A New Layer 1 Ethereum, A Better Ethereum?
February 21st, 2022

By Ivan, Caijing new media

Abstract:As a blockchain infrastructure, Ethereum seems at an unshakable position. But it also faces problems such as high gas fee, low efficiency and deviation from decentralization. The formation and consolidation of vested interest groups on the platform has gradually made innovation difficult. A group of Ethereum community members initiated a project CUN to inherit and improve the Ethereum, and proposed solutions in terms of compatibility, performance, and decentralization. Their supporters in the encryption industry are rapidly increasing.

Bitcoin has become a totem. Although Ethereum is the current blockchain infrastructure that changed how Internet works, it will also be changed.

When Satoshi Nakamoto invented Bitcoin in 2008, the blockchain was only a technical tools to ensure the stability of Bitcoin system. It was not until Vitalik Buterin created Ethereum in 2013 that Blockchain was truly independent from Bitcoin and became the next-generation network technology that changes the way the internet works.

Bitcoin is more characterized by its payment function which guarantees security through the decentralized setting of the blockchain without a digital currency issued by a central bank. Ethereum has begun to develop into a new digital network, a blockchain network system that can deploy a series of applications and transactions through smart contracts.

However, as Ethereum succeeded, various defects began to be exposed: high cost, low efficiency, deviation from the original intention of decentralization, and so on. Competitors are beginning to appear, the routes they followed can be classified as “alternative” and “inheritance and improvement”.

The Rise of Ethereum

Altcoins ( Bitcoin alternative) sprung up after the birth of Bitcoin. They have created their own independent electronic currency system by modifying or even directly applying the open source Bitcoin source code, using the same blockchain technology as Bitcoin.

Altcoins, also called Copycat coin, most of which are just simple imitations of Bitcoin. By building a Turing-complete Ethereum virtual machine, Ethereum enabled smart contracts and decentralized applications (Dapp) to be built and run on this blockchain network, and thus stood out among many Altcoins and became the representative of “the Second Generation Blockchain”.

The several explosive developments of Ethereum are all applications of smart contracts in different situations.

ICO (Initial Coin Offering) is the main method to raise funds for blockchain projects. Ethereum raised more than US$18 million through ICO in July 2014 for the development and deployment of the project. However, after Ethereum came online, it became the main platform for ICO. The ERC-20 standard made Token issuing very simple. In 2017, a large number of blockchain projects used the ERC-20 standard to issue Tokens to raise funds, which caused a huge bubble. But it was the first large-scale application of Ethereum’s smart contracts.

DAO (Decentralized Autonomous Organization) is an ideal model for many people, and blockchain solves the problem of trust among people and makes DAO possible. At present, there are a large number of DAO organizations in the Ethereum’s ecosystem. They built up different communities by conforming to different concepts and conventions to enrich the ecosystem of Ethereum.

DeFi (Decentralized Finance) has always been regarded as the most likely field of blockchain. Ethereum’s smart contract can be transformed into an automatically executed financial contract or escrow, and transfer the funds automatically based on agreed conditions and specific events. Currently, DeFi is one of the most widely used field on Ethereum.

Collectible tokens such as CryptoKitties briefly thrived. But in 2021, NFT (Non-Fungible Token), which applied the Ethereum ERC-721 standard, became the most popular project. The NFT even applied by other field and drove the explosion of the concept of Metaverse.

Public Chains Competing with Ethereum

Similar to Bitcoin, after Ethereum became the largest blockchain platform, competitors also emerged, and the routes they followed can be classified as “alternative” and “ improvement”.

One route is become the “alternative to Ethereum”. For example, Polkadot, Solana, and Dfinity tried to establish a new consensus mechanism, and even some projects establish a new programming language to solve the problems of low throughput and efficiency, as well as decentralization and cross-chain.

