Lightspeed - Polygon's Aggregation Layer - Marc and Brendan - Revelo Intel

Lightspeed – Polygon’s Aggregation Layer – Marc and Brendan

In this episode of Lightspeed which took place on March 20, 2024, Dan, Mert, Marc, and Brendan discuss the evolution of Polygon, Agg Layer, and token migration. Read our notes below to learn more.

Background

  • Mert (Host) – CEO at Helius Labs, Co-Host at Lightspeed 
  • Dan (Host) – Co-Host at Lightspeed
  • Marc (Guest) – CEO of Polygon Labs
  • Brendan (Guest) – Co-Founder of Polygon

The Evolution Of Polygon

  • Marc says that Polygon was conceptualized in late 2017/early 2018 with a focus on scaling Ethereum when ideal scaling methods were unclear. It launched as Polygon POS, acting as a side chain for Ethereum to provide cost-effective and fast transactions during DeFi summer. Recognizing the need for better scalability solutions, Polygon acquired ZK technology companies (Polygon Zero and Polygon Oret) to transition towards advanced ZK technology.
  • He adds that Polygon’s anticipated early mass adoption led to partnerships with major brands like Starbucks and Nike, attracting a significant user base to Polygon. They transitioned faster than expected to ZK technology with the launch of Polygon zkEVM, emphasizing a multichain future with the creation of the Chain Development Kit (CDK).

Building The AggLayer

  • Brendan says that Polygon introduced a Proof-of-Stake (POS) chain distinct from Layer 2 solutions.  “Agg Layer” is a decentralized service for aggregating proof within the Polygon ecosystem. He put emphasis on lower latency cross-chain communication compared to Ethereum for trustless transactions.
  • He adds that there are challenges in transitioning between rollups due to time-consuming processes on Ethereum. Agg Layer enables asynchronous message exchange or synchronous transaction bundles between rollups. Rollups commit to received messages, ensuring consistency and validity across interconnected chains.
  • Brendan says that Agg Layer offers cryptographic guarantees for safe interoperation at lower latency than Ethereum finality. The shared bridge allows the movement of assets across various chains within the Polygon ecosystem effortlessly. Emergent coordination infrastructure supports shared sequencers, relays, and cross-rollup blocks for enhanced interoperability.

Seamless Bridging

  • Brendan says that bridging facilitated by the Agg Layer is a significant advancement in the industry. Scaling blockchains essentially means scaling access to liquidity in the shared state. The seamless bridging process involves transferring assets between different layers like layer-1 assets to rollups.
  • He adds that shared bridge contracts and prover circuits are essential for transferring assets between different layers. Heterogeneous execution environments are a key focus at Polygon, allowing various VMs beyond EVM.
  • Brendan says that Polygon aims for heterogeneous execution environments but must ensure security against unsound provers. The Agg Layer cryptographically proves balance conservation across chains, enabling safe asset transfers.
  • He adds that zero-proof cryptography ensures balance conservation across chains. Users can seamlessly transfer assets like $ETH between different chains while maintaining collateralization on layer-1 for safety. Users pay fees on the origin chain for transfers without needing extra tokens.

Data Availability & Value Accrual

  • Brendan says that the choices made within the Agg Layer do not affect other chains using it, limiting risks to individual chains.
  • He adds that the Agg Layer charges a nominal fee for batches and proofs submitted by chains. Emphasis is placed on shared liquidity and user access as positive interactions for chains joining the ecosystem.
  • Brendan says that rollups can pay in their own tokens when interacting with source and destination chains. A nominal fee is charged for submitting batches and proofs to the Agg Layer, generating income. The focus lies on creating a win-win scenario where applications benefit from shared liquidity and users in the ecosystem.
  • Marc says that they are prioritizing ecosystem growth over capturing a significant percentage of economic value or GDP. He is advocating for a collaborative approach to grow a substantial pie rather than aiming to dominate entirely.

Chain Abstraction vs Agg Layer

  • Brendan says that the Agg Layer is primarily used for transactions within a rollup or chain itself, without needing to access other layers. Deeper liquidity on another chain can lead users to opt for that chain for better execution prices. Users may unexpectedly find deeper liquidity on a different chain than anticipated, showcasing the interconnected nature of chains.
  • He adds that the long-term benefits of neutral protocols are acknowledged, but short-term incentives may sway decision-making. Concerns arise regarding reliance on specific technologies like ZK proofs and validators controlled by other entities. Balancing competition with collaboration poses challenges in maintaining project alignment within evolving narratives.
  • Brendan says that chain abstraction emphasizes enhancing user experience through multi-chain wallets and seamless interactions. The Agg Layer concentrates on building secure infrastructure to facilitate cross-chain operations effectively.
  • Marc says that the Ethereum ecosystem is becoming more accessible to entities that previously did not have access, such as through Polygon’s developments. Direct competitors are unlikely to join a platform built by Polygon immediately; however, there are aspects that could make collaboration feasible in the future. Shared sequencing is ed as a feature that could foster collaboration between different chains, allowing for enhanced security without needing to control everything. The concept of “constellations” emerges, where various chains can interconnect within ecosystems like Polygon Agg Layer, offering seamless interaction and reducing friction between different platforms.

