Based on the Ethereum Layer2 project developed on Op Rollup, it has also surged in the recent surge of L2. This article discusses how to achieve true decentralization of Layer2 before the Cancun upgrade.
Table of Contents:
Metis TVL and the driving force behind the spiral rise in token price
The First Decentralized POS Sequencer: Injecting Incentives into Execution and Internal Drive
Hybrid Rollups: Achieving Both Op and ZK in the Battle of Mixes
From the User’s Perspective: Multidimensional Economic Incentives Promote Ecological Diversity
Facing 2024: Embracing Multiple Milestones
Conclusion
According to L2 Beat data, Metis, a Layer2 project in which Vitalik’s mother Natalia Ameline and her close friend Elena Sinelnikova are involved, currently has a TVL exceeding $500 million, an increase of 416%, and has entered the top four of Ethereum Layer 2. With the surge in TVL, the token price has also soared, rising more than 300% in the past 30 days.
With the approaching of the Ethereum “Cancun upgrade” in the first quarter of 2024, Layer 2 projects have entered the investors’ “range”. Compared to large-scale L2 projects such as Arbitrum and Optimism with a market capitalization of $3 billion, Metis, with a market capitalization of only $300 million, is more cost-effective in the eyes of investors. Furthermore, Metis has its own expertise—a decentralized sequencer.
The existing mainstream Layer2 designs of the Ethereum ecosystem outsource the computational requirements of smart contracts to external servers and then settle the results (fraud proofs or zero-knowledge proofs) on Ethereum. This server is also called a sequencer, which receives unordered transactions from users, processes them off-chain into batches, and then generates compressed ordered transactions, which are then sent to Ethereum. It can be said that the sequencer is the soul of L2.
A harsh reality is that the current mainstream Layer2 projects, including Arbitrum and Optimism, are all executed by centralized sequencers. The reason is simple: executing their own centralized sequencer is more convenient, user-friendly, and cost-effective. However, this not only does not conform to the decentralization spirit that cryptocurrencies have always advocated but also raises questions about whether the sequencer will act maliciously, insert transactions, or engage in MEV.
Metis has decided to break through in the field of decentralized sequencers. It will conduct tests of decentralized PoS sequencers on the Sepolia testnet and start community testing on January 3, 2024. Can Metis’s leading attack on decentralized sequencers accelerate the program of decentralizing L2 and ignite a new wave of innovation?
This article aims to compare L2 projects from two dimensions: technical and ecological, based on Metis’s technical innovation points and ecological construction ideas, in order to explore the opportunities and challenges of the future L2 track.
Undoubtedly, the centralization problem of sequencers in the L2 track has reached an irreversible stage. On the one hand, most L2 projects currently use centralized sequencers, and their attitude towards implementing decentralized sequencers is ambiguous. For example, the OP Foundation and Arbitrum Foundation both operate centralized sequencers themselves, although they have proposed decentralized sequencer solutions to appease community demands. However, due to the lower threshold and cost of operating centralized sequencers and the considerable benefits brought by executing centralized sequencers, the development of decentralized sequencers has been extremely slow.
On the other hand, there is an urgent need to promote the implementation of decentralized sequencers. Centralized sequencers not only contradict the original intention of blockchain decentralization but also pose significant risks. Once a failure or attack occurs, the entire L2 will be affected. In addition, the sequencer determines the order, content, and structure of bundled transactions, and centralized sequencers have the potential to act maliciously to maximize their own arbitrage opportunities, capture MEV value, and even have the power to completely censor user transactions.
Indeed, it is difficult to change human nature, which tends to seek personal gain. Therefore, the design of decentralized sequencers not only needs to understand the market but also human nature. Grasping the nature of seeking personal gain and designing solutions accordingly is an inexhaustible internal driving force for the long-term stable execution of decentralized sequencers.
Metis’s decentralized PoS sequencer solution with Staking mechanism is a combination of underlying technology protection and incentive system escort.
In Metis’s design, there is an administrator role responsible for setting important parameters in the decentralized system, including incorporating qualified sequencers into the sequencer pool and setting the release rate of block rewards.