Polkadot is mainly to solve the cross-chain problem: the information cannot exchange between different blockchains. In order to break data isolation, Polkadot is trying to create a network protocol that allows all blockchains connected can better exchange the information. Among them, the parachains are mainly responsible for data calculation and transaction. The horizontal expansion of the blockchain can be realized through parachains, which is to solve the performance problem of the blockchain.

The Bridge, in essence, is a special kind of parachain, but it also can link blockchains in different structures. The relay-chain is the center of Polkadot. Its main function is to verify the blocks generated by each parachain and provide a confirmable verification.

Polkadot has certain advantages over Ethereum in terms of scalability and cost at present, but its basic construction is still within the scope of Ethereum.

Solana’s goal is to become a high-performance public chain: the biggest feature is that its mainnet adopts the PoH (Proof of History) mechanism, which allows each node to generate a local timestamp without waiting for the entire blockchain network to synchronize updated data and data status, thus improving overall efficiency.

Many innovations, such as PoH plus Tower BFT, Turbine , Gulf Stream , SeaLevel , Pipelining , Cloudbreak, Replicators and so on, make Solana a strong competitor to Ethereum.

The Formation of “Ethereum System”

The “Alternatives” to Ethereum have many advantages, but there are also competitors who have adopted the ways of “Imitating or changing Ethereum” to rise up.
BSC (Binance Smart Chain): BSC introduced PoSA (Proof of Stake Authority) consensus algorithm, which combined the functions of Delegated Proof of Stake (DPoS) and Proof of Authority (PoA) mechanisms. It was established on a network of 21 validator nodes, with a high block hash capable of establishing a high-speed infrastructure for the DeFi protocol. The word smart in BSC is reflected in the function of smart contract: BSC supports writing smart contract and is compatible with the Ethereum Virtual Machine (EVM) and all applications and tools under this ecosystem, thus easily realizing transfer and deployment of Ethereum’s DAPs.

Thanks to the support of funding, users and other resources provided by the world’s largest Digital Currency Exchange, Binance Exchange, BSC has quickly attracted a large number of users and communities that are desire of expanding their users.
Polygon: In 2018, the Matic team began creating Layer2 solutions to Ethereum, with the goal of reducing the cost of Ethereum as well as improving scalability.
Unlike traditional Layer2 solutions, Polygon combined different scalable solutions, such as zkRollups, Optimistic Rollups, Validium, etc., to enable one-stop Layer2 aggregation. By providing easy-to-use Polygon SDK, Ploygon greatly lowered the the barriers to develop.

In May 2020, Polygon launched Matic, which contains two components: a PoS sidechain variant called the “commit chain” that supports smart contract development, and a Plasma-based entrance ramp for routing Ethereum to Matic sidechain transactions. The Polygon PoS chain exists between a sidechain and a purely Layer 2 extension solution, inheriting the security of the main chiain, packaging bulk transactions together and confirming them in bulk before returning the data to the main chain.

Currently, Polygon brought together applications and infrastructure such as DeFi, NFT, wallets, oracle machine, and DAOs, including DeFi lending protocol powerhouse Aave, decentralized exchange SushiSwap, automated market service Curve, and on-chain aggregation exchange 1inch; NFT project included the world’s largest NFT digital art exchange Opensea, NFT virtual game Decentraland, oracle machine’s leading project Chainlink, AP13, etc.; digital wallet includes MetaMask, MathWallet, Fortmatic and so on.

What Are the Problems of Layer2?

