Comment on Vitalik’s new article: Escape from the pure Degen dilemma, ZK transcends pure financial narrative

In the real application era, ZK will become as necessary as the blockchain.

Written by: Haotian

Vitalik’s new article seems to reiterate the Cypherpunk spirit of Ethereum (decentralization, censorship resistance, auditability, tool components, open cooperation), but in fact it is his hidden worries and dissatisfaction with the current ecology that is too financial (Degen).

How to get out of the pure Degen dilemma? @VitalikButerin proposed five major directions for positive development. I will simply add some personal comments:

1） Rollups are starting to actually exist.

Comment: In the past year, the layer2 track has shown a scene of market competition and prosperity. The layer2 war is fiercely launched. For Ethereum, the more Rollups chains, the more traffic + empowerment will be. However, Ethereum layer2 is gradually being seized by various RaaS solutions + DA solutions and modular VM solutions. The layer2 market is escaping from the orthodox spiritual control of Ethereum.

As far as Ethereum is concerned, this is indeed not what Vitalik wants to see, but as far as the Crypto industry is concerned, the market outcome of layer 2 will inevitably move towards two factions: pro-Ethereum and anti-Ethereum. In the end, which layer 2 can emerge will not be limited by political legitimacy, but will depend on whether they can promote Mass Adoption.

2） Following a temporary lull after the regulatory crackdowns on Tornado Cash, second-generation privacy solutions such as Railway and Nocturne are seeing the (moon) light.

Comment: Privacy Centric Privacy trading is a track that sounds necessary but is slow to implement. Because of the openness and transparency, MEV space and trading intentions in the DEX environment, most market makers and individual traders tend to focus on CEX.

Whether DEX can be on par with CEX in the future depends entirely on the construction of Privacy Infra. The first-generation private transaction solution, Tornado, splits funds and mixes assets through the contract layer and is widely used for illegal money laundering, and has been subject to frequent regulatory sanctions. The second-generation private transaction solution all uses an intermediate privacy layer, whether it is Nocturne’s Teller and handler or Railway’s Relayer all take on the From address role of private transactions, and the user’s true transaction intention will be hidden through the middle layer.

Specific implementation technologies usually include ZK-Snarks, Paymaster with AA account abstraction, and multi-signature management in MPC trusted environment, etc. Users only need to wrap assets into private assets, and then initiate transaction intentions to the middle layer, and the middle layer Pool will complete a series of DeFi interactions on their behalf. The more assets accumulated in this middle layer, the larger the number of users, and the better the privacy effect. The key is that compliance solutions can exist in parallel, making it easier to become mainstream in the future. (Look for opportunities to analyze in detail)

3） Account abstraction is starting to take off.

Comment: The market has become desensitized to Account Abstraction because it is too basic. Only when the application layer explodes can the value of Account Abstraction be revealed. It should be said that the account abstraction is like a patch, which gives Ethereum the confidence not to be drained of liquidity by high-performance public chains such as Solana.

Moreover, at present, the account abstraction track is already very prosperous, but most of the solutions are biased towards the underlying Infra construction, which has not yet been verified by the market, and everyone feels that it is irrelevant. But I think that whether Ethereum layer 2 can really burst into high-frequency applications and become the entrance to incremental users, account abstraction is a must-choose question. When playing layer2, don’t forget to choose some applications that abstract the underlying account.

4） Light clients, forgotten for a long time, are starting to actually exist.

Comment: The light client becomes more important after Ethereum is converted to POS, because it can extend the verification capabilities of Ethereum Validators and extend the consensus of Ethereum to other chains. For example: If you are building a three-party DA solution, you can use the Restaking mode to allow some validators of Ethereum to participate in the maintenance of the side chain consensus. The consensus built by pure third-party validators will be more convincing than that built by pure third-party validators; another example: do A decentralized Sequencer solution can also use Restaking to allow Ethereum’s Validators to participate in the side chain Sequencer echelon.

The premise of all these assumptions is based on the light client solution. The familiar Eigenlayer implements the expansion of the capabilities of Ethereum Validators based on the light client. From a strategic perspective, this solution is a powerful weapon for Ethereum to fight against third-party DA intrusions and maintain its orthodox status of Ethereum.

5） Zero knowledge proofs, a technology which we thought was decades away, are now here, are increasingly developer-friendly, and are on the cusp of being usable for consumer applications.

Comments: Zero-knowledge proofs were once highly praised and anticipated, but now they are lamented and disappointed. Because zero-knowledge proofs do not have immediate results in solving privacy and scalability issues. For example, when OP-Rollup and ZK-Rollup fought until the end, everyone knew that ZK was more awesome, but they could not hide the fact that OP was more popular than ZK.

In my opinion, ZK technology is more suitable for the future and transcends pure financial narratives. At present, everyone’s emotion about ZK is understandable, but in the real application era, ZK will become as necessary as the blockchain. (It seems that Vitalik also said this).