of-ethereu...

On one hand you have a complicated protocol that doesn't really use cryptography and that has the user (you) monitor the blockchain for a week to make sure their transfer was processed correctly (otherwise my understanding is that you have to create a fraud proof, send it to the chain, otherwise you will lose your funds).

On the other hand you have a cryptographic proof of a few kilobyte that proves that some program correctly validated and applied the state transition of thousands of transactions.

[Ar-Curunir]

As a zkSNARK cryptographer, efficient cryptographic proofs are incredibly complex pieces of technology that still have a ways to go before they can match the speed of native execution. Both approaches have pros and cons.

[jrochkind1]

I gotta admit I don't know what 50% of the words there mean, but it surprises me to suggest that "absolute integrity" would not be required for trading, escrow, DeFi, DAO/access tokens.

Makes sense for games and art (but then I wonder what they are doing using a blockchain in the first place).

[mattdesl]

zk rollups tend to inherit most of the security features of L1[1] but with some trade-offs.

The trade-off is basically scalability (and thus fees). If the L1 network is so highly congested that each transaction costs $100 or more in the future, a scalable zk rollup that achieves about the same level of security at the cost of < $0.001 may be worth these tradeoffs.

[1] - https://zksync.io/userdocs/security.html#security-overview

[sophrocyne]

This turned out to be longer than I intended. Apologies.

I view Ethereum as a value network, connecting disparate sets of transactional use cases around a set of core services (like Address, asset records, and transaction functions)

To believe that blockchain makes sense for assets which do not require absolute integrity, you'd need to first accept that there are valuable use cases which having an asset management & transaction layer (L1) serves.

If we establish that there are valuable use cases that attract asset management to L1, at a certain point network effects begin to take hold, and the system becomes "top of wallet".

There are parallels in how you manage traditional finances today - Even if you have multiple bank accounts and digital wallets for USD (e.g., a Chase account, Cash App, Venmo, etc.) you're likely to mentally consider one of those your "primary" account. The important one. The main difference in the value network of Ethereum is that the primary account can aggregate the assets that are managed/transacted through L2 solutions. The L2 solutions leverage the core "identity/asset mgmt layer" of L1, but serve use cases that don't justify the cost of development/operation/transaction on the main layer.

To connect this analogy to the original question, let's imagine that your Bank Account offered direct integration with each of the other accounts you manage - Capturing every asset you held, including the 124 gold you still have on your World of Warcraft account from a decade ago. If the 124 gold were to somehow disappear due to a bug/hack/other integrity issue, your bank account would reflect that. But the important stuff would be there.

TL;DR - If commerce generally moves to blockchain systems at significant scale, there will be an acceptable level of failure on L2 systems to support the convenience of aggregating up asset mgmt alongside the important stuff.

[8note]

This does a good job of answering what kinds of transactions you don't care about, but not why you want them to be on a block chain.

The usecase given agregating those assets by the wallet has two problems: 1. You can have many wallets 2. Not everything associated with the wallet has to have it's transactions tracked on a block chain

All you need is one more column in the wow database, and you can pull up your wow assets with your wallet without them being on the L1 or L2 chain

[sophrocyne]

I suppose that’s fair. You could theoretically argue for some “integration” between an off-chain centralized database and on-chain wallet - but unless it were just an untrusted pointer, there would need to be some asset managed from a contract to serve as a “proof” of sorts.

If you’re questioning why people would prefer on-chain vs off-chain games, I wager there’s something appealing about the “decentralized” nature of the system that attracts people to on-chain games - and I put decentralized in quotes because it’s not always certain that’s a promise always delivered on, but it’s where the appeal is derived from.

Regarding your other notes - 1. Same theory applies though. One wallet is often seen as a primary wallet (hot) that manages public facing assets - e.g., registered ENS domain, an NFT, etc. 2. It’s certainly not required that all associations live on chain, but if you want core services and verification of ownership, it’s mostly on/chain or bust.

[lhl]

execution node (ETH 1.0) diversity is important, but actually more important moving forward is the consensus (beacon chain, fka Ethereum 2.0) diversity. The crawled data here shows that Prysm has almost 2/3s of that: https://migalabs.es/crawler/dashboard

For a good recent/up-to-date summary of the differences, why it matters: https://ethereum.org/ms/developers/docs/nodes-and-clients/cl...

And here's a good reference site as well promoting better client diversity before the merge: https://clientdiversity.org/

[sophrocyne]

Doing my part with lighthouse!

[DennisP]

With zkrollups, you get an on-chain proof that the off-chain infrastructure did everything correctly. A contract can even verify that proof before updating the data on chain.

[serverholic]

Ethereum didn't start that way, it had to build trust over time just like any other project. Eventually L2s will get there too.

[SubiculumCode]

Same with Polygon their Ethereum L2+Sidechaining scaling solutions. Polygon is quickly building a reputation for solid secure code, mostly because their team kicks ass and is proactive.

[jeffalbertson]

I mean they just disclosed a 1.6mil hack 40days ago.

