I. Introduction
You know what? Another Ethereum Layer 2 just launched its mainnet.
Layer 2 solutions are now like the popular kids on the block, each claiming to be the fix for Ethereum's slow pace. We already have stars like Arbitrum, Optimism, and zkSync, each promising to speed things up without breaking the bank. They've become the go-to guys for anyone looking to get things done faster. And just when we thought the crowd couldn’t get any bigger, here comes Scroll, the new kid on the block.
The arrival of Scroll might make you wonder, "Do we really need another Layer 2 solution?" It's like having a bunch of express lanes and then adding one more, hoping to ease the traffic. But Scroll isn’t just here to add to the numbers. It brings along something called Zero Knowledge Proofs, and surprisingly fully EVM-compatible, trying to offer a fresh approach to the scalability issue. It's like a new coffee shop opening in a town already filled with places to grab your morning brew, aiming to serve it up in a way that's different from the rest.
Scroll faces the tough task of proving its worth in a yard already full of tough competitors. It's not just about showing up; it's about making a mark. As we dive into the Scroll story in the upcoming sections, we'll look into what makes Scroll tick, how it plans to speed up Ethereum, and where it stands among the existing Layer 2 solutions.
So, as we prepare to explore Scroll's story, let's try to find out if it’s just another face in the crowd or if it has what it takes to stand tall among the Layer 2 giants. Stick around as we explain the Scroll narrative in the bustling world of Layer 2 solutions.
II. All about Scroll
Technology behind Scroll
Scroll enters the Layer 2 domain with a technology known as zkEVM, which stands for Zero-Knowledge Ethereum Virtual Machine. This technology isn't just another fancy acronym; it's a robust engine aimed at addressing Ethereum's scalability challenges.
The essence of zkEVM lies in its ability to execute transactions off-chain while generating succinct proofs of the transactions' validity. These proofs are then posted and verified on Ethereum Layer 1, significantly improving scalability since verifying a batch of transactions becomes much cheaper than re-executing them.
“THE COMPLETE GUIDE TO ZERO-KNOWLEDGE EVMS”, one of our previous articles, is a clear dive into how zkEVM works. By leveraging zkEVM, Scroll doesn’t just aim to tackle scalability; it ventures to offer a seamless, cost-effective, and secure environment for Ethereum applications
Scroll Architecture
Scroll's architecture is engineered with a layered approach, each layer playing a pivotal role in ensuring a seamless, efficient, and secure interaction between Ethereum and Scroll. The architecture comprises three distinct layers as illustrated in the figure above:
Settlement Layer
The Settlement Layer is the foundation that ensures data availability and order for the canonical Scroll chain. It is responsible for verifying the validity proofs and facilitating the communication of messages and assets between Ethereum and Scroll. Interestingly, Ethereum itself acts as the Settlement Layer, with the bridge and rollup contract deployed onto it. This layer essentially acts as a bridge, ensuring the smooth transit of information and assets between Ethereum and Scroll.
Sequencing Layer
This layer houses two crucial nodes: the Execution Node and the Rollup Node.
The Execution Node takes on the task of processing transactions submitted to the Scroll sequencer and the transactions relayed to the L1 bridge contract, producing L2 blocks in the process.
On the other side, the Rollup Node batches transactions, posts transaction data and block information to Ethereum for data availability, and submits validity proofs to Ethereum for finality. This dual-node setup within the Sequencing Layer orchestrates the processing and sequencing of transactions, ensuring they are properly batched and verified before being finalized on Ethereum.
Proving Layer
At the heart of the Proving Layer is a pool of provers, tasked with generating the zkEVM validity proofs that affirm the correctness of L2 transactions.
Additionally, there's a coordinator that dispatches the proving tasks to the provers and relays the proofs to the Rollup Node, which then finalizes them on Ethereum. This layer is crucial for ensuring that every transaction on Scroll is correct and secure, acting as the final checkpoint before transactions are finalized on Ethereum.
Too complicated? Imagine Scroll's system is like a big, busy kitchen where meals (transactions) are prepared and sent out to the dining room (Ethereum). There are three main stations in this kitchen:
Settlement Layer (The Storage Room)
This is where all the ingredients (data and assets) are kept and organized. It's also where they check to make sure they have everything they need to make the meals. In Scroll, Ethereum is like this storage room, holding everything needed to prepare the transactions.
Sequencing Layer (The Cooking Stations)
Now, to cook the meals:
- One station (Execution Node) takes the orders (transactions), cooks them up, and gets them ready to be sent out.
- Another station (Rollup Node) groups these cooked meals into trays (batches), lists what's on each tray, and gets them ready for the waiters to take them to the dining room.
Proving Layer (Quality Check)
Before the meals go out, there's a final check:
- A team of food testers (provers) tastes each meal to make sure it's cooked right.
- A head chef (coordinator) organizes which meals are tested next and gives the final okay to send the meals out to the dining room.
So, in simple terms, Scroll has a well-organized kitchen that makes sure all transactions are prepared correctly, grouped together, and checked for quality before they're sent out to Ethereum.
Development Milestones
Pre-Alpha Testnet Launch (August 2022, Pre-Mainnet):
Last August, before the mainnet was launched, Scroll introduced an upgraded Pre-Alpha Testnet that featured the smart contract deployment capability using Ethereum developer tools. During this phase, testers had the opportunity to bridge NFTs and ERC-20 tokens between Layer 1 (Ethereum) and the testnet, exploring the functionality and interoperability of Scroll with Ethereum.
