$614.72 6.81%
ETH · 5w

Synthetix: Why Optimistic rollups for L2 vs sidechains, plasma, state channels etc.

The emergence of DeFi has clearly demonstrated Ethereum needs to scale before we reach ETH2.0, but maintaining composability within the DeFi ecosystem also requires coordinating on a single scaling solution.

Thankfully the market is very good at anticipating and solving challenges like this and we now have many scaling technologies coming online. We’ve spoken to many of the teams working on the major scaling variants, and after reviewing each of them I believe Optimistic Ethereum is the scaling solution likely to reach consensus within the community.

This post will detail why I believe this but will also address concerns raised in the community about the Optimistic Ethereum rollout. It will also lay out the governance process required to implement an OVM variant of Synthetix on mainnet, as well as the circumstances under which I believe another scaling technology could supplant Optimistic Ethereum. The motivation being to ensure the community has the information it needs to reach consensus on the migration of Synthetix to Optimistic Ethereum.

[If you haven’t read Vitalik’s post “A rollup-centric ethereum roadmap” it is a good top down argument for what is laid out in this post. I have come at this from the bottom up, looking at what DeFi projects need to scale, and why Optimistic Ethereum satisfies those requirements.]

Social consensus

I feel like “Trade-offs all the way down” should be my new catch phrase. Yet it remains true — there is no silver bullet with scaling. Every approach has significant trade-offs, and specific implementations of each scaling technology have further low-level trade-offs. All of this against the backdrop of a high stakes meta-coordination game, because it is not enough to pick the right design and trade-offs — we must also optimise for the solution that is most likely to be chosen by everyone else. Thus scaling becomes more than just a technical challenge, it is also a social c...

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