The competition of layer 2, the way of defi, is about to turn white hot. Let's learn about Metis, the rookie of optimal track

Published on 9/1/2021   548 views   0 Comments  

Ethereum costs more and more. In the past 18 months, the average transaction cost of Ethereum has increased from about $0.10 to about $5, an increase of about 50 times. When the average cost soared to nearly $70 in the recent speculative boom in the second quarter, $5 was simply desirable.

From a macro perspective, high costs are not all bad things. They represent the user's demand for block space. Therefore, the increase in transaction costs indicates that the network is providing greater utility and value in return. Many people also recognize that high gas fees are a necessary cost to ensure high-value transactions. But the cost will eventually add up, and the increasing cost will shut out some users and use cases. With new applications released on Ethereum every day, network utilization close to capacity and eth2 expansion and upgrading still under development, there seems to be no available short-term mitigation measures for Ethereum's basic layer.

This is where the layer 2 (L2) extension solution comes into play. The goal of L2 is to solve the congestion problem of Ethereum by greatly reducing the cost, and minimize the impact on security. One such solution is optimistic rollups, which bundles and sorts a series of transactions on a network layer above Ethereum, and then sends them to Ethereum layer 1 main chain as a transaction. By running the computing layer above Ethereum (so called "layer 2"), their throughput is expected to be about 100 times that of their underlying chain.

Although optimal Ethereum and arbitrum one of arbitrum attracted the most headlines and excitement when preparing for public release, they are only two of several upcoming rollup solutions.

Metis is one of these solutions. It is a fork of optimism and aims to improve its current more popular competitors. Metis seeks to provide standard advantages of optimal rollup, such as low cost (& lt; $1), speed (less than a second) and Ethereum level economic security. However, it plans to differentiate its platform by providing local data storage, faster withdrawal to the Ethereum L1 main chain, and improving the availability of DAPP providers.


Rollup and side chains


So far, the expansion war has been dominated by side chains and other L1 networks, and polygon has gained the greatest attraction in the wave of defi and metauniverse. Sushiswap, AAVE and curve are all extended to polygon, and sushiswap is also deployed on several other chains. Axie infinity now runs on a custom side chain called ronin to isolate popular game earning games from Ethereum's expensive cost fluctuations. Dapper labs, the developer of NBA top shot and crypto kitties, launched an independent tier 1 to escape Ethereum's notoriously high costs. The defi ecosystem has also sprouted on newer networks such as Solana, Terra, binance smart chain (BSC) and avalanche.

Each chain has benefited directly from the rising costs of Ethereum, which can be reflected in their recently increased chain activities and total value lock-in (TVL).

The biggest problem with side chains and some L1 is that they may have different attack surfaces (usually related to their perceived low level of decentralization) and lower economic security assurance than Ethereum. Therefore, an expansion solution that minimizes any trade-offs between security and decentralization has always been the core focus of the Ethereum community.

Vitalik buterin, founder of Ethereum, began to support "rollup" as a way to extend Ethereum and its security to the next growth cycle in September 2018. Rollup is the execution layer of a layer above the L1 network. Before pushing transactions to their underlying blockchain, they batch and sort transactions in this chain environment. Since the underlying layer acts as the arbiter of the truth, rollup "inherits the security attributes of the blockchain they have established".

Rollup has two forms: Zero Knowledge (zk) rollup and optimal rollup.

ZK rollup uses complex proofs to confirm the final state from L2 to Ethereum L1 almost immediately. Some application specific ZK rollups have been started, including loopring DEX, immutable x (gods unchained) and derivative protocol dydx.

Optimal rollup "optimistically" assumes that all transactions are valid. However, as a fraud prevention mechanism, transaction confirmation on the main chain is affected by the challenge period. Extracting tokens from optimal Ethereum DAPP usually requires some delay (relative to ZK rollup) to meet any challenges. In the past, the difference between optimal rollup and ZK rollup is that they can easily support EVM compatible application environments. EVM compatibility enables developers to migrate existing solidity contracts from Ethereum with minimal changes. However, the gap between optimal rollup and ZK rollup programmability seems to be narrowing as matter Labs' zksync and starkware approach the ability to perform EVM like calculations in ZK rollup.


Metis Layer2


Metis will be one of the EVM compatible optimal rollup series launched in the coming months. It uses a fork of optimism's optimism virtual machine (OVM), which is called Metis virtual machine (MVM). MVM mirrors OVM in function and code execution.

