Polygon (Matic) deep dive: the Big Tech approach to scaling solutions

In December 2021, Ethereum’s Lord and Saviour, Vitalik Buterin, published a blog post called Endgame.

In it, he imagined three possible futures for big blockchain projects, but for Ethereum in particular.

The way Vitalik sees it, there are three paths to achieve scalability, while maintaining decentralisation and security… which is basically the holy grail of crypto.

It’s called the holy grail – or more commonly, the trilemma – because, so far, it’s been impossible to achieve.

As with all “trilemmas”, you must sacrifice one of the three parts to achieve the other two.

The holy grail would be achieving all three at the same time.

For example, a common trilemma in the real world is good-fast-cheap. When you want something done, generally you can only pick two.

So you could have a project done fast and done well, but it’s going to cost you.

Or you could have it done cheaply and well, but it’s going to take a long time.

Or, you could go for the ol’ classic of fast and cheap… and then complain when you realise the work isn’t up to the standard you hoped it would be.

OG crypto projects like Bitcoin and Ethereum tended to pick security and decentralisation over scalability.

Many newer projects like Solana, Aptos and Algorand choose scalability and security over decentralisation.

But eventually, all projects are aiming to banish that crypto trilemma and unearth the holy grail of scalability, decentralisation and security.

(Except for Bitcoin. Bitcoin is happy being the most secure and decentralised chain out there.)

Many of the newer projects claim to have done just that. But usually they either aren’t that decentralised or aren’t that fast… or in really bad cases, aren’t even that secure.

Vitalik knows all this. Let’s be honest, Vitalik knows everything.

And Vitalik knows that long-term Ethereum must scale – without sacrificing security or decentralisation.

And that’s where his three possible futures come in.

Vitalik’s first future – the big block chain

In the first future, Vitalik imagines a “big block chain”.

Note the space there. He literally means a blockchain with “very high block frequency, very high block size, many thousands of transactions per second”.

The issue with this approach, as Vitalik notes is that it also ends up being very centralised.

“Because the blocks are so big, only a few dozen or few hundred nodes can afford to run a fully participating node that can create blocks or verify the existing chain,” he says.

Now, there is a way to make the big block chain trustless and censorship resistant (the core components of decentralisation) in this future, but it’s clunky.

The way to do it would be to:

Add a second tier of staking, with low resource requirements, to do distributed block validation.

Introduce either fraud proofs or ZK-SNARKs to let users directly (and cheaply) check block validity.

Introduce data availability sampling to let users check block availability.

And add secondary transaction channels to prevent censorship.

After all this, “block production is still centralized, but block validation is trustless and highly decentralized, and specialized anti-censorship magic prevents the block producers from censoring.”

As Vitalik points out:

Even if every single one of the primary stakers (the block producers) is intent on attacking or censoring, the worst that they could do is all go offline entirely, at which point the chain stops accepting transactions until the community pools their resources and sets up one primary-staker node that is honest.

This isn’t exactly an ideal solution, but it does (sort of?) solve the trilemma.

Surely we can do better…

Vitalik’s second future – one rollup to rule them all

In this possible future, Vitalik imagines that one rollup (or layer-2 as they’re also called. Well, kind of. They aren’t exactly interchangeable terms, but it would be too long and boring if I went into all that here) has superior tech and traction, so everyone uses it.

You could think of this as like how eBay essentially owns the online auction space. Sure, if you want to sell some stuff you could use one of the lesser-known sites. But why would you? All your potential customers are already browsing eBay.

You see, the thing about layer-2 solutions is, you have to move your Ethereum off the main chain and onto the layer-2 in order to use them.

If there was just one layer-2, this wouldn’t be so bad. But this isn’t the case. There are many – with more coming out all the time. And they’re all competing with each other.

So, which layer-2 do you use? Or do you have to flit between them constantly?

Also, if you’re already moving your Ethereum over to a layer-2, why not move it over to another layer-1 that’s already completed the trilemma without needing a clunky solution like layer-2s at all?

From this perspective, it’s easy to see how a layer-2 with superior tech (or another layer-1 with superior tech – which is my usual argument against layer-2s in general) could capture most of the market through network effects.

Let’s ignore the part in brackets for now, as I’ve already argued that point a lot in the past (here’s a direct link to that argument, if you’re interested: the biggest issue in crypto) and forget about other layer-1s.

So, if a particular layer-2 won out, how would it maintain decentralisation… Vitalik?

Once again, we get a world where, block production is centralized, block validation is trustless and highly decentralized, and censorship is still prevented. Rollup block producers have to process a huge number of transactions, and so it is a difficult market to enter, but they have no way to push invalid blocks through. Block availability is secured by the underlying chain, and block validity is guaranteed by the rollup logic: if it's a ZK rollup, it's ensured by SNARKs, and an optimistic rollup is secure as long as there is one honest actor somewhere running a fraud prover node (they can be subsidized with Gitcoin grants). Furthermore, because users always have the option of submitting transactions through the on-chain secondary inclusion channel, rollup sequencers also cannot effectively censor.

