After the upgrade of Ethereum Shanghai, what new changes will happen to the encryption industry?

In March of this year, Ethereum developers will start the Goerli Shanghai upgrade plan for the Ethereum testnet, and complete the Ethereum Shanghai upgrade 3-4 weeks after reaching a general consensus. The upgrade will introduce three key Ethereum protocols, namely EIP-3855 to increase the transaction speed of the Ethereum network, EIP-3860 to reduce transaction fees, and the focal proposal EIP-4895 to provide Ethereum stakers with a more flexible staking mechanism.

In addition, according to the future roadmap of Ethereum disclosed by Vitalik Buterin, the co-founder of Ethereum, after the upgrade in Shanghai, the developers of Ethereum plan to release EIP-4844 (proto-danksharding) in the middle of this year.This will significantly increase the scalability of the Ethereum network. At the same time, the scalability of Ethereum Layer 2 will be increased to a greater magnitude.

It is not difficult to see that Ethereum is currently the most widely used network in the Web3 field. The two upgrades this year revolve around the blockchain impossible triangle (security, decentralization, and scalability) problems. during this process,The LSD track and Layer 2 track will be directly affected by the upgrade and will be pushed to the cusp of development. As an explorer of the Web3 industry, how to grasp the opportunities brought by the LSD and Layer 2 tracks?wonderful point of view

wonderful point of view

• After Shanghai's upgrade, the LSD track ushered in long-term benefits

• Layer 2 track will expand hundreds of times and thousands of times with the upgrade of Ethereum

• Short-term OP, long-term ZK

• Zk-EVM is compatible with Ethereum to achieve high developer friendliness

• first level title

The liquid staking track ushered in an explosion

LSD (Liquid Staking Derivatives) is a liquid pledge derivatives agreement. LSD essentially unlocks the liquidity of the ETH pledged by the user, and will allow users to indirectly use your pledged ETH to sell, lend, and use it as collateral in DeFi activities, earning extra on top of the pledge income income. Ethereum is one of the public chains with a lower pledge rate. Compared with other public chains with a pledge rate of 60%, Ethereum’s current pledge rate is only about 12%. Will the arrival of Shanghai’s upgrade unlock the development of the Ethereum pledge track? space?

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LSD Track Opportunities and Challenges

After the upgrade of Ethereum Shanghai, it is both an opportunity and a challenge for the staking track. Mr. Bruce introduced that the upgrade of Ethereum Shanghai belongs to the solution to the remaining problems after the merger and upgrade of PoS last year. Pledgers can not only guarantee the security of the network through staking, but also withdraw pledged assets at any time, so the product logic of the entire staking service is opened.

On the one hand, opening up Ethereum's withdrawal function means that LSD will become more popular. It is predicted that there should be nearly 10 million ETH decompressed in this upgrade, and there will be some fluctuations in the price in the short term. But in the long run, it will release the previously pledged funds, and at the same time, the risk of staking ETH will be reduced. The inflow of more ETH also means more income for pledge agreement providers, which is beneficial to the liquid pledge field and ecological development.

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Discover LSD Potential Project

At present, some LSD track projects are also constantly developing and improving. Mr. SUYU, the investment manager, also introduced the currently popular LSD track projects, such as Rocket Pool, which focuses on "everyone can become a node operator" and achieves a high degree of decentralization to reduce the risk of evil nodes, but its rate of return needs to be weighed . Emerging SSV adopts the key sharing verifier (SSV), which splits the verifier key into N pieces, and each split key is given to a node operator to prevent evil and ensure security, but the services provided by the platform have A certain threshold.

The top LSD star project is Lido, which introduced stETH, allowing users to stake any amount of ETH they wish, while still using these ETHs on other DeFi platforms. After the Shanghai upgrade, the pledged ETH can be withdrawn, and Lido’s model of redeeming pledges at any time will no longer have an exclusive advantage. How to create a new pledge “killer” has become an upcoming challenge.

The LSD track is in the limelight. Mr. SUYU suggests that in addition to paying attention to top star projects, you can also explore some "potential" projects in the early stages of the track's outbreak, such as comparing their revenue strategies and uniqueness through TVL value and other dimensions, and judging which ones The project has development prospects. Teacher Frank also mentioned that with the expansion of the LSD market, the hype effect will gradually fade away, and everyone will become more rational. You can take advantage of this wave of development to explore more projects at a lower cost of participation, and even join the competition The road is deeply plowed.