The sequencers in the sequencer pool are responsible for determining the order, content, and structure of bundled transactions. When there are multiple sequencers, at least 2/3 of the sequencers’ signatures are required to submit the bundled batch to the Rollup contract on L1.
In addition, to prevent sequencer malfeasance, there is also a validator role that performs sample verification on the blocks, including checking if the sequence of transactions has been swapped or if there are any maliciously inserted transactions, and so on.
The whole process can be simply compared to the scenario where a principal selects a group of qualified teachers as question setters based on requirements, forms a standardized set of questions, and then submits it to the school. The final acceptance of the questions is based on the signatures of at least 2/3 of the teachers. In addition, supervisors will randomly check the question setters to ensure that they do not leak questions or violate regulations.
This type of sequencer solution implemented by multiple entities achieves true decentralization, which shows Metis’s insights into market demands and timely responses. But another question that needs to be considered is: what motivates more people to participate?
Metis’s answer is the Staking mechanism.
Firstly, operators entering the sequencer pool need to stake at least 20,000 METIS tokens, and sequencer operators participating in block production will receive a large number of token rewards. This threshold of 20,000 METIS tokens has multiple positive implications:
In terms of stable system execution: On the one hand, it aims to verify whether the sequencer has the ability to participate in network execution normally, and on the other hand, it serves as a deterrent. If the sequencer acts maliciously, the staked assets may be penalized.
In terms of ecological development: In the current limited L2 token application scenarios, the setting of the staking mechanism increases the utility of METIS tokens and further reduces the circulating supply of METIS, which has a very positive catalytic effect on the ecological development.
For validators, verifying blocks itself will earn token rewards. In addition, if a sequencer is found to be malicious, a portion of the penalized assets will be rewarded to the validator. This also subtly enhances the motivation of validators to earn more rewards through verification.
In terms of attracting broader participation, the Metis ecosystem will also create some Staking dApps to serve ordinary users who do not have enough funds to enter the sequencer pool. They can stake their tokens to trusted sequencer operators to earn rewards. Sequencer operators, in turn, need to provide support to their users by sharing a portion of their earnings in order to attract more staking support.
In this way, a stable decentralized sequencer execution framework that encourages widespread participation, transparent supervision, and benefits for all participants will emerge.
In addition to incentives, Metis’s practice of introducing the Staking mechanism also leads us to further explore the utility of native L2 tokens: for a long time, the application scenarios of native L2 tokens have been limited to governance, which has raised doubts about the necessity of native L2 tokens. How to give native L2 tokens more utility has become a problem for many project teams. Through the introduction of Staking in the decentralized POS sequencer mechanism, Metis not only provides incentives but also integrates token utility into consensus and network security.
Of course, this design is still in the theoretical stage, but it will soon face community tests. On December 27, 2023, Metis will conduct tests of the decentralized POS sequencer on the Sepolia testnet and start community testing on January 3, 2024. Users can earn points through testing dApps, Learn to Earn, and other methods. Different levels of points will receive different types of NFT, and ultimately, the NFT will be used to claim community testing airdrops.
Metis encourages broad community participation in order to better test network robustness, identify weaknesses, and promote further improvements to the decentralized POS sequencer solution.
Of course, in the fierce competition of L2, Metis’s innovation does not only lie in the decentralized POS sequencer. Hybrid Rollups are also worth exploring.
Looking back at the development of the L2 track in the past two years, OP has flourished with the advantage of open-source technology stacks, and airdrop campaigns have sparked multiple rounds of community enthusiasm. ZK, on the other hand, has higher security due to more rigorous mathematical proofs and has projects such as zkSync and Starkware to compete with Optimism and Arbitrum. Furthermore, almost all new projects are derived from OP and ZK technical solutions, which inevitably leads to the problem of technical homogeneity among L2 projects and highlights the shortcomings of OP and ZK in a wider range of project samples:
Optimistic Rollups are fully compatible with EVM and have faster transaction processing speed and lower costs off-chain. However, due to the assumption that transactions are valid by default, there are security risks. In addition, the challenge period set for submitting fraud proofs prolongs the time it takes for transactions to be confirmed.
