Layer 2 Governance - Navigating the Next Frontier of Blockchain Scaling
L2 Governance BGIN Block #11
Key Takeaways:
Definition of Layer 2 (L2) solutions remains ambiguous and often misused
Sequencers play a crucial role in L2 governance and security
Data storage and availability present unique challenges
Fraud proofs and validity proofs offer different security trade-offs
Centralization of sequencers raises important governance questions
Defining the Layer 2 Landscape
BGIN Block #11 tackled the complex world of Layer 2 governance, starting with a fundamental question: What exactly is L2? As one participant noted:
"L2 has become a marketing term. Many projects call themselves L2 if they provide faster transactions and lower fees than L1, often without meeting core criteria."
Core Characteristics of True L2s
Essential elements include:
Speed and Cost Efficiency
Faster transactions than L1
Lower fees per transaction
Technical Compatibility
Support for L1 virtual machine
Application compatibility
State management capabilities
Security Inheritance
Leverages L1 security guarantees
Maintains data availability
Provides verifiable proofs
The Sequencer Challenge
Sequencers emerged as a critical focus point:
Responsible for transaction validation
Submit proofs to L1
Maintain state consistency
Manage data availability
As one expert explained: "If sequencers fail or misbehave, the entire L2 ecosystem is at risk. We need robust governance frameworks for sequencer operation."
Proof Mechanisms
Two main approaches were discussed:
Fraud Proofs
Users submit Merkle proofs
Challenge period required
Delayed finality
Lower computational requirements
Validity Proofs
Continuous validation through zk-proofs
Immediate finality
Higher computational needs
More complex implementation
Data Storage Solutions
Key considerations:
Call Data Storage
Cost efficiency
L1 capacity constraints
EIP-4844 improvements
Data Availability Layers
Off-chain storage solutions
Monitoring requirements
Governance tokens for incentives
Risk Factors
Major risks identified:
Smart contract vulnerabilities
Sequencer centralization
Challenge period manipulation
Deposit incentive misalignment
Data availability issues
Governance Models
Emerging governance approaches:
DAO-based decision making
Stake-based voting
Multi-stakeholder frameworks
Hybrid models
Future Considerations
Key areas for development:
Decentralized sequencer networks
Improved proof systems
Enhanced data availability solutions
Standardized governance frameworks
Cross-L2 coordination
BGIN's Focus
The working group is:
Documenting L2 governance models
Analyzing risk factors
Developing best practices
Creating educational resources
Fostering industry dialogue
Call to Action
BGIN invites L2 developers, researchers, and stakeholders to:
Contribute to governance frameworks
Share operational experiences
Participate in working groups
Help define standards
Join the ongoing dialogue
The Path Forward
As L2 solutions continue to evolve, the need for clear governance frameworks becomes increasingly important. Your participation in BGIN can help shape these crucial standards.
This blog post is based on discussions from BGIN Block #11, Washington DC, October 21, 2024.
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