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Kneejerk dismissals here are sad to see. L2 is, in my view, some of the most interesting research happening in computer science right now. The article above is

Kneejerk dismissals here are sad to see. L2 is, in my view, some of the most interesting research happening in computer science right now. The article above is not a great explanation--in particular, L2s are not off-chain as the article presents. The point of L2 is that it on-chain, inheriting the security and censorship resistance guarantees of L1. To simplify: L2 is about creating a fast, high throughput state machine whose state transitions are verifiable on a blockchain. Blockchains, in turn, are about creating a uncensorable state machine that reaches global consensus. So L1 achieves security, and L2 adds speed. So why not just make L1 fast to begin with? The strong guarantees of L1 rely on a lot of validators (on the order of ~10k+, worldwide, often on home internet connections) verifying each state transition. This puts a fairly low practical ceiling on how fast L1 can go. L2 uses centralized sequencers to run transactions much faster, but uses a mechanism that runs on L1 to ensure the sequencer can't cheat. The main mechanisms are 1. optimistic rollups and 2. ZK rollups. The latter, in particular, are fascinating. If you care about distributed systems even a little bit, it pays to suppress your skepticism and learn about how they work. Good starting point: https://vitalik.ca/general/2021/01/05/rollup.html https://vitalik.ca/general/2021/01/05/rollup.html Alternatively if you believe this is all just a ponzi scheme involving ape jpegs, bookmark this comment and come back in 3 years.