The End State For Crypto

  • Brendan emphasizes the need for horizontal scaling to meet increasing demand efficiently. Two critical requirements for internet-scale crypto are horizontal scalability and accommodating diverse needs such as security, user experience, latency, and decentralization. He highlights the challenges include adding capacity to meet growing demands and addressing heterogeneous application requirements effectively.
  • He acknowledges Solana’s engineering excellence and its vertical scaling approach. While Solana’s approach is valuable, it may not suit all types of applications equally well.
  • Marc advocates for the “many rollups” approach as a compelling solution to scalability challenges. This approach allows adding capacity as needed and tailoring experiences based on specific application requirements. Different sectors like DeFi, gaming, or NFT minting have distinct needs that can be better addressed through varied solutions.
  • He foresees a future with numerous specialized chains catering to specific applications rather than many general-purpose chains. He emphasizes that not every application needs to be on a blockchain but highlights the significance of tailored environments for those that do.
  • Marc says that rollups or Layer-2 solutions enable users to control their environment within blockchain applications effectively. The value of providing unique user experiences while maintaining control over these experiences in a decentralized manner is crucial.

Prioritizing ZK Tech

  • Marc acknowledges the challenges faced by companies with diverse product portfolios in allocating resources effectively. Polygon ventured into too many areas simultaneously leading to subsequent spin-offs like Polygon Avail.
  • He adds that Polygon Ventures was spun off to allow a focus on core strengths like ZK Tech.
  • Marc says that the primary focus areas are Polygon CDK and Avail within the ecosystem. Other components like Polygon POS, zkEVM, and Miden serve specific purposes within the ZK-based framework. The deliberate move towards focusing on ZK technology is to streamline operations and enhance efficiency.
  • Brendan says that optimistic rollups lack proof while having a permissioned structure raises security issues.
  • He says that emphasis is placed on how execution-level technologies will be commoditized, leading to collaboration around aggregators.
  • Brendan advocates for all chains to adopt zero-knowledge proofs for heightened security. Even if proving is permissioned, users are assured their funds cannot be stolen unless the proving system is compromised.
  • Marc calls for a return to the original ethos of crypto innovation that enables secure operations distinct from traditional web environments. He criticizes certain rollups for prioritizing user acquisition over security, urging against shortcuts in development. He stresses the importance of taking a firm stance against compromising security standards despite social and financial pressures within the industry.
  • Marc recognizes the multifaceted nature of crypto involving technical innovation alongside social and financial considerations. He advocates for building robust technical solutions to deter shortcuts driven by financial incentives within the community.
  • Brendan says that proofs can be wrapped to distribute costs among different chains. Costs of all chains proving to Ethereum are distributed among users, resulting in lower overall costs. ZK systems offer flexibility with data availability (DA) through validium mode, ensuring secure transactions without directly putting DA on Ethereum or other platforms.
  • He adds that speculations about 4844 include discussions on cost improvements ranging from 3X to 100X but may not see a significant increase due to rising $ETH prices. Solana is projected as a promising chain for specific use cases despite limitations, emphasizing the importance of choice in selecting appropriate security levels based on economic value.
  • Marc says that different levels of security tradeoffs exist in DAs such as local data availability, data availability committees, Celestia or Eigen DA, providing varying degrees of security at different costs compared to Ethereum. Developers should have the freedom to choose security levels based on the economic value provided by their applications and user needs.
  • He adds that various projects like Veladrome, Aerodrome, Uniswap, Trader Joe, Merchant Moe, and others have opted for token migration. The migration involved slight economic changes due to evolving token standards over four years. The decision to migrate was driven by the need for upgradability as the original token was non-upgradeable.
  • Marc says that economic advantages include lower inflation rates and governance allocation flexibility.
  • He adds that facilitating new CDK chain launches with economic security without requiring a separate token issuance.

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Show Information

  • Medium: YouTube (Video)
  • Show: Lightspeed
  • Show Title: Everything You Need To Know About Polygon’s Aggregation Layer | Marc Boiron & Brendan Farmer
  • Show Date: March 20, 2024