Original author: YBB Capital Researcher Ac-Core
Preface:
In our minds, Layer 2 should be an expansion path with "Ethereum correctness", but influenced by market rumors that the founding team of Metis is "Vitalik Buterin's mother/best friend", Metis was given the title of MEME Layer 2, which undoubtedly hit the core of market investors' belief in the orthodoxy of Ethereum. However, the current essential attribute of blockchain is still "code + finance", and from an investment perspective, technology and the market have always been a pair of happy enemies that are both separated and united. Can Metis stand out from many Layer 2s by relying on the centralized sorter problems of other Rollups and the disadvantages of strong control of economic models?
Metis Introduction
(Left: Natalia Ameline, Right: Elena Sinelnikova)
The origin of MEME attributes, according to the official website of Metis, Metis's co-founder and CEO Elena Sinelnikova has been promoting education and popularization in the blockchain industry, and is also one of the co-founders of CryptoChicks, the world's largest women's blockchain community, an educational non-profit organization. Another co-founder of CryptoChicks is Natalia Ameline, the mother of Ethereum founder Vitalik Buterin. In addition, Vitalik Buterin's father Dmitry Buterin also took the lead in founding the blockchain education company Blockgeeks, which is committed to developing courses related to blockchain technology. Metis Network was founded in 2018 and issued in May 2021.
Metis is a Layer 2 based on the Ethereum chain and is the earliest fork project of Optimism. Its working principle is the same as other Layer 2s. The biggest highlight is that it is the first Optimistic Rollup that successfully realizes the decentralization of the sorter. The network adopts the Proof-of-Stake Sequencer Pool mechanism to ensure the continuous availability and censorship resistance of the network, while enabling fee sharing and sorter staking. These sorters are responsible for determining the order in which transactions are packaged. During the process, at least 2/3 of the signatures of the sorters in the sorter pool must be obtained before the data can be packaged and uploaded to the Layer 1 network. In order to prevent malicious behavior, Metis also introduced the role of validators to sample blocks to ensure that the sorting of transactions by the sorter is correct.
MPC (Multi-Party Computation) has advantages in privacy protection and decentralization. However, it also has some obvious disadvantages in blockchain networks that require consensus. Due to the lack of relay nodes to distribute information, the number of communications increases, which in turn leads to a significant increase in communication costs within the network. Metis's solution is to transform a single point orderer into a orderer pool, and achieve decentralization through the node staking mechanism and rotation mechanism, so that the decentralized orderer can reach consensus and complete signatures. While this may ultimately make the network cost not much lower than Layer 1, it can achieve MEV resistance and solve the single point of failure problem, while distributing benefits to node stakers.
The recent rapid growth of Metis TVL has drawn attention to the importance of decentralized sorters. According to L2 BEAT data, the TVL of the OP solution currently ranks fifth among all Layer 2 networks. The original intention of Metis' decentralized sorter design is to actively distribute the cake while allowing the market to see the value capture of Layer 2 native tokens.
Source: L2 BEAT Data time 24/02/01
Three Elements of Rollup
Rollup is one of the Layer 2 solutions, also known as rollup. Its working principle is to migrate the transaction calculation and storage performed on the Ethereum mainnet (ie Layer 1) to Layer 2 for processing and compression, and then upload the compressed data to the Ethereum mainnet, thereby expanding the performance of Ethereum.
Rollup can be divided into ZK Rollup and Optimistic Rollup according to the different schemes for ensuring the validity of compressed data (i.e. data correctness). It involves off-chain computations, packaging transactions onto the chain every few minutes for rolling verification and accounting, hence the name. However, although we usually call it a Rollup chain, the off-chain part of Rollup is not a complete blockchain. Literally, Rollup rolls up a bunch of transactions to form a Rollup transaction. After receiving this Rollup transaction, all nodes do not execute the rolled-up logic but only accept the execution results of these logics.
Image source: Ac-Core Homemade
Sequencer
The sequencer is responsible for sorting, organizing, packaging and submitting transactions to the L1 network in L2. Currently, most L2 projects rely on a single sequencer (usually the project owner itself) to complete the above tasks. There are two security issues here: 1. Single point of failure. If the sequencer fails due to an attack or technical failure, the entire network will be shut down;
2. Scalability issues: a single sequencer may not be able to cope with the growing transaction volume.
verify
During the transaction, the data packaged and sent by the sorter needs to be verified. Currently, most of the verification of Ethereum Rollup is performed by Ethereum Rollup smart contracts to ensure the credibility of the data. There are mainly two different verification methods: ZK Rollup (Zero Knowledge Proof Rollup) and Optimistic Rollup. For example:
ZK Rollup:
Verification method: ZK Rollup uses zero-knowledge proofs to verify the correctness of all transactions occurring in Layer 2. Zero-knowledge proofs allow the verifier to confirm its validity without knowing the specific transaction details;
Privacy protection: ZK Rollup emphasizes user privacy because what is submitted on Layer 1 is the "proof" of the calculation result rather than the detailed information of the transaction. The specific transaction content is carried out on Layer 2, while Layer 1 only verifies the validity of the zero-knowledge proof.