I like polygon and unfortunately feel like hacks/stolen funds are part of the maturing process for blockchain projects but im not yet ready to say they are building a reputation for solid secure code.

[8note]

I think it's worth noting that that was an exploit as opposed to a hack or a scam.

In this case, the code securely gave the money to people in a way the owners didn't expect

[lhl]

For those interested in the specific risks of various L2s as they stand, L2Beat has the best overview: https://l2beat.com/?view=risk

While the various L2s are all pretty bleeding edge, the current state/alternative [1] is that a majority of the TVL is being bridged to alternate L1s, where the bridges are also extreme weaknesses [2]. There was the recent $320M Wormhole hack [3], the last record white-hat payout ($2M bounty on $850M at risk with the Polygon Bridge) [4][5], and $2.2B sits on Avalanche's Bridge [6] which is an EOA that is secured by literally 4 SGX machines. [7]

[1] https://defillama.com/chains

[2] https://old.reddit.com/r/ethereum/comments/rwojtk/ama_we_are...

[3] https://wormholecrypto.medium.com/wormhole-incident-report-0...

[4] https://medium.com/immunefi/polygon-double-spend-bug-fix-pos...

[5] https://gerhard-wagner.medium.com/double-spending-bug-in-pol...

[6] https://app.uniwhales.io/avalanche/bridge-tracker

[7] https://medium.com/avalancheavax/avalanche-bridge-secure-cro...

[sschueller]

Isn't the whole lightning network for bitcoin also L2?

[rawtxapp]

It's L2, but you can have different types of L2s. With lightning network, you're opening and closing channels with a counterparty using on-chain transactions, so each channel can be tied back to an on-chain transaction.

Before someone points out that it would require tons of on-chain transactions to onboard everyone onto it, you can batch thousands of channel open/closes into a single transaction with new protocol upgrades.

[idiotsecant]

That's not even the most fundamental issue with LN though, it's not a fully thought out system. As LN node count increases the routing complexity increases exponentially, which is the classic problem of routing issues on large graphs that literally every networked system has. The internet solves this with some degree of human intervention to tip the scales to particular routes, which is something that the LN inherently can't (and shouldn't) do. There is some amount of optimization that could take place using common graph routing algorithms like OLSR or others but those represent foundational changes to the protocol which historically LN is allergic to for whatever reason and wouldn't entirely solve the problem in any case.

Simply put - it can't scale to that kind of throughput for a combination of cultural and technical reasons.

[keymone]

Sigh. Quick, go tell UPS and DHL and others that they must file for bankruptcy because traveling salesman problem or whatever is hard to solve.

This is just nonsense because, for instance, each LN hub can configure how much processing it wants to take on by focusing on most profitable subgraph.

In the end, LN will be processing more and more payments and you will keep ignoring that fact and claiming that it can’t scale. This has been happening for years already.

[suyjuris]

> the routing complexity increases exponentially, which is the classic problem of routing issues on large graphs that literally every networked system has

I assume you are using “exponentially” in its informal meaning of “somewhat quickly” ? At least I am not aware of any routing issues that scale exponentially with the size of the graph.

To the contrary, if you can pick the graph structure then routing is not very difficult at all.

[rawtxapp]

Most end-users won't be acting as payment gateways, they'll all have private channels, so they won't appear in the routing graphs. The number of routing nodes would be many magnitude smaller than total number of LN users. It's working fine for now with growing adoption (1ml.com) and I believe it'll only get better with time.

[idiotsecant]

Sure, but in order to accommodate more users you need more routing nodes. Exponential scaling is a funny thing- systems work perfectly right up until they catastrophically fail. That's why it's important to understand these kinds of problems ahead of time, which LN is determined not to do.

[rawtxapp]

Look at it this way, if x = number of total users, routing nodes will grow O(log x), not O(c^x). The users can grow exponentially, the routing nodes won't because the marginal cost of processing an extra transaction from an end-user is very close to 0.

[jksmith]

>> which LN is determined not to do.

What's the source of your opinion?

[simias]

Unless things have changed recently the big issue with LN is that it's fundamentally a centralizing force. The idea that everybody is going to open a million channels with every single counterparty (locking coins in the process) is ridiculous. Instead people would just open a couple of channels with big, centralized nodes but that's just Visa with cryptobabble on top.

[thebean11]

No it's not.

Even if everyone had channels with the same, single central node it would have more guarantees than Visa does. The single central node could not just decide to keep everyone's money, as participants have the option to create an L1 transaction to withdraw funds if node they have a channel with misbehaves.

[null0pointer]

The main issue with LN is even more fundamental than that. Their argument against other scaling solutions was basically "if we scale on chain the hardware requirements will be hard for regular people to keep up and decentralization will suffer". So instead they went about and created a system where only the wealthy have the capital to commit to open enough channels and route payments. LN is almost totally antithetical to crypto in that it enables the creation of the very thing crypto sought to destroy; gatekeeping payment processors. Bitcoin was co-opted by Blockstream and co. who wanted to become Visa/Mastercard-like rent seeking middlemen.

