The Rollup - The Rise of altVMs in The Modular Stack

In this episode of The Rollup, which took place on January 1, 2023, Andy, Robbie, and Rushi discuss Movement Labs, blockchain settlement, bottlenecks, and Move language. Read our notes below to learn more.

Background

Robbie (Host) – Merkle Tree Maxi, Co-Founder of The Rollup
Andy (Host) – zkProof Maxi, Co-Founder of The Rollup
Rushi (Guest) – Co-Founder of Movement Labs

Introduction to Movement Labs

Rushi explains his engineering background working with data security before entering the crypto space. He talks about his early involvement in the Move space and recognizes the need for a better virtual machine (VM) for building technology that can handle billions of users.
He mentions the failed Diem project from Facebook and how it led to the creation of Movement Labs.
Rushi highlights that there were certain issues they couldn’t directly handle on the infrastructure side, leading them to build Movement Labs. He mentions being one of the earliest builders in the move space and recognizing the market fit for Move VM within the DeFi ecosystem.
He explains their decision to build Movement as the first Move Layer-2 on Ethereum.

Addressing EVM Bottlenecks

Rushi points out that execution after data availability is one of the biggest bottlenecks on Ethereum. He highlights security concerns related to hacker attacks resulting in significant financial losses. The limited throughput of EVM chains, topping at 100 TPS, is seen as problematic for building consumer apps on-chain.

Market Perspective and Conclusion

Rushi explains that despite different virtual machines in the market, the challenge lies in dethroning the EVM and gaining mind share. He emphasizes that competition in execution layer levels is not tribalistic since the overall market aims to replace the EVM. The current state of the market is summarized as a need for better execution layers and increased scalability.
He adds that The Move VM is compatible with the Ethereum Virtual Machine (EVM) and works like it on the surface but has a Move VM running underneath. This brings formal verification and enhanced security to smart contracts. Ethereum is still the best place for settling transactions and has a significant share of DeFi. However, the EVM itself has limitations in terms of scalability and Solidity‘s flaws.
Rushi says that the goal is not to dethrone Ethereum or remove the EVM entirely. Instead, it aims to bring next-generation technology to where users are while allowing experimentation on Ethereum through modularity.

Benefits of Alternative VMs

Rushi says that there are several benefits of alternative VMs
- Performance: Alternative VMs like Solana and Avalanche have demonstrated better scalability during peak usage compared to most Ethereum chains. Parallelization allows transactions to execute concurrently instead of waiting for each transaction to finish.
- Security: Move’s block STM pattern provides superior parallelization and transaction threading. This enhances security by reducing attack vectors.
- Customizations: Move enables dynamic NFT traits without constantly minting and burning new entities. This allows for upgrades within smart contracts, resulting in lower fees and better user experience.

Limitations of Solidity and EVM

Rushi says that Solidity and EVM have scalability issues, as seen with recent attacks on protocols like Kyber and Curve. There are frequent new attacks in the crypto space, resulting in significant financial losses. Traditional institutions like Bank of America are unlikely to adopt Ethereum due to security concerns.
He adds that formal verification is introduced as a solution to mitigate smart contract risks by performing checks at runtime. Formal verification ensures resource type and memory safety, blocks flash loans, and prevents major-scale attacks.

Parallelization vs Atomic Composability

Rushi says that parallelization enables high throughput chains by running transactions simultaneously. Atomic composability allows efficient pricing by putting transactions into the same sequencer, eliminating settlement bloating through coincidences.
He adds that while both concepts involve running transactions concurrently, atomic composability refers to multiple blockchains’ interoperability, while parallelization focuses on state within a specific network or chain.

The Power of Parallelization

Rushi says that parallelization offers a 5x to 6x increase in throughput compared to traditional methods. The real adjustments lie in the database used and integration with consensus mechanisms.
He adds that Monad‘s modified version of RocksDB enables high throughput execution while handling EVM equivalency.

Blockchain vs Databases: Understanding Onchain Components

Rushi says that databases store local memory, including read and write calls for specific transactions. Transaction history is stored directly on the blockchain (e.g., Celestia or Ethereum mainnet). Blockchains offer more security and immutability compared to traditional databases like Excel spreadsheets.
He adds that blockchain allows for unlimited transactions without a bottleneck, unlike centralized servers like Google or Amazon. Ethereum and other blockchains are not limited by a centralized server and can continue operating for decades. The database is just a small part of blockchain technology, with the ability to handle payments and store data quickly on-chain.

Integration and Settlement with Move VM

Rushi says that the Move VM can be integrated with almost every Rust provider, making it versatile and widely compatible. Partnerships have been established with major dealers, including upcoming role staff providers.
He adds that move rollups can settle to different platforms such as Solana, Avalanche, Near, Bitcoin, etc. There has been recent progress in implementing move Bitcoin integration.

Building a Modular Rollup for Gaming Applications

Rushi says that it is important to focus on building a good game first before considering which blockchain to use. Community building is crucial in this stage.
He adds that Ethereum is recommended for settlement due to its liquidity and storage value. For the data layer, Celestia and EigenLayer are mentioned as potential options for gaming applications. Benchmarking is being done to compare their performance.
Rushi suggests ZK rollup for its fast withdrawal times, with Polygon and other stacks being considered.