homarp 5y ago
you should do a https://longbets.org/ https://longbets.org/
lottin 5y ago
The primary function of finance is to enable economic agents to trade future consumption for present consumption, by means of debt. And debt requires a trusted third-party that has the capacity to re-allocate assets. Otherwise the borrower can simply walk away with the money, and never repay the debt. Now, blockchains, not only lack a trusted third-party that can re-allocate assets, but they are designed with the explicit goal of preventing such re-allocations. Therefore my question is how can this technology be the "future of finance" when it's designed from the ground up to be incompatible with finance?
- yuvalr1 5y ago
  Loans are an important concept, that's true. Do blockchains inherently prevent loans? I'm not sure, I think Ethereum smart contracts enable the concept of loans. The 3rd party here is the contract itself, as I understand it.
  - cuteboy19 5y ago
    Blockchain "loans" are fully collateralised and sometimes even require upto 4x the collateral than the loan itself. This is not useful in the vast majority of cases
  - lottin 5y ago
    If I lend you 1 ETH, I have no means to make you pay me back. Smart contracts can't do that either. A smart contract cannot seize 1 ETH from your wallet and send it back to my wallet. Blockchains are designed specifically to prevent that.
    - carlosdp 5y ago
      That's not true, you can definitely do this with a smart contract blockchain like Ethereum, and there are plenty of loan protocols already that do this in production with $ billions in assets transacted. No one can steal your ETH from your wallet, but they can liquidate your staked collateral held by the smart contract.
      - lottin 5y ago
        If the collateral is "held by a smart contract" it means your buying power hasn't changed and you haven't financed anything.
- ricochet11 5y ago
  There is no reason that the third-party cant be a contract with globally accessible permissionless apis, that let you borrow peer2peer or peer2protocol against your assets, and that upon you not repaying your debt liquidates your position (by other people/protocols bidding for the assets that are out of position, usually over-collateralized at 150% min). Most of defi is structured in this way and it is working fine, it works because it IS being integrated and made compatible with existing finance. This is "futuristic" because anyone in the world has opportunity to lend/borrow to anyone else in the world, to write code that automates savings accounts by rotating these positions, to write business logic of their startup to borrow money when they need and pay it back when its the best time for them - scaling their finance on demand like spinning up an ec2 instance. A system where you have more voice and opportunity for your work/savings/co-op/club, compared with whatever the state of banking is in wherever you happen to be born in the world. Concrete example: I asked my bank to borrow some money and showed them my bitcoin, they predictably said no because their system cant handle it. I wrapped it onto ethereum, deposited it in aave, borrowed usdc, withdrew to my bank account and carried on with my life without needing the banks permissions. The people lending that usdc to aave to lend out to me know it is safe and I cant run off never paying back my debts and interest (otherwise they get my over-collateralized btc). permissionless global p2p lending and borrowing. it isn't futuristic, it is the present. ill never understand why "hacker"news doesnt find that amazing.
ricochet11 5y ago
agree, ZKProofs are really interesting and i'm sure they will come to be used across lots of areas of the web and not just blockchain, though their use and development is most active in the blockchain space for how useful they are for privacy+scalability. Proving knowledge without revealing information allows us to prove computations (validating them is a lot quicker than repeating the computation) and "use things" without sacrificing privacy. You can combine the two and have private transactions which are then rolled up in a computation, and then post the proof of the computation to mainnet. You get both cheap and private transactions and infra on top of the base chain. But this goes beyond blockchain: we can hand code to other people to run and then have proof they haven't altered what we agreed upon running, so we can trust the results of someone else running something. That is useful in all sorts of research for replicability in science/engineering. WIRED Computer Scientist Explains One Concept in 5 Levels of Difficulty : https://www.youtube.com/watch?v=fOGdb1CTu5c https://www.youtube.com/watch?v=fOGdb1CTu5c https://developers.aztec.network/ https://developers.aztec.network/ https://z.cash/technology/zksnarks/ https://z.cash/technology/zksnarks/ https://github.com/matter-labs/awesome-zero-knowledge-proofs https://github.com/matter-labs/awesome-zero-knowledge-proofs
- drog 5y ago
  > i'm sure they will come to be used across lots of areas of the web and not just blockchain Totally agree with this. After working closely with zk I noticed that it boosts your thinking about decentralized protocols in the same way as knowing about signatures or hashes. Right now infrastructure for doing zk is in “alpha” stage and different proving systems and optimizations are fairly new and not widely used. I believe it will grow bigger It’s very exciting field. (I worked on zk rollup called zksync but zk rollups are only one of the use cases for zk proofs)
deleted 5y ago
[deleted]
syntheweave 5y ago
Yes, ZK is cool. I expect to hear about it on other chains too. One of the lower visibility projects I follow, Symbol, has a similar concept of subchains and is already working towards applications on them.
muzikman1 5y ago
Thank you for your reply. It does not say it's 'off-chain'. It says that the scalability solution is off-chain - 'can process transactions off-chain'. See: https://ethereum.org/en/developers/docs/scaling/ https://ethereum.org/en/developers/docs/scaling/

homarp 5y ago

you should do a https://longbets.org/ https://longbets.org/

lottin 5y ago

The primary function of finance is to enable economic agents to trade future consumption for present consumption, by means of debt. And debt requires a trusted third-party that has the capacity to re-allocate assets. Otherwise the borrower can simply walk away with the money, and never repay the debt. Now, blockchains, not only lack a trusted third-party that can re-allocate assets, but they are designed with the explicit goal of preventing such re-allocations. Therefore my question is how can this technology be the "future of finance" when it's designed from the ground up to be incompatible with finance?