Opinion part: Monero is technically superior to Bitcoin in basically every way.

[voldacar]

>Monero is technically superior to Bitcoin in basically every way

I see how this is true from a privacy perspective, but how does monero solve the issue of the blockchain eventually becoming too large for an ordinary person to run a node on their pc? the bitcoin blockchain is already several hundred gigabytes

[null0pointer]

As I said, that's just my opinion really. But Monero uses a dynamic block size. The hardware requirements will increase of course. But hardware becomes cheaper over time so the monetary cost of participation does not increase as quickly as LN where the cost of participation is capital directly.

[kingo55]

RE: Monero, I agree. One shortfall - how do we verify no one on the network has found and exploited an inflation bug?

[null0pointer]

Good question, I don't have an answer for you unfortunately. I have seen people talk about this in the Monero community though so at least they're aware of the issue.

[anonporridge]

Monero is what everyone used to think bitcoin was.

Now that people are starting to realize what bitcoin actually is, and all the lies and misinformation are falling away, the world is gearing up to pounce on it and fully integrate it into society. People are rapidly realizing that it really is the internet of money.

Monero will still have it's place, but only as the dark money network.

I've actually become increasingly worried that Monero is at pretty significant risk of a nation state 51% mining attack, since it mines with generic CPUs. A government could rent out an AWS fleet to attack the network and if not kill it, at least add a lot of friction via this kind of DDOSing that temporarily blocks people and breaks interest, like they do with Tor services today.

[HashBasher]

Exactly, CashApp/RobinHood/Coinbase/Kraken are all bitcoin L2. Centralized and trusted, but L2 nonetheless.

[vmception]

hm okay, room for nuance, there are at about a dozen L2 technologies in deployment right now, each with multiple competitors using a specific technology.

[stale2002]

It is yes, and even though the lightning network is considered one of the more secure/safe L2 networks, even it has had bugs (now solved) that potentially could have caused everyone to lose all their money, if those bugs had been taken advantage of.

[HashBasher]

> extremely decentralized network

Can you provide source for this claim? I thought that infura was the dominant infrastructure provider for eth and if it gets taken down, a majority of the apps goes down too.

[iskander]

Infura is a single RPC endpoint, the underlying network it talks with has 5k-6k clients: https://www.ethernodes.org/?synced=1

You can choose one of ~20 different free RPC endpoints: https://ethereumnodes.com/

This doesn't include private or paid RPCs or just running your own.

[rvz]

Well on the same site ethernodes.org, the majority of Ethereum nodes are running on AWS at 45% [0]. Due to this announcement from AWS [1], it is going to become even more centralized.

So the claim of 'extremely decentralized network' is somewhat of a myth and a falsehood.

[0] https://ethernodes.org/networkType/Hosting

[1] https://aws.amazon.com/about-aws/whats-new/2021/03/announcin...

[yokem55]

Ethernodes is known to be inaccurate [0] and is missing a lot of nodes because they can't index nodes that are maxed out on peers or are behind NAT and can't accept incoming connections from nodes they haven't connected to first. I know this for a fact because my own personal node (been online for over a year now) is not indexed on ethernodes, nor are 70% of the peers my node has. Only 2 out of my 15 peers are AWS IP addresses.

As a general rule - its very difficult to get anything close to an authoritative census of a decentralized peer to peer protocol.

[0] https://nttr.stream/peter_szilagyi/status/146057566700382617...

[mattdesl]

Correction: according to your link, only 28% of Eth nodes are running on AWS (1579 of 5632 - click "Network Types").

However, many of these are not mining nodes that secure the network (and therefore security of the blockchain), but instead are nodes run by dApp/web3 developers to handle things like indexing NFTs and the current state inside a smart contract.[1] It is easy to spin up a geth node for a task like this—and by default mining is not enabled. I haven't seen any stats on the total number of mining nodes and their network types.

I agree that too much of the traffic is going through AWS, and I suspect all of these stats will need to be re-examined after the PoS Merge.

[1] https://www.reddit.com/r/ethereum/comments/ksdu11/how_can_et...

[nootropicat]

Infura already went down several times and nothing happened. Metamask users can easily switch to other rpc providers (including their own nodes).

[soco]

Correct me if I'm wrong, but with those L2 tricks the plusvalue of Ethereum gets kinda diluted... and there's already a heavy discussion on the "why should I use it at all".

[serverholic]

You're going to have to explain. L2 heavily rely on the Ethereum base layer.

[suikadayo]

Most L2s will require users to pay transaction fees in ETH. Some will have fee abstraction where people can pay with tokens, but the rollup themselves will still end up paying ETH on L1.

Ethereum will essentially be a settlement layer for rollups, and everyone will be doing their DeFi, NFTs, etc on the rollups which are almost treated like their own chains.

[k__]

Their proof ends up on L1 and they get cheaper the more people use them.