Sei Lianchuang: Expanding EVM requires L1 instead of L2

Author: Jay Jog, co-founder of Sei Labs; Translator: Baishui, Golden Finance

In 2017, the industry learned a painful lesson about blockchain scalability when CryptoKitties caused the Ethereum network to crash. Today, with more than $100 billion locked in decentralized finance (DeFi) and millions of non-fungible tokens (NFTs) being traded, that lesson is more important than ever. The Ethereum Virtual Machine (EVM) - the engine that drives this activity - is reaching its limits.

So far, the crypto community’s answer has been layer 2 solutions - independent chains that process transactions and report back to Ethereum. But what if the community has been looking for answers in the wrong place?

Layer 2 is not the solution

Layer 2 blockchains have long been touted as a solution to EVM performance challenges because they are able to offload computational work from Ethereum to secondary chains. It turns out that Layer 2 solutions are little more than a “quick fix” and not the permanent solution many had hoped for. As Gemini reports, A new Layer 2 will appear every 19 days in 2024, suggesting that the competitive landscape is creating more problems than it solves.

Layer 2 solutions come with their own challenges, primarily related to centralization and interoperability. Many of today’s Layer 2 blockchains run using centralized collators, which can expose the network to transaction censorship, transaction reordering, and other issues. Additionally, Vitalik Buterin said in a recent blog post that Layer 2s are struggling to remain interoperable. This has raised concerns about the chaotic state of Layer 2, further leading to fragmented liquidity and complex user experiences.

Advanced rollup designs have attempted to address these pain points. Recently, a new design called native rollups has emerged that attempts to address the centralization issues of Layer 2. Native rollups take away the value of the project, which will greatly hinder adoption. Therefore, it is questionable whether native rollups can solve all of Ethereum's pressing problems.

With so many challenges facing the EVM itself, why rely on Layer 2 instead of creating another one? Is there a better solution? According to L2BEAT, it costs about $95.53 million per year to run all major L2s. Instead of spending more money building and running more L2s and interoperability solutions, why not focus on perfecting the existing base layer?

A More Accurate Alternative to TPS

In order to create the highest performing Layer 1, the industry must first re-evaluate the way blockchain performance is tracked. Most blockchains focus on throughput, using transactions per second (TPS) to compare chain performance. While many believe reaching the all-important number of transactions per second is the way to achieve mainstream adoption of cryptocurrency, unfortunately, TPS does not allow for apples-to-apples comparisons, as different types of transactions require different amounts of computation.

For example, an Ether transfer requires 21,000 units of gas, while an ERC-20 transfer requires 65,000 units of gas, confirming that TPS has no value when tracking large-scale transactions and network throughput.

A new standardized performance metric that better reflects the computational power of the network must be developed to understand the full potential of blockchain.This is where an alternative performance metric called “gas per second” comes in — a metric that assesses the gas fees required to process a transaction, better reflecting different transaction types. While TPS is best suited for evaluating simple ETH transfers, gas per second reflects the bigger picture, as it takes into account all computational work, even for complex transactions.

Given the newness of this metric, measuring gas per second for all chains will be a long process, but it is a critical step in the evolution of blockchain.

Back to Basics: Layer 1

The functionality of Layer 1 has historically been overlooked as many Ethereum researchers focus on a rollup-centric roadmap. As the backbone of the entire crypto ecosystem, Layer 1 is key to scaling the EVM. To address the EVM’s scalability challenges, Layer 1 had to rebuild the EVM from the ground up, with performance being a top priority.

As transaction volume increased, the EVM faced severe network congestion and high gas prices. Now is the time for Layer 1 to scale to accommodate the next generation of users. Methods like parallelization will help increase throughput, and combined with revamping the EVM’s consensus mechanism and storage solutions, will set a new performance standard for the industry and establish a more developer-friendly environment for projects.

The Right Solution to Scaling the EVM

For the past few years, Layer 2 has been seen as the answer to providing the cheapest and fastest way to execute transactions. Layer 2 is not what the EVM really needs. Layer 1 has been the real solution to the EVM’s scalability issues since day one.

It’s time to adopt more accurate performance metrics and shift our focus to improving network performance. These changes will pave the way for the EVM to reach its full potential, bringing unprecedented levels of scalability and efficiency. The EVM will continue to exist, but its future depends on what the industry builds.