Vitalik’s third future – rollups for everything

The messy future.

In this future, we pretty much keep treading water.

No one rollup wins out, no big block chain wins out, we just have tons of different rollups all competing with each other and all being used for different things.

It’s a mess.

But until someone creates a good enough big block chain or rollup to win out, it’s the future we’re stuck with.

Vitalik:

No single rollup succeeds at holding anywhere close to the majority of Ethereum activity. Instead, they all top out at a few hundred transactions per second. We get a multi-rollup future for Ethereum - the Cosmos multi–chain vision, but on top of a base layer providing data availability and shared security. Users frequently rely on cross-rollup bridging to jump between different rollups without paying the high fees on the main chain.

What would that world look like?

It seems like we could have it all: decentralized validation, robust censorship resistance, and even distributed block production, because the rollups are all individually small and so easy to start producing blocks in.

Vitalik seems to like this future. But that’s because he seems happy with everyone having to constantly move between different rollups.

As a user, that’s at best a big frustration/time suck and at worst a huge security hole.

Every time you bridge (move your Ethereum from one layer-2 to another) you have to trust that you’re moving to the right layer-2 and not a scam. Or not the right layer-2 that turns out to be a scam.

Personally, I’m not a fan of this future. But it definitely seems to be the easiest one to implement… which is why it already has been.

Long-term though, I’d hope Vitalik’s future one (big block chain) or two (one rollup to rule them all) wins out for the reasons I state above.

How does decentralisation look in future three?

Vitalik:

The decentralization of block production may not last, because of the possibility of cross-domain MEV. There are a number of benefits to being able to construct the next block on many domains at the same time: you can create blocks that use arbitrage opportunities that rely on making transactions in two rollups, or one rollup and the main chain, or even more complex combinations.

Hence, in a multi-domain world, there are strong pressures toward the same people controlling block production on all domains. It may not happen, but there's a good chance that it will, and we have to be prepared for that possibility. What can we do about it?

So far, the best that we know how to do is to use two techniques in combination:

Rollups implement some mechanism for auctioning off block production at each slot, or the Ethereum base layer implements proposer/builder separation (PBS) (or both). …

Rollups implement censorship-resistant bypass channels, and the Ethereum base layer implements PBS anti-censorship techniques. …

So what's the result? Block production is centralized, block validation is trustless and highly decentralized, and censorship is still prevented.

Vitalik’s conclusion, and what it means for Ethereum

Vitalik’s conclusion is that whichever future comes to pass, block production will end up centralised, but block validation will be decentralised.

And that will keep things trustless and censorship resistant.

Vitalik:

There's a high chance that block production will end up centralized: either the network effects within rollups or the network effects of cross-domain MEV push us in that direction in their own different ways. But what we can do is use protocol-level techniques such as committee validation, data availability sampling and bypass channels to "regulate" this market, ensuring that the winners cannot abuse their power.

No matter which future comes to pass, Vitalik believes Ethereum will make a success of it.

Vitalik:

Ethereum is very well-positioned to adjust to this future world, despite the inherent uncertainty. The profound benefit of the Ethereum rollup-centric roadmap is that it means that Ethereum is open to all of the futures, and does not have to commit to an opinion about which one will necessarily win. Will users very strongly want to be on a single rollup? Ethereum, following its existing course, can be the base layer of that, automatically providing the anti-fraud and anti-censorship "armor" that high-capacity domains need to be secure. Is making a high-capacity domain too technically complicated, or do users just have a great need for variety? Ethereum can be the base layer of that too - and a very good one, as the common root of trust makes it far easier to move assets between rollups safely and cheaply.

But also, Ethereum researchers should think hard about what levels of decentralization in block production are actually achievable. It may not be worth it to add complicated plumbing to make highly decentralized block production easy if cross-domain MEV (or even cross-shard MEV from one rollup taking up multiple shards) make it unsustainable regardless.

Here’s where Polygon comes in

You’ll notice that Vitalik doesn’t see Ethereum ever becoming a “big block chain”.

It is pursuing a “rollup-centric roadmap”, which means we’re most likely to end up with future two (one rollup to rule them all) or future three (rollups for everything).

And this is where Polygon comes in.

Polygon is a project that makes a variety of layer-2 scaling solutions for Ethereum.

Its Polygon PoS solution is already one of the most popular Ethereum scaling solutions out there.

In fact, it’s already one of the most popular projects out there in terms of Total Value Locked (TVL) – which is how you measure how much money is in a decentralised finance (DeFi) project – full stop.