ZK Rollups, based on zero-knowledge proofs, have higher security and no challenge period, allowing faster final confirmation of transactions. However, achieving EVM compatibility is more challenging for ZK Rollups, and generating proofs requires higher off-chain computation costs.
In the trade-off between security and efficiency, the two competing factions have begun to seek integration and complementarity. Hybrid Rollups have emerged and gradually become the future trend in the eyes of many practitioners in the L2 field. Many projects have embarked on the exploration of Hybrid Rollups based on their own characteristics. For example, in July of this year, the hybrid algorithm stablecoin protocol Frax Finance launched the Layer 2 network Fraxchain, which is a typical example of Hybrid Rollups. In addition, the lightweight blockchain protocol Mina has applied its zero-knowledge proof technology based on MIPS zkVM to OP Stack fraud proofs, among others.
This inclusive trend has also inspired Metis. As early as March 2023, Metis highlighted Hybrid Rollups in its publicly released roadmap.
This mechanism retains the structure of Optimistic Rollup while introducing Zero Knowledge fraud-proof (ZKFP). Compared to traditional fraud-proof mechanisms that require re-executing all transactions, ZKFP only requires submitting a single ZK proof to prove the Rollup, making it easier, lower-cost, and more efficient to handle and verify transactions.
In the entire operation process, after the sequencer generates a block, the proposer submits transactions and states, and then the prover reads data from L1 to generate blocks and MIPS programs. After the proof is generated, the prover submits the proof to L1. If it is not submitted or the smart contract determines that the conditions are not met, the verifier will initiate the anti-fraud process, and the staked tokens of the sequencer may be penalized.
In terms of specific implementation ideas, Metis integrates the MIPS instruction set into the design of Hybrid Rollups.
As the EVM instruction set introduces new commands and deprecates old commands over time, this kind of change poses challenges for any developer who wants to build and use a standardized instruction set. Therefore, Metis chose to optimize on the basis of MIP and created zkMIPS, which is customized for ZK proofs. Compared to traditional ZK proof integration, zkMIPS can also establish recursive proofs, allowing multiple proofs to be aggregated into a more manageable unit, resulting in higher efficiency and lower costs.
In July of this year, Metis also announced the launch of the first Hybrid Rollups network on its mainnet, ushering in a new era of L2 development.
The integration of MIPS and ZK proofs in Metis’s Hybrid Rollups design has opened up a new path for L2 development and will bring new possibilities to the L2 track.ZKM: ZKM is a zkMIPS project that implements zero-knowledge proof (ZKP) security for all virtual machines (VMs) and applications at the CPU level, using the MIPS instruction set and supporting various blockchain smart contract engines. Its plug-and-play feature allows developers to apply ZKP without changing the codebase, reducing adoption costs. With the decentralized security infrastructure of Ethereum, ZKM can verify all blockchain and non-blockchain transactions.
Of course, Metis also understands the importance of EVM for ecosystem construction. Being EVM compatible not only attracts a large number of mature Ethereum ecosystem developers to seamlessly enter the Metis ecosystem, but also allows developers to enjoy a massive number of practical tools, development tutorials, and infrastructure from the Ethereum ecosystem. Based on this, Metis has launched the Metis Virtual Machine (MVM) Rollup solution: MVM is designed to be almost identical to EVM but with key improvements, such as separating computation and storage functions. This design not only allows the Metis ecosystem to be open to a wide range of EVM universes, but also reduces gas fees and shortens withdrawal waiting times.
In this way, Metis not only retains the advantages of OP series, achieves EVM equivalence, and provides developers with an easy-to-code environment, but also promotes the finality and security advantages of the ZK series, reducing the final confirmation time of transactions from 7 days to about 4 hours, greatly improving security. For developers, Hybrid Rollups have lower barriers and are more flexible, while for users, Hybrid Rollups are safer and more efficient.