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Layer 2 continues to improve scalability

As the Ethereum ecosystem continues to expand, transaction requests continue to increase, and transaction costs rise accordingly. In order to improve network scalability and reduce transaction costs, the Ethereum upgrade plan will start The Surge upgrade phase in the middle of this year, that is, the use of Ethereum. Chip technology (Sharding) allows its computing power to continue to grow. After the upgrade, the scalability of the Layer 2 solution that inherits the security of the main network and transfers calculations to off-chain will be greatly improved.

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Layer 2 Technology Trends

At present, there are many Layer 2 expansion solutions, such as side chain, Rollup, channel, Plasma, and Validium. Three teachers from Polygon Labs, Scroll, and Loopring introduced these technical solutions to everyone.

- Take the Rollup system as the mainstream

Currently the most popular solution is the Rollup extension technology. Rollup keeps data on-chain while offloading execution to"outside the chain"environments that can handle faster performance while still retaining"chain"A characteristic security guarantee for Ethereum transactions. Currently, there are two types of ZK Rollup and Optimistic Rollup. As early as 2020, the "Rollup-centric Ethereum Roadmap" was recognized by the Ethereum community. The key information in this roadmap is that when Rollup is combined with Ethereum sharding upgrades, Rollup will become more efficient. Powerful - the Rollup solution will provide the Ethereum network with a throughput of 3,000 transactions per second and increase it to more than 100,000 transactions per second.

- Committed to being highly developer-friendly

Development cost is a key issue that developers need to consider. Researcher Young pointed out that Scroll combines the scalability of ZK Rollup technology with the developer experience of EVM. By maintaining the equivalence of EVM, builders can directly migrate their applications from Layer 1 to Scroll, realizing the in-code migration. The process does not require any modification to its code, creating a highly developer-friendly environment.

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Discover the value depression of Layer 2

Teacher Yuxing Liao provided some development ideas for entrepreneurs or developers who want to enter Layer 2. In addition to using Layer 2 to develop specific applications, as Layer 2 solutions become more and more popular among developers, their infrastructure There is also a lot to do.

Smart contract wallet: On the basis of inheriting the security of the main network, customized services can be written into the application to make the user experience smoother. It can also be combined with account abstraction technology, which not only improves the TPS compared with Layer 1, but also realizes the integration and improvement of functions that could not be realized in the past.

Layer 3 public chain: It is also possible to make a Layer 3 customized public chain based on Layer 1 and Layer 2. That is, Layer 2 is used for capacity expansion, and Layer 3 is used for customizable capacity expansion. This kind of customization accurately matches the special scenarios used by users and the application direction preferred by developers to achieve large-scale application.

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Opportunities for developers at Layer 2

Layer 2 projects continue to improve in scalability. What development directions can developers or entrepreneurs who want to work on this track seize?

• Middleware and other infrastructure development

Teacher Loopy pointed out that Layer 2 can play unique advantages in the construction of various middleware. Regarding the scalability problem, many new public chains are solving this problem, so where should the advantages of the existence and development of Layer 2 be reflected? On the basis of inheriting the security of Ethereum, perhaps Layer 2 can communicate To B services, including the construction of middleware API.

• Expansion of the field of "fat applications"

Teacher Loopy also suggested that Layer 2 track entrepreneurs can explore the direction of basic development functions. For example, it can provide developers with one-click deployment of Rollup projects. In addition, we need to realize that the current development paradigm of Layer 2 may not maximize the benefits. How to use Layer 2 to develop unique native applications may be able to explode the development potential of "fat applications". Coincidentally, Mr. Magic introduced Loopring’s ZK Rollup-based Ethereum expansion network, which leverages the security of the main network and the scalability of Layer 2, and accesses Chainlink Price Feeds, serving hundreds of thousands of users and billions of transactions. From this we can see the unlimited potential brought by the application.

• Continue to attract developers and users

Teacher Young pointed out that the key to the development of Layer 2 lies in how to attract developers and users of web3 and Web2. On the one hand, the highly friendly development trend of Layer 2 developers can lower the development threshold of the entire blockchain, allowing more developers of Web3 and Web2 developers to build and experience. Good development experience and low threshold become the advantages of its long-term development .

epilogue

epilogue

The Ethereum upgrade is a critical moment that affects the development of the encryption industry. In the middle of this year, the Ethereum EIP-4844 (proto-danksharding) proposal will reduce the gas fee on the network without sacrificing decentralization, which will bring great benefits to the Rollup expansion scheme. In fact, the scalability solution of Ethereum is not completely implemented on Layer 1, but to migrate users to Layer 2, where they can enjoy a transaction experience with high performance and low price. Therefore, Layer 2 will provide novice developers and users with a new stage with a low threshold. Taking advantage of this opportunity, the Layer 2 track will usher in a new round of explosion, which will become an annual event that Web3 developers should not miss.