Projects such as Polygon have relatively solved the problem of inefficiency and high cost of Ethereum. They chose the Layer2 scalable solution: most transactions are placed in the Layer2 protocol under the Ethereum and submitted to the Ethereum by packaging up. Layer2 solution to Ethereum relies on the security of the main Ethereum network, which actually further strengthens users’ reliance on Ethereum. More importantly, except the network congestion and high costs caused by the dramatic increase in usage, Ethereum is gradually monopolizing on the verge of its ecological advantages, just like the mainstream platforms in the web 2.0 era, which deviates from the original intention of decentralization and community participation in blockchain. The Layer2 solution, which relied more on Ethereum, is not the best choice for the encryption world. Layer2 is strengthening the monopoly position of Ethereum, but not improving it. The new network should be faster, more secure, lower cost, more private, and easy to embrace new opportunities in the crypto market, such as NFT and the metaverse. Most importantly: the network should belong to the crypto community. Currently, those who hold the view of improving Ethereum proposed as below:

  1. By evolving from Ethereum to solve the compatibility problem between different blockchains and Ethereum-related network. Solving the asset cross-chain problem through cross-chain bridge.
  2. Improving consensus based on new mathematical logic to enhance network communication efficiency.
  3. Building a new Layer1 network instead of Layer2 network to ensure security while reducing the dependence on the Ethereum mainnet, and then avoid centralization.
  4. Settling the problem of ecological application migration and network upgrade by inheriting Ethereum and building block design as much as possible.
  5. Building up a DAO-governed community ultimately without founders and core developers

Altering Ethereum at Layer 1

CUN is a new Layer1 network. In terms of consensus mechanism, CUN plans to introduce PoA consensus as access mechanism in the first stage (the Origin Network), adopt PoS+PoA in the second stage (Cape of Good Hope Network) to achieve access consensus with pledge voting mechanism, and in the third stage (New Generation Network), the consensus network will shift to PoS+PBFT consensus.

At the beginning of the launch, the CUN Origin Network is a Layer 1 network with the mainnet Coin, using PoA as the access mechanism, and forming a collection of nodes by electing trust nodes to participate in network launch and maintenance. These nodes need to stake a portion of the CUNPs. The block collection, packaging, consensus and verification are all performed by nodes in the set.

When the network node scale and the CUNPs held by the community are accumulated to be eligible for pledge voting, CUN will enter Cape of Good Hope Network from Origin Network. The Cape of Good Hope Network is a transitional network evolving to Next Generation Network, with PoA+PoS as the access mechanism.

One difference of the Cape of Good Hope network is the introduction of the PoS mechanism. At this stage, the nodes joined by the PoS mechanism are community nodes. A large number of community nodes will be added to the network, and more long-term participants in the CUN ecosystem will be added through the staking incentive mechanism. By combining the PoA+PoS consensus, while expanding decentralization, the stability and high performance of the network are guaranteed.

The Next Generation Network uses PoS as the access mechanism like Ethereum, but CUN proposes to adopt an improved BFT algorithm to achieve Byzantine fault tolerance in the consensus stage of the main chain and plans to be DAO-governed in this stage.

The communication complexity of the currently widely used PBFT consensus protocol is O(n²). The number of nodes in the later period will continue to increase, the consensus efficiency will drop by a quadratic level after the final node scale reaches 100 or more. In response to this problem, CUN will improve the BFT consensus in the transition phase to enhance its scalability, security and performance.

According to this formula, it can be concluded that when the number of nodes expands to N=84, the number of PBFT communication will reach 13,944, while the number of third-layer PBFT communication is only 152. At present, the hierarchical PBFT algorithm significantly improve the consensus efficiency of the main chain at the theoretical value of 1000 nodes, which is equivalent to the current number of Solana.

Remarkably, CUN is one of the few networks among the current followers of the Ethereum technology route that proposes an upgrade in the consensus layer of the main chain. Compared to the Layer2 solution, a transition scheme for Ethereum, CUN is an evolution of the Layer1 network.

The idealism of the CUN community is similar to the Bitcoin era to some degree. Among these supporters are technology company CTOs, exchange practitioners, university professors, non-profit organizations, business, and sociologists, they do not disclose their identities, perhaps because they do not want to impose more individual ideas on the community.

It is impossible to predict the future of this emerging network, because sometimes success is not entirely determined by technology. But we hope that innovators can succeed. Bitcoin also told us that the Internet should open to the community, not to any institution or individual.

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