Compared to 2021, the current L2 technology has matured a lot, thanks to the innovation of the racetrack innovators. As a member of this group, Metis’ understanding and design of decentralized sorters and Hybrid Rollups demonstrate its innovation and progress as an L2 technology pioneer, and in the field of ecosystem construction, Metis is also a pioneer in meeting the needs of users and developers.
The construction of Layer 2 is like building a shopping mall, and the gradual resolution of technical issues is like laying a solid steel frame for the prosperity and development of the mall. The main body of transactions is the users, so the prosperity of the mall depends on attracting merchants and customers. Similarly, the prosperity of L2 is reflected in two aspects: how to attract more developers to enter the ecosystem, build projects, and continue to innovate, and how to attract more users to participate in the ecosystem and continue to explore.
L2 projects with unique capabilities have gained a lot of success in this traffic competition. For example, Optimism’s airdrop attracted a large number of participants, and then gradually built its super chain universe with the OP Stack open-source components. Arbitrum actively introduced top DeFi projects, and the participation of major DeFi projects such as Uniswap, Aave, Curve, and 1inch brought a large number of users to Arbitrum. BASE, a Layer 2 project backed by Coinbase, launched the popular application FriendTech. The founder of Blur launched the Layer 2 network Blast with RWA native income gameplay, and its TVL exceeded 600 million in 9 days.
Metis has been deeply involved in the L2 track for many years and understands the conventional practice of ecosystem customer acquisition. While following the basic strategy, Metis focuses on low entry barriers and high returns, constantly expanding the ecological territory from the perspectives of users and developers.
For users:
Reducing the entry threshold of the ecosystem is the first priority to attract users. Therefore, every L2 project attaches great importance to the development of ecosystem infrastructure “wallets,” and Metis is no exception. Currently, mainstream wallets such as MetaMask, Trust Wallet, imToken, TokenPocket, and OKX Web3 Wallet have supported Metis, allowing users to interact with various dApps in the Metis ecosystem without additional learning costs.
Reducing the cost of ecosystem participation can accumulate good user reputation. With the clever design of Hybrid Rollups, the transaction experience in the Metis ecosystem is efficient and secure. In addition, Metis integrates a decentralized storage MemoLabs, which significantly reduces transaction costs compared to Optimism and Arbitrum, with ETH transfers less than $0.01. Although in the future, as Metis changes the DA layer to the ETH mainnet, transaction fees may increase, they will still remain low and transaction security will be further improved.
Rich choices for ecosystem participation are the key to attracting users to stay for a long time. According to Layer2 Station data, the Metis ecosystem has over 100 applications, including DeFi, wallets, NFTs, and other sectors. It also includes well-known DeFi applications such as Aave, SushiSwap, and Stargate. These early adopters brought a large number of users to Metis and provided more playability for the Metis ecosystem users.
Interestingly, since the name “Metis” comes from the Greek mythology goddess of wisdom, many projects in the Metis ecosystem are named after Greek goddesses. For example, the DeFi yield enhancer Maia is named after the goddess of fertility (Greek: Μαῖα), and the Dex aggregator Hera Finance is named after the goddess Hera (Greek: Ἥρα). This interesting naming convention has become a memorable feature of the Metis ecosystem.
In the future, Metis will continue to focus on diversifying the ecosystem and attracting more DeFi, GameFi, SocialFi, and NFT projects to join, further enriching the ecosystem and providing users with a rich experience.
Capturing the user’s interest is the key to attracting traffic. Airdrops were once a hot topic in the L2 community. As early as the launch in 2021, Metis conducted a large number of airdrops. The upcoming decentralized PoS sorter community test (January 2, 2024) will also provide generous rewards to community members actively participating in the test.
In addition to airdrops, Metis also aligns incentives with ecosystem participation. The Metis Advocates program has been launched, allowing community members who agree with Metis’ development philosophy and have content creation abilities and social media influence to apply for the program and contribute to the development of Metis while receiving corresponding rewards.
