Is a new dawn here? That’s a question we have not asked for a long time but can reasonably ask it now following the live launch of what generally can be called a new space of scalability innovation within the ethereum network itself.
“While everyone wasn’t looking, the initial deployment of ethereum’s layer 2 scaling strategy has *basically* succeeded. What’s left is refinement and deployment,” Vitalik Buterin, ethereum’s co-founder, said.
Ethereum is Turing complete as you know, and therefore theoretically you can have within a set of linked smart contracts even the whole ethereum network itself in a while loop of as above so below.
And generally these new scaling methods can be described as kind of the ethereum network, but within a contract.
From an end users perspective at its very basic, eth is a method of having a non copiable asset that can move from A to B through code processed by nodes.
From an end users perspective these new scaling methods allow you to move from A to B through processed code in a way that you can be sure your asset can’t be double spent.
Layer two is a familiar term but realistically generally these are sub layers. These are somewhat localized networks within ethereum rather than structures above it which is more what sharding is where you have the ‘blockchains’ and then the layer above all them that coordinates the chains or shards.
So there can actually be far wider applications for these sub methods, that then have the ethereum layer above them all coordinating them, than just simple value transfers.
Meaning terminology maybe has confused, but now that this is gaining a concrete form, some clarity can be reached conceptually speaking with the details varying but the method is generally the same.
It starts with a contract, a Turing complete one where you can code anything. You send your eth to it to enter this ‘network’ which is still under the rules of ethereum nodes that make it follow the code written in the contract, and then that eth is turned into contracted eth.
That eth is kind of an “I Owe You” (IOU), except here there is no I or an entity but a piece of code engaging in a transformation of the network eth into contract units of account.
These contract units of account are basically a token. Just like eth can trustlessly be turned into weth, here you have them as say ceth.
Within this contract we can now do with this ceth whatever we want, obviously within the code rules of the written contract, with the eth then kind of being a ‘slave’ to the ceth in as far as if you sent the ceth to some other contract user, you have also sent the eth with that finalized once there is a blockchain transaction that pretty much converts these ceths into eths once you exit the contract network.
Meaning what are called layer 2s in eth are more blackholes, one of which recently gave birth to a full on star, sublayers.
A Whole New World?
Petro, which plenty call controversial but we don’t care about the political aspects for this ‘exercise,’ initially planned to launch on ethereum back in 2018.
They changed their mind however after realistically thinking of how ethereum could handle potentially even country level usage. So they went with Nem, a somewhat messy blockchain of private-public unproven experimentation.
Petro however is actually a smart contract, and what’s more it is a contract that does keep accounts within itself, but to change ownership it needs the blockchain.
Needed. With these new methods of maintaining accounts of change of ownership within the contract itself, realistically and holistically scalability shouldn’t be a problem for Petro.
A project just demoed for example showing how you can have close to 2,000x current eth capacity for a token with each transaction costing less than a penny.
This is bleeding edge, not cutting edge. These are not fully proven technologies in as far as they are still very new and haven’t quite been tested under pressure or under the witt of some Nakamoto somewhere that can read the code better than all of us.
So we wouldn’t recommend someone jumping to country level usage at this stage, but it is time to experiment and it is time to start wondering whether scalability has been generally solved at least where dapps or tokens are concerned.
That’s because from an end user’s perspective there is no detrimental difference where a token or dapp is concerned, both of which are contracts, as the incorporation of these methods within the contract is more a back-end thing.
Unlike in the Lightning Network (LN) for example, where you transact in a layer outside and above the bitcoin network to then come down to the bitcoin network, in something like eth you can potentially incorporate the layer within the contract and therefore come up to the ethereum network.
Meaning potentially unlike now where every token transaction is an eth network transaction, you can have thousands of token transactions and then just one eth network finalization of account changes.
Moreover unlike in LN where your bitcoin transfers are limited to LN users only, in a scalable token you enter the token network the moment you exchange your eth for the token, at which point you have this ‘limitation’ of transacting with only other tokeners and thus thereafter there needs be no barrier in regards to which same token holder you can transact with.
Making the end user experience no different as they have to enter the contract network even now, except for the difference that the token can now scale to even potentially a country level usage.