Optimistic Rollup:
Verification method: Optimistic Rollup adopts an "optimistic" strategy, which assumes that all transactions are legal and then verifies them when necessary. Verification is done through fraud proofs, that is, submitting proofs on Layer 1 to prove that the transactions on Layer 2 violate the rules;
Real-time: Since all transactions are assumed to be legal, Optimistic Rollup transactions on Layer 2 can be performed quickly, and verification occurs when disputes or objections arise.
DA(Data Availability)
DA stands for data availability, which publicly releases the status data of each transaction processed off-chain so that other participants can also access and use these transaction status data. Some Layer 2 writes the status data of the transaction to Ethereum Layer 1 to achieve DA. There are also some Rollup Layer 2s that write key transaction data on a third-party blockchain. The premise of data availability is that the data is trustworthy.
For example:
DA in Optimistic Rollup: Ensure that Layer 1 can obtain data on all transactions on Layer 2. If the data is unavailable, anyone can raise an objection on Layer 1, which helps prevent potential data tampering or omissions;
Commitments in ZK Rollup: In Layer 2, all transaction computation and storage occur, but only the results of the computation (called Commitments) are submitted to Layer 1. Zero-knowledge proofs are used to prove the correctness of these Commitments.
Note: In ZK Rollup, "Commitment" focuses more on verifying the correctness of transaction calculation results on Layer 2, while "Data Availability" focuses more on ensuring that Layer 1 can obtain data on all transactions on Layer 2. The two usually complement each other to ensure the security and reliability of the entire system.
Among the three key elements of Rollup, the sorter is considered the most critical. The sorter is responsible for performing the process of sorting and compressing Layer 2 transaction information off-chain. Since this process involves the credibility verification of data, it is crucial to achieve data availability. However, when the sorter is decentralized, the realization of data credibility verification and availability may no longer be so critical.
Metis decentralized sorter based on PoS consensus
Image source: Metis L2
Selection of sequencer
Locking $Metis on Metis gives you a chance to become a node, and the weight will be calculated based on the amount of locked $Metis, and the algorithm will assign a range to each of these nodes. Metis Rollup has improved the "Transaction Data Verification Section". In the calculation process of Layer 2, a role called "validator" is introduced, and a competitive mining mechanism is used to incentivize verification nodes to quickly verify transactions, and this process is achieved through a competitive mechanism. Similar to other Layer 1 networks that use the Proof-of-Stake (PoS) mechanism, Metis transactions also require node verification. Therefore, there is no dispute over the data packaged from Metis and transmitted to L1, which avoids the problem of intervals and delays in extracting assets from Metis to the Ethereum mainnet.
Compared with Optimistic Rollup, a significant difference of Metis Rollup is that it only takes a few hours or minutes to withdraw assets from Metis to the Ethereum L1 layer. This highlights the advantages of Metis Rollup in terms of efficiency and speed in processing transactions. Generally speaking, nodes with higher lock-up amounts have a higher probability of joining the sorter. Of course there is some randomness involved.
Sorter’s MPC (Multi-Party Computation)
Metis’s decentralization of sorters involves three key roles: administrator (Admin), sorter, and PoS-based consensus layer.
Administrator: Responsible for setting the key parameters of the overall network and managing the qualifications of the sorters to join the sorter pool. The parties to the agreement no longer have direct absolute control over such matters, but are executed by the administrator after the proposal is approved. One of the difficulties in achieving decentralization is that the management of the sorter must be carried out in a decentralized manner while maintaining efficiency and convenience;
Sorter: Metis uses MPC (Multi-Party Computation) signatures based on TSS (Threshold Signature Scheme) to manage the signing permissions of multiple sorters. Each sorter has the right to decide a batch and let all sorters participate through MPC signatures. If the number of signatures exceeds 2/3, the batch is considered valid and can be submitted to the Rollup contract on L1. The MPC signatures performed by the sorter pool are managed by another contract based on the PoS network. When the PoS network cannot detect the MPC address, the MPC module will be triggered to generate keys;
Consensus layer based on PoS: The PoS network is responsible for managing the contracts for the signature permissions of the sorters, monitoring the MPC addresses, and triggering the generation of keys. The generated keys will be distributed to each sorter in the pool after sharding for MPC signing. The settings of this module cover the life cycle management of keys, including multi-signature generation, key re-sharing, application signatures, deletion signatures, etc.
The reason for using TSS is that it has the properties of high fault tolerance and high flexibility. Compared with multi-signature, TSS does not need to verify each signature on the chain, but aggregates the signatures of all signers for unified verification, thereby increasing the transaction confirmation rate. In addition, communication between PoS nodes uses independent Tendermint channels, while communication during MPC runtime uses the lib p2p protocol. This entire system is designed to achieve efficient and secure decentralized management of sorters.