In September of this year, Metis announced the $5 million DeFi Incentive Program “Metis Journey” to incentivize active DeFi participants. Among them, 100,000 METIS tokens will be distributed to incentivize Aave users in the Metis liquidity pool, including ETH, METIS, USDC, USDT, and DAI. Similar series of incentives are aimed at enhancing user participation in the ecosystem and attracting more users to join.
Furthermore, as mentioned earlier, with the implementation of the decentralized PoS sorter, ordinary users can stake their tokens to the sorter operator and share block mining rewards.
For developers:
Low technical barriers save developers a lot of learning costs. By retaining the Optimistic Rollup architecture, Metis can provide EVM equivalence, allowing a large number of Ethereum developers to seamlessly enter the ecosystem.
Thoughtful technical services help developers avoid many detours. Like many mature projects in terms of technology, Metis’s official website displays detailed technical documentation, development tutorials, and related technical tools. It also establishes a developer community to facilitate technical exchanges and learning. Professional technical personnel in the group respond promptly to help new developers with their questions and doubts.
In addition, Metis is generous in providing financial support to developers. The official website has a Bug Bounty program for smart contracts, which offers rewards of up to $100,000. Additionally, Metis periodically holds hackathons to discover advantageous projects and developers and provide support in terms of funding, technology, and marketing.
This week, Metis announced a $100 million Ecological Development Fund, with 4.6 million METIS tokens allocated to fund sorter mining, fund tracking, deployment of new projects, and other initiatives. In the future, the fund will focus on projects in the fields of DeFi, RWA, SocialFi, NFTs, cross-chain technology, smart contract development, blockchain security, decentralized identity and privacy solutions, and games, to accelerate the growth of its ecosystem.
In the roadmap announced at the beginning of the year, the upgrade of the Hybrid Rollup series is also a focus for Metis. The ZKM will meet everyone in the first quarter of 2024, according to the official team.
Furthermore, another important milestone for Metis is the upcoming decentralized PoS sorter community test.
The first phase of the test will last for two weeks (January 3, 2024, to January 17, 2024) and aims to encourage users to interact with Metis dApps deployed on the Sepolia testnet. The participating dApps include Hummus Exchange, Netswap, Tethys Finance, and the native liquidity staking protocol for METIS tokens.
As the first project to implement a decentralized PoS sorter, there is high curiosity and expectation from the community members who are interested in the development of the sorter. At that time, the Metis social media platform will also announce more gameplay tutorials and reward rules. In addition, the activity has set up a series of rewards associated with airdrops. Interested users can continue to pay attention.
In the upcoming year 2024, Metis will achieve multiple milestones, and with the acceleration of ecosystem construction, Metis may seize the opportunity to challenge the four major Layer 2 projects (Arb, OP, zksync, starkware) and join the first-tier of L2.
From the increasing demand for decentralized sorters and the in-depth exploration of Hybrid Rollups by developers, we can see that the L2 track is trending towards decentralization and integration.
Going with the flow and making steady progress. Perhaps in the current L2 competition, we also need to make smarter choices based on trends, continuously innovate with a compatible and inclusive mindset, lead projects to stand out, and promote breakthroughs in the track.
Extending from the name “Metis,” which is derived from Greek mythology meaning “wisdom,” the name not only reflects the project’s positioning and expectations but also implies Metis’ wise layout and choices in the L2 competition:
Jumping out of the competition between OP and ZK series early on, targeting Hybrid Rollups with keen market insight, and firmly following the decentralized concept, Metis provides a dual guarantee for the stable execution of decentralized PoS sorters through technology and incentive measures.
This wisdom also extends to the ecosystem. It is said that a bear market is the best time for building, and the construction of the Metis ecosystem has gradually improved from infrastructure to various types of dApps. With the arrival of the bull market, Metis is about to make breakthrough progress, preparing for the influx of users and funds.
Of course, the L2 War is just beginning. With the arrival of a new bull market and facing market opportunities and challenges, we look forward to the performance of Metis and the emergence of more innovative solutions in the L2 track.