Like other optimal rollup designs, Metis relies on network participants called sequencers to sort and batch transactions before submitting final MVM status changes to Ethereum. However, unlike other companies, Metis intends to launch multiple sorters that will be pooled into an on chain entity called a decentralized autonomous company (DAC). For each Metis block, the protocol will randomly select a new sequencer from the sequencer DAC to push any state changes to Ethereum. Metis's sequencer pool and selection process contrasts with the single sequencer approach that arbitrum and optimization will initially use. However, both arbitrum and optimization discussed plans to move to a more democratic sorter selection process.

DAC is essentially Dao. Metis represents them as a chain organization that allows users to collaborate and perform certain network operations, such as running a sequencer pool (as described above) or running new applications on MVM. In order to be qualified to confirm a batch of transactions, the sorter must hold more Metis than the dynamic bond threshold (DBT), which is a mechanism to inhibit malicious behavior and sorter indifference.

Users can also participate in supervising sorter activities as Rangers. Rangers samples a series of blocks and verifies the status root in exchange for Metis token rewards. Successful challenges (called fraud proofs) can lead to a reduction in sorters. These reduced assets will be transferred to Ranger who initiated the dispute procedure. Ranger's repeated challenge failure may lead to network ban.

Source: Metis white paper

The challenge process is critical to the functionality of optimal rollup. Optimal rollup is "optimistic" in design, assuming that transactions not published are fraudulent. They basically use the "not guilty until proven guilty" method, which relies on a "check and balance" system to prevent fraud and ensure that Ethereum remains the arbiter of the truth. All fraud detection on Metis is done by Rangers monitoring sorter activity and challenging any misconduct.

Although Metis uses a fork of optimism's OVM, it has some features designed to improve the original design. These features include:

  1. IPFs integration - a cheaper data storage option than using a secondary solution
  2. Verification is faster when publishing status changes to Ethereum using Rangers
  3. Polis Middleware - provides templates and support for an improved development environment for cryptocurrency novices
  4. Multiple execution layers - Metis will allow the DAC to start a new MVM execution environment to expand capacity as the demand for block space increases
  5. Licensing environment - DAC can customize access control to its MVM instances


IPFs integration


Due to the limited block space, the data storage cost on Ethereum and bitcoin is very high. Metis saves space on the chain by allowing each DAC to run a separate MVM instance with a built-in storage tier using interstellar file service (IPFs). Users and developers can access content from Metis through MVM's IPFs parser.

Source: Metis white paper

There are two potential benefits to storing and accessing data in this way. First, data can be encrypted within the Metis protocol, allowing users to store confidential information. Secondly, the IPFs parser enables Metis applications to directly access and link to stored data, such as NFT's underlying works of art or music.


Faster validation with Rangers


The main weakness of optimal rollup is the waiting time to confirm the withdrawal of Ethereum L1 (or even another L2). This wait time is usually in days. Arbitrum expects that the withdrawal may take about three days, while optimism expects it to take about a week. These waiting times are critical to the fraud detection process, but they may also reduce the flexibility of users and create friction when trying to transfer funds to Ethereum or between different L2.

Metis's multi-party fraud detection system can reduce the time for status change confirmation from days to hours. As mentioned above, Metis randomly selects a new sequencer for each block and relies on a set of nodes (Rangers) to monitor the sequencer activity. Sorters are financially motivated to avoid issuing fraudulent status changes (being caught will lead to the loss of pledged Metis), and rangers will receive financial rewards for correctly reported fraud attempts. Although unilateral sorting systems such as optimisms and arbitrum (at startup) take several days to withdraw money, the Metis team said that its multi-layer checks and balances enable Metis to shorten the withdrawal time to about 6 hours. Metis must ensure that it has a powerful sorter and ranger at the time of release to achieve its goal of 6-hour withdrawal waiting time.


Polis


A key factor that may affect the adoption of L2 is the challenge of porting existing contracts from Ethereum to a new layer. A platform that requires a project to significantly adjust its existing contracts may become an application desert because the project may avoid a development environment that requires code base overhaul. Instead, developers will target familiarity, which translates into maximizing EVM compatibility.

Metis uses an EVM compatible design. It attempts to further simplify the transition of existing Ethereum applications to L2 through its polis middleware. The Metis team intends to help polis bridge the gap from web2 to Web3 by providing developers with a "low code to no code" template for deploying and managing new applications. The combination of low cost and low development learning curve can create a fertile environment for experiment and innovation, which is the key element of cultivating application ecosystem from scratch.