Smart Contract Deployment on Alpha Testnet (April 17, 2023):
By April 17, Scroll progressed to a stage where developers could deploy smart contracts on the Scroll Alpha Testnet. This phase was crucial as it allowed for the testing and validation of smart contract deployment within the Scroll ecosystem, showcasing the ease with which developers could transition their Ethereum-based applications to Scroll.
Mainnet Launch and Smart Contract Deployment (October 8):
The most significant milestone was reached on October 8 when Scroll's mainnet went live. On this day, the first smart contract was deployed on Scroll's mainnet. However, the official announcement was held off until a later date. This phase marked Scroll's full-fledged entry into the Layer 2 space, ready to serve the Ethereum community with its scaling solutions.
Funding and Valuation
Scroll's financial backing journey commenced with a Series A funding round, raising approximately $30 million with participation from renowned venture capital firms like Polychain Capital and Bain Capital Crypto, alongside Robot Ventures and Geometry DAO. This capital infusion accelerated Scroll's development and testnet launch, paving the way for robust testing and refinements.
Progressing, Scroll garnered a total of $80 million across three funding rounds, with a recent round on March 6, 2023, backed by notable investors such as Qiming Venture Partners and Polychain. This financial backing significantly propelled Scroll's development and mainnet launch, enabling a thorough refinement of its technology.
In a subsequent funding round, Scroll raised $50 million, elevating its valuation to an estimated $1.8 billion. The valuation of around $1.8 billion underscores the substantial financial and strategic backing Scroll has garnered.
The tokenomics of Scroll have not yet been announced, leaving room for future disclosure on its token distribution, utility, and economic model.
Scroll’s Team
The foundational trio of Scroll comprises Sandy, Haichen, and Ye. Their collaborative voyage commenced with R&D on zkEVM alongside the Ethereum Foundation, which eventually transitioned into the commercial project known as Scroll. Sandy Peng, a co-founder, has been spotlighted across various platforms for her pivotal role in Scroll, particularly during its fundraising and testnet phases
Under the stewardship of Sandy, Haichen, and Ye, the dedicated team at Scroll has been fundamental in nurturing the project through its developmental phases, aligning it towards alleviating Ethereum's scalability challenges.
III. Layer 2 War
The war of Layer 2 solutions is vibrant with several projects contending for dominance, each presenting unique approaches to solve Ethereum's scalability issues. Among the contenders are Arbitrum, Optimism, and zkSync, which are often spotlighted for their innovative solutions. Scroll, entering this competitive domain, brings its own flavor of technology to the table.
Arbitrum and Optimism
Known for its Optimistic Rollups technology that helps reduce the cost of transactions on the Ethereum network while retaining a high degree of security and decentralization.
zkSync
Utilizes Zero Knowledge Rollups, which offer better scalability and lower costs compared to Optimistic Rollups, while maintaining a strong level of security.
Scroll
Adopts zkEVM technology, a form of Zero Knowledge Rollups, aiming to provide a scalable and secure Layer 2 solution while ensuring compatibility with Ethereum's existing ecosystem. Unlike some Layer 2 solutions, Scroll emphasizes a seamless user experience with easy migration for developers from Ethereum to Scroll. However, it is not alone in this endeavor. Notable opponents like Polygon and Taiko also harness zkEVM, adding to the competitive essence of this space. Polygon, with its comprehensive framework and a focus on interoperability, presents a robust competition
The valuation of Scroll stands at a notable $1.8 billion, which, although high, pales in comparison to some other Layer 2 solutions. For instance, Arbitrum has a fully diluted valuation of around $8.56 billion, Optimism holds a total value locked of $2.8 billion, and zkSync has garnered $458 million in funding, with one of its competitors, Starkware, being valued at $8 billion.
However, this valuation of Scroll possibly reflects something intriguing that private investors see in the project or the team, an aspect that might be driving the heightened investor confidence.
IV. Last thoughts
As we stand on the cusp of a potential bull run, propelled by the nearing Bitcoin halving, it's not surprising to see a flurry of mainnet launches from Layer 2 solutions like Mantle, Manta, and Scroll. Seizing the moment now is a smart move to stake a claim in the market before the big wave hits. However, as I look at the grand picture, it seems like the Layer 2 war is increasingly becoming a battlefield for the big guns - Arbitrum, zkSync, Polygon, and Starknet, each backed by substantial support and showcasing distinct advantages.
Scroll, with its valuation of $1.8 billion, steps into this intense competition, but still shows little potential. In my observation, Scroll hasn't yet revealed any Unique Selling Points (USPs) that could set it apart from the rest. Is it a deliberate move to keep the cards close to the chest, or do they not have a winning hand? The suspense is like a novel, keeping us on the edge, waiting for the plot to unfold.
Moreover, the absence of announced tokenomics is like a missing puzzle piece in Scroll's narrative. It leaves us guessing on whether there's an airdrop or not. A potential airdrop could stir interest and draw users towards Scroll, but without it and no distinct features disclosed, it might struggle to capture attention amidst the battle of Layer 2 solutions.
Lastly, predicting the path of a project, especially in the unpredictable crypto market, is really tough. Even the founders might be facing unknown challenges. As we watch Scroll and other Layer 2 projects, let's not forget our goal of making a profit. After all, among the technical terms and market changes, we are here to find money-making opportunities. So, as we keep watching the story of Scroll and other Layer 2 solutions unfold, let's stay alert to the market trends, spot the important signals among all the noise, and plan our moves in this constantly changing blockchain scene.