Incentivizing Builders and Value Accrual

Rushi says that the business model revolves around encouraging builders to create great games on the Move VM, which adds value to the technology. The focus is currently on DeFi applications to ensure liquidity and user adoption. Gaming is also a significant focus due to partnerships with major players in Southeast Asia and Korea. Each part of the stack contributes value, resulting in a better user experience, lower fees, and improved UX.
He adds that next-gen VMs have low fees due to parallelized runtimes and localized fee markets. Sequencer fees are almost zero, diminishing the value proposition for next-gen VMS. Validators can stake native tokens to participate in sequencing and receive a percentage of the fees.
Rushi says that even as sequencer fees decrease on Ethereum, they still provide economic incentives for validators. Decentralized sequencers are expected to dominate the market as sequencer fees diminish.

The Role of Decentralized Sequencers

Rushi says that next-gen VMs like Fuel, Move, and SBMs prioritize low-fee markets and require decentralized sequencers. Decentralized sequencers require token staking and offer business models baked into them. They also handle parallelized high throughput benefits by avoiding reliance on a single point.
He adds that while Arbitrum may not adopt a decentralized sequencer soon, it is more relevant for next-gen VMS.
Rushi says that Arbitrum and other EVM chains are currently profitable with centralized sequencers. There is no economic incentive for them to transition to decentralized sequencers in the short to midterm. Next-gen VMs prioritizing low fee markets are more likely to adopt shared sequencers due to their business models and token staking requirements.

Race to the Bottom for Sequencer Fees

Rushi says that alt DAs like Near and Celestia are competing on sequence fees, with Near being significantly cheaper. In a two-to-three-year horizon, all live DA layers will compete for big brands deploying on top of them, leading to reduced fees.
He adds that when transaction costs decrease, the sequence of fees becomes less important. The lower bound of transaction costs may render sequencer fees exponentially less significant. Centralized sequencers are not ideal due to downtime issues.

Move Framework and Customization

Rushi says that M2 enables customization of infrastructure within the Move stack. The first Move Hyperlane module allows easy integration with other platforms without third-party bridges.
He says that IBC is one of the most powerful technologies for interconnecting different blockchain ecosystems. Celesta aims to connect with Cosmos and other players like Noble through the move IBC module. Union will be building IBC compatibility for a virtual machine, enabling compatibility with the Cosmos ecosystem.

Move Language and its Advantages

Rushi says that Facebook’s need for security led to the development of a complete VM and language from scratch. The Move language was built with security in mind to handle large-scale applications like Facebook on-chain.
He adds that Move is comparable to Solana’s virtual machine combined with a favorite auditor. It offers greater throughput, security, and scalability compared to other options for virtual machines.
Rushi says that the Move runtime has built-in verification that flags and prevents bugs at compile time, ensuring code quality and reducing the risk of errors. By auditing the code in real-time, the Move runtime increases production velocity by allowing developers to deploy code to mainnet with confidence.
He adds that traditional development processes can be slow and prone to errors, requiring extensive auditing and testing. In contrast, Move allows for faster development cycles while maintaining security. The example of Stars Arena highlights how a bug can cripple a project and lead to significant losses. Move aims to mitigate such risks by prioritizing security during development.

Security Focus in Move

Rushi says that Move is designed with security as a primary consideration, aiming to minimize vulnerabilities and potential attacks on smart contracts. The use of formal verification techniques embedded into alternative VM logic further enhances security measures within the ecosystem.
He adds that other projects are also incorporating formal verification into their VMs, recognizing its significance in increasing development velocity while maintaining robustness.

Modularity and Onboarding Developers

Rushi says that the modularity introduced by platforms like Move opens up design space for developers who may not be blockchain-native. As on-chain work becomes easier, more creative work is happening off-chain, allowing non-natives to contribute to blockchain development.
He adds that the ability to customize and experiment with different use cases attracts developers who previously faced limitations in building on existing platforms.
Rushi says that technology trends often involve cycles of bundling and unbundling, where customization and convenience are weighed against each other. The onboarding of developers plays a crucial role in the growth and adoption of Move. University hackathons and developer relationships are key focus areas for expanding the developer community.

Alternative VMs and Developer Onboarding

Rushi says that Move’s thesis aligns with platforms like Eclipse, leveraging their established environments to attract developers. Collaboration with platforms like Aptos and Sui extends the reach of Move to previously untapped environments, enabling more move development opportunities.
He adds that Move focuses on bringing new developers into the space by supporting JavaScript and TypeScript languages, expanding the programming language horizon within the ecosystem.
Rushi says that Move is designed to be intuitive, with similarities to Rust and React in terms of ease of learning. University hackathons have shown a positive trajectory in terms of developer adoption and interest in Move.

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Show Information

Medium: Youtube
Show: The Rollup
Show Title: DeFi By Design EP119: The Rise of altVMs in The Modular Stack
Show Date: January 11, 2023