Although the adoption of EVM is a huge growth hacker (and increasingly necessary), this strategy also means that Metis will directly compete with all other EVM compatible L1 networks and L2 solutions. Using different VMS is a gamble because stimulating developers' interest in new languages and toolsets is a huge and often expensive job. But if the new VM becomes attractive, it may be a gamble worth taking a risk, because developers will not be able to easily migrate to newer and better solutions. Distinguishing product suites can create stickiness and prevent developers or mobility from leaking to competitive platforms.


Token Economics


Metis tokens were first distributed on May 13, 2021 during Ido over the pay network and the initial exchange product (IEO) with gate.io. After the launch of IDO at $5, Metis quickly rose to $8. Then it rallied around $5 for three months and rose to a new high in the recent market recovery.

Metis token has three main use cases in Metis's L2 platform:

  1. Transaction fee - the user pays the transaction fee in Metis
  2. Pledge for DAC - DAC contributors must pledge Metis to become a sequencer, collaborate, or start a new MVM layer
  3. Rewards - DAC and Rangers receive Metis rewards by contributing and winning fraud challenges, respectively. If these participants are found to violate the rules of the agreement, they may also lose Metis.

Metis allocated 49.3% (or 4.93 million Metis) to markets such as community programs (airdrop and community participation incentives), decentralized exchanges to obtain sufficient trading liquidity, early contributors (public and private investors), teams and metislab foundation. The allocation of teams, foundations and private investors is subject to the 12-18 month attribution schedule, which makes the early volatility of Metis relatively low.

The project has earmarked the remaining 5.07 million tokens for a 10-year incentive plan to reward network participants who process transactions, such as sequencers, Rangers and community members (Metis calls it the "transaction mining" process).

Metis's inflation plan will serve as an incentive to provide security and avoid fraud. However, one aspect of token that is often ignored is its impact on project innovation and adoption rate. Token incentives, even inflation, can guide ecosystem and user growth, as shown by the rapid rise of polygon. The polygon team used its matic supply to reward verifiers and later liquidity providers on AAVE and curve.

L2 Bureau will be a competitive landscape, and projects that may not be in the public eye can (and may) take advantage of all the advantages they can use. Given that arbitrum, optimism and starkware have not yet shared clear details about native tokens, owning tokens may be a competitive advantage.


L2 competition status


With the full launch of optimal Ethereum (OE) and arbitrum, how will Metis go? Metis plans to establish a public test network in September and release the main network in October.

The L2 competitive landscape is evolving rapidly. Uniswap V3 goes online on OE and will be deployed to aribitrum. Since late July, synthetix, an experienced defi veteran, has been launched on OE through the white list. Arbitrum said that it has granted "access to the main network of more than 400 projects, of which dozens have been successfully deployed". As optimism and arbitrum take the lead in application adoption, Metis will need to quickly populate its ecosystem after startup. A bifurcated metisswap of uniswap V2 has been launched on Metis's test network, and wowswap has promised to add leveraged token trading protocol. Although financial primitives are required for each new network, Metis's marketing activities are far from those on Optimization and arbitrum.

Metis plans to stimulate its application ecosystem through its ecosystem development plan. Developers must have a work project, a mature community, or a great idea and team to win ecosystem funding. Metis will promote VC introduction, technical support, market and community construction, and provide Metis awards to successful applicants.


road map


With the continuous development of polis Middleware Tools, Metis focuses on stimulating the development of the ecosystem so that the main network can be finally launched in October. Metis has established relationships with partners of defi, infrastructure and token launchpad, including trustee wallet, oropocket opendefi, parsiq, pay network, etc.


Future challenges


Network effect is the main driving force of transaction volume on the chain. Well-known competitors such as optimism and arbitrum and layer 1 such as Solana and Terra have an evolving ecosystem. Large-scale defi and metauniverse projects have been established or are in progress. ZK rollup has also evolved rapidly from early DAPP specific solutions such as loopring and dydx. Immutable x plans to support the second game, bringing it closer to the goal of becoming a metacosmic ecosystem. Zksync and starkware have ZK rollups compatible with EVM in the test network.

The competition is just beginning, and Metis must deliver on its promise to improve the optimal rollup experience through its proposed versatility and UX improvements. If Metis can cultivate an application ecosystem through its token incentive program, it may be able to produce any network effects required for L2 survival.

The transfer of developers and users from web2 to Web3 is already in progress, and will only accelerate from here. The market may be large enough to meet each project. However, projects and infrastructure that establish a sufficient distance from the closest competitors will become the leader in the next frontier of the Internet.


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