If therefore one of these in-contract scaling methods are incorporated within the weth contract, that being a trustless tokenization of eth, then the ethereum asset too would get some 2000x more capacity.
For the ethereum asset however it is a bit more complex because right now you don’t have to enter a contract to send from A to B. Thus such requirement creates a barrier where say ordering a shipment from Shenzhen is concerned.
Yet to use a dapp currently you do generally need to turn eth into weth as then the contract can ‘order’ the weth, while for eth only the ethereum nodes can ‘order’ it.
So for a dapp there is no barrier. The non-integration of these in-contract scaling methods is instead the barrier because you have to constantly wait for the slow blockchain to undertake even fairly simple actions.
Thus the dapps that haven’t incorporated such methods might start to feel old and dial-up once people experience the scaling dapps, but is that where scaling ends for now, just dapps and tokens?
Benzing the Blockchain
A new nice car charging station is installed by some keeping up company or maybe a new dreamy startup where they require the usage of some app or have integrated with some app to allow us to pay with eth.
We can be even cuter and say our car is blockchain ready and already has a wallet which we top up now and then.
When we top it up we are basically depositing to a contract. Likewise if we are sending eth to the car-charge app or whatever app. We have entered the sub network, and thus here we can have scale.
The wallet, and now we’re talking ordinary ‘wallet,’ an app ultimately, can easily see whether your transfer is to a same wallet user, and thus can contract transfer it, or is outside their ‘network’ and therefore has to instantly go through the blockchain.
The centralizing pressures here are obvious and you can’t quite fork them because although you can copy paste the contract, you can’t copy paste the eth unless you fork eth which complicates it by a million times more.
So there is perhaps an inevitability of re-creating the current power structures due to the vertical structures of either sub layers or upper layer scaling.
In any master and slave relationship, there is a master. The master here so being the contracts and whoever has most eth within it, with the slave being the ethereum network which has to abide by the contract, and the ethereum users which can’t realistically clone the contract in a technically level playing field way.
The alternative of mass base layer scale without appropriate resource constrains creates a different sort of master slave relationship where you need datacentre resources to clone the ethereum network in a level playing field way, like ETC did where the technical aspects are concerned.
The end result is the same in an absolutist sense, but with contract scaling you can start anew and you’d have to contract first, although just how much that is a free choice would depend on just how dominant are the network effects.
While having this master and slave relationship at the ethereum layer would mean you wouldn’t have a contractual say unless you’re very rich and are willing to pour the resources towards cloning it, both technically and socially.
You can of course try and addition that base layer but probably never quite to the contractual scale as the contract itself is basically a user of the network, not complementary where the network resources are concerned. Thus if network capacity increases, the contract’s capacity increases by 2,000x per 1x network capacity increase.
The key is of course that we can see the contracts fully, or at least the Nakamotos can, because its code is open source, although there have been some small changes that makes that ‘seeing’ a bit more difficult in some cases.
But there’s a degree of difference in all or at least in the most important aspects, starting from accountability and awareness, as well as even power in regards to whether it is the code ruling or whether the code has been backdoored and therefore the code is kind of a facade.
Yet the fundamental structure of monopolistic pressures is somewhat apparent and therefore the vertical power structure is what should be expected with the only question being whether this time it is humans that have such power say, or stone like code.
You’d expect the answer to be the former or maybe both, with imagination seeing this developing into what can be called the corporate ethereum space and the ‘free’ ethereum land.
Just as the internet gradually has kind of split into two where you have the corporate Reddit or Twitter for example and the more free space of 4chan as well as others as well as then the dark web itself.
So too ethereum through its contracts network can allow for the corporate ‘businesses’ that might even backdoor the contracts with their aim being more to say give machines bank accounts and to make money rather than some high ideals of egalitarianism.
At the same time these corporate contracts can live next to the ‘egalitarian’ contracts which people scrupulously scrutinize to ensure there are no backdoors and if there are any they reee or fork it.
Some of this we are already beginning to see, but not quite at scale because there wasn’t scale until now.
Looking forward however and once these in-contract scaling methods are more proven, we might start seeing proper ‘corporate’ contracts as well as maybe proper ‘egalitarian’ contracts as people start finding actual use cases instead of just playing around while wondering what on earth is this thing as has been the case until now.