yuvalr1 5y ago
Loans are an important concept, that's true. Do blockchains inherently prevent loans? I'm not sure, I think Ethereum smart contracts enable the concept of loans. The 3rd party here is the contract itself, as I understand it.
- cuteboy19 5y ago
  Blockchain "loans" are fully collateralised and sometimes even require upto 4x the collateral than the loan itself. This is not useful in the vast majority of cases
- lottin 5y ago
  If I lend you 1 ETH, I have no means to make you pay me back. Smart contracts can't do that either. A smart contract cannot seize 1 ETH from your wallet and send it back to my wallet. Blockchains are designed specifically to prevent that.
  - carlosdp 5y ago
    That's not true, you can definitely do this with a smart contract blockchain like Ethereum, and there are plenty of loan protocols already that do this in production with $ billions in assets transacted. No one can steal your ETH from your wallet, but they can liquidate your staked collateral held by the smart contract.
    - lottin 5y ago
      If the collateral is "held by a smart contract" it means your buying power hasn't changed and you haven't financed anything.
ricochet11 5y ago
There is no reason that the third-party cant be a contract with globally accessible permissionless apis, that let you borrow peer2peer or peer2protocol against your assets, and that upon you not repaying your debt liquidates your position (by other people/protocols bidding for the assets that are out of position, usually over-collateralized at 150% min). Most of defi is structured in this way and it is working fine, it works because it IS being integrated and made compatible with existing finance. This is "futuristic" because anyone in the world has opportunity to lend/borrow to anyone else in the world, to write code that automates savings accounts by rotating these positions, to write business logic of their startup to borrow money when they need and pay it back when its the best time for them - scaling their finance on demand like spinning up an ec2 instance. A system where you have more voice and opportunity for your work/savings/co-op/club, compared with whatever the state of banking is in wherever you happen to be born in the world. Concrete example: I asked my bank to borrow some money and showed them my bitcoin, they predictably said no because their system cant handle it. I wrapped it onto ethereum, deposited it in aave, borrowed usdc, withdrew to my bank account and carried on with my life without needing the banks permissions. The people lending that usdc to aave to lend out to me know it is safe and I cant run off never paying back my debts and interest (otherwise they get my over-collateralized btc). permissionless global p2p lending and borrowing. it isn't futuristic, it is the present. ill never understand why "hacker"news doesnt find that amazing.

ricochet11 5y ago

agree, ZKProofs are really interesting and i'm sure they will come to be used across lots of areas of the web and not just blockchain, though their use and development is most active in the blockchain space for how useful they are for privacy+scalability. Proving knowledge without revealing information allows us to prove computations (validating them is a lot quicker than repeating the computation) and "use things" without sacrificing privacy. You can combine the two and have private transactions which are then rolled up in a computation, and then post the proof of the computation to mainnet. You get both cheap and private transactions and infra on top of the base chain. But this goes beyond blockchain: we can hand code to other people to run and then have proof they haven't altered what we agreed upon running, so we can trust the results of someone else running something. That is useful in all sorts of research for replicability in science/engineering. WIRED Computer Scientist Explains One Concept in 5 Levels of Difficulty : https://www.youtube.com/watch?v=fOGdb1CTu5c https://www.youtube.com/watch?v=fOGdb1CTu5c https://developers.aztec.network/ https://developers.aztec.network/ https://z.cash/technology/zksnarks/ https://z.cash/technology/zksnarks/ https://github.com/matter-labs/awesome-zero-knowledge-proofs https://github.com/matter-labs/awesome-zero-knowledge-proofs

drog 5y ago
> i'm sure they will come to be used across lots of areas of the web and not just blockchain Totally agree with this. After working closely with zk I noticed that it boosts your thinking about decentralized protocols in the same way as knowing about signatures or hashes. Right now infrastructure for doing zk is in “alpha” stage and different proving systems and optimizations are fairly new and not widely used. I believe it will grow bigger It’s very exciting field. (I worked on zk rollup called zksync but zk rollups are only one of the use cases for zk proofs)

deleted 5y ago

[deleted]

syntheweave 5y ago

Yes, ZK is cool. I expect to hear about it on other chains too. One of the lower visibility projects I follow, Symbol, has a similar concept of subchains and is already working towards applications on them.

muzikman1 5y ago

Thank you for your reply. It does not say it's 'off-chain'. It says that the scalability solution is off-chain - 'can process transactions off-chain'. See: https://ethereum.org/en/developers/docs/scaling/ https://ethereum.org/en/developers/docs/scaling/