Metis Sorter Transaction Process
1. The initiating user starts the transaction; 2. The transaction is forwarded to the network sorter node; 3. Block generation: The sorter creates a block when it accepts the transaction as valid; 4. Finalization: The multi-party computing (MPC) node merges the block and forwards it to the Ethereum main chain.
MetisEDF
The Metis Ecosystem Development Fund (MetisEDF) provides financial support for this, covering multiple aspects such as the development and deployment of incentive protocols, providing liquidity support, conducting security audits and implementing liquidity mining programs. The allocation includes:
Sequencer Mining: 65.4% (3 million $METIS / >$260 million);
Ecosystem funding: 34.6% ($1.6 million / >$1.4 billion).
The centralized sorter problem
Image source: Ac-Core Homemade
The principle of Ethereum is that each node stores and executes every transaction submitted to it by the user. This high-level security method also makes the entire network very expensive, so a Rollup solution is needed to expand the capacity of the entire network. Simply put, Rollup = a set of contracts on Layer 1 + Layer 2's own network nodes, that is, on-chain smart contracts + off-chain aggregators, which rely on Ethereum for settlement, consensus, and data availability, and are only responsible for executing Rollup.
The on-chain smart contract means that its trust model is a smart contract on Ethereum, which borrows the security of Ethereum;
The off-chain aggregator means that it will execute and aggregate transactions off-chain, compress a large number of transactions, and finally put them on the Ethereum mainnet to achieve faster and cheaper goals.
The Layer 2 network node is composed of many parts, among which the sorter component is the most important. It is responsible for receiving transaction requests on Layer 2, determining their execution order and batching the transaction sequence, and finally transmitting it to the Rollup project's contract on Layer 1. Currently, all Ethereum Layer 2 Rollups' sorters are centralized, but Metis has taken the lead in decentralized sorters.
Layer 2 full nodes can obtain transaction sequences in two ways: one is to obtain it directly from the sorter, and the other is to read the batch sent by the sorter to Layer 1, but the latter has a stronger immutable property. Since transaction execution will change the state of the blockchain ledger, in order to ensure consistency, Layer 2 full nodes must not only obtain the transaction order, but also synchronize the ledger state with the sorter. Therefore, the task of the sorter is not only to send transaction batches to the Rollup contract of Layer 1, but also to transmit the state update results StateRoot/StateDiff after the transaction execution to Layer 1. In layman's terms, the job of the sorter is to process and sort transactions into blocks added to the blockchain, and is responsible for batch processing of transactions and publishing them to the Layer 1 smart contract.
For the full node of Layer 2, as long as the transaction sequence and the initial StateRoot of the Rollup on Layer 1 are obtained, the blockchain ledger of Layer 2 can be restored and the latest StateRoot can be calculated. On the contrary, if the StateRoot calculated by the full node of Layer 2 is inconsistent with the StateRoot published by the sorter to Layer 1, it means that the sorter has committed fraud. In summary, compared with the network of Layer 2 itself, Layer 1 will be more decentralized, trustless and safer.
For example, Optimistic Rollup allows Layer 2 full nodes to provide fraud proofs to prove that the data published by the sorter in Layer 1 is wrong. But for Optimism, which does not have fraud proofs, if it really wants to steal Layer 2 user assets through the sorter, it only needs to let the sorter operator forge transaction instructions and transfer other people's assets in Layer 2 to its own address, and finally transfer the stolen coins to Layer 1 through the Bridge contract that comes with Rollup.
What do you think of Metis?
Image source: Chaindebrief
The biggest hype of Layer 2 in recent times is undoubtedly the Cancun upgrade, but this will not have a unique benefit to Metis but a universal one. Putting aside the market sentiment impact of "Vitalik Buterin's mother/best friend", the biggest competitive point of Metis and other Layer 2 is its decentralized sorter and the economic model of equity decentralization. The market value shown by TVL is more in line with the feedback of market users on the confidence of Metis.
Unlike other Layer 2s that hold financial power tightly, Metis distributes more revenue to users. The overall economic model of OP Rollup is in a state of strong control. In a centralized way, it continuously issues OP Token rewards to the ecosystem to stimulate development and interaction, thereby earning profits by earning Gas price differences. Unlike this method, Metis delegates the rights to revenue to pledgers to participate in the competition, greatly releasing the financialization attributes of Layer 2 infrastructure, thereby attracting a lot of attention from the market.
MEME represents more of a culture and some socioeconomic factors. For example, when we buy MEME, in addition to the expectation of ten, a hundred or even a thousand times investment, more of it comes from our recognition and love of its narrative style and various factors. But in the end, pulling up the price is justice. Metis's growing TVL is also a feedback from the market on its investment expectations. Putting aside the technical level and considering the MEME attribute issue from the perspective of the market, my view is that if the inscription is a tester of the public chain performance, then MEME is to some extent a touchstone of market recognition.
