Will Superchain upon OP Stack be the endgame of Layer2 Rollup War?

20 min readJul 19, 2023

Author: F.F, HY from LBank Labs Research team

TL; DR

With the emergence of ZK Stack proposed by zkSync, the RaaS track has regained high attention from a variety of participants including existing L2 rollups and RaaS-focused services. This track is reminiscent of the battles of sharding, parachains, and subnets that occurred not long ago. We can learn from those past experiences and recognize RaaS as a B2B solution that ultimately depends on business adoption.

Among the existing solutions, OP Stack has gained the largest market share. In this article, we aim to provide an overview of the essence of OP Stack, and the broad OP Stack ecosystem, and explain why OP Stack is currently leading and will likely dominate the Layer2 RaaS war in the future.

Op Stack serves as the core component for building Superchain, the rollup network, which represents the ultimate objective of Optimism. Since the stable version of OP Stack called “Bedrock” was recognized by the broader community, many entities have chosen “Rollup LEGO” modules from OP Stack to build their own rollups. There are six layers in the whole OP Stack, and the four internal layers make up the core stack offered by the platform.

We provide a comprehensive overview of the different types of rollups and their contributions to the development of OP Stack, as well as the motivations and advantages of adopting rollups on OP Stack. Specifically, we cover rollups such as Coinbase’s Base, Binance’s opBNB, Zora Network, Adventure Gold DAO’s Loot Chain, Gitcoin’s Public Goods Network, Manta Pacific, and Celo, each with unique motivations for adoption and adding value to the ecosystem in different ways. Additionally, we highlight open contributions to the development of OP Stack, including a16z’s Magi, Curio’s Keystone, and Lattice’s OPCraft, showcasing the broad community’s active engagement in co-building and contributing to the platform’s development.

OP Stack is currently leading the RaaS track due to its inherent properties, which make it similar to Ethereum’s success in L1 wars, including:

First-mover advantage from a GTM strategy.
Open mind and community-driven culture inherited from Ethereum.
Robust solution from a battle-tested codebase.
New possibilities of synergy from the thriving OP ecosystem.

Cornerstone of Rollups Network

OP Stack is a fundamental building block for Superchain, the rollup network that represents Optimism’s ultimate goal. However, Op Stack is just the first step towards achieving this ambitious objective. Its main purpose is to enable quick protocol launches and establish a standard. Currently, each rollup can be seen as a separate chain without direct interconnection beyond the bridge. While these rollups create their own protocols, their architectures are similar but not identical.

Once the stable version of OP Stack gains recognition from the broader community, the OP Stack alliance faces the challenge of addressing horizontal scaling issues. This involves finding solutions for shared security and communication layers, as well as ensuring original Ethereum Virtual Machine (EVM) interoperability. This is an ongoing process primarily carried out among L1 networks and has not been fully resolved yet.

Recognizing the challenges of horizontal scaling, Optimism has established Superchain as a long-term goal with the aim of reducing cross-rollup transaction latency, maintaining atomic synchronous composability, and building the rollup network simultaneously.

For now, let’s focus on OP Stack itself and explore its architecture and how it paves the way toward the future Superchain.

In the modular approach, the architecture of OP Stack resembles more of a “Rollup LEGO” rather than a one-click deployment toolkit. According to the official documentation, OP Stack is divided into six layers. The top layer involves governance, represented by smart contracts governing the treasury or council. The bottom layer is the Ethereum layer with robust consensus. However, the four internal layers form the core stack offered by OP where the RaaS solutions compete.

Using a top-down analysis approach, there is significant debate surrounding the settlement layer in the proof system layer of rollups. The proponents of zk rollup argue that zk proofs provide increased security, while the Op rollups argue that zkRollup is also upgradeable. Each rollup uses different levels of “training wheels.” In the case of Optimism, it has proposed two sets of proof systems: fault-proof in the short and medium term and zero-knowledge proofs (zkp) in the long term, which aligns with Vitalik’s statement. However, Optimism’s mainnet has operated without fault proof since its genesis.

Diving into the codebase, OP’s fault-proof system has been upgraded with the Optimism Virtual Machine (OVM). In OVM 1.0, fault-proof is more direct but expensive. It involves deploying all controversial contracts on L1 and re-executing them to settle disputes. OVM 2.0’s mechanism is similar to that of ZK proofs, featuring an on-chain part and an off-chain part. The off-chain part, called mipsevm, consists of a smaller instruction set virtual machine. Challengers can iteratively perform binary searches to identify controversial opcodes and generate proofs. The on-chain part comprises an MIPS.sol contract that is responsible for emulating and verifying the proof.

Other zk teams have proposed building ZK proofs using their own virtual machines for the OP Stack. Mina, Risc0, and Ethstorage are among those who have presented their solutions. Furthermore, Optimism could also use the open-source repository from the Ethereum PSE team. Therefore, in the foreseeable future, we may see both fault-proof and validity-proof systems in use.

As previously mentioned, OVM functions as Optimism’s virtual machine, with only a slight deviation of approximately 1–2k lines from the mainnet EVM. This strategic decision ensures close alignment with Ethereum and allows developers on the mainnet to transition effortlessly to Optimism. While sacrificing some performance, this approach provides a smoother developer experience. The minimal modifications to OVM also expedite the development of OP Stack, in line with Optimism’s strategy to bring its product to market quickly.

The derivation layer, which is sometimes overlooked by most users, plays a crucial role in determining the flexibility and modularity of OP Stack. The derivation layer collects raw data blocks necessary for rollups. While current rollups typically derive from blocks, bridge contracts, and transaction batches, OP Stack proposes abstracting the derivation layer to accept more data resources, such as an indexer. This approach enables the integration of uniform data formats into rollup blocks, paving the way for a thriving ecosystem with various types of rollups.

Regarding the sequencer layer, there is still much work to be done. The ideal scenario would be for OP Stack to easily build a sequencer network for rollups. However, the reality is more challenging, as having a separate consensus layer for each individual rollup is not practical. OP Stack aims to transition from this intermediate stage to achieve ultimate shared security, similar to Cosmos 2.0. This demonstrates OP Stack’s ambitious goals, putting it in direct competition with other innovative solutions like parachains, subnets, or sharding.

In addition to these core layers, OP Stack provides open-source affiliate tools for rollups, such as indexers and explorers. Rollups can easily establish the necessary infrastructure around them, supported by the Ethereum-compatible toolchain.

After analyzing the codebase, we found that the open-source repository follows the modularized design of OP Stack. Here are some key components within the repository:

op-node: This module is responsible for block derivation from L1, serving as a replacement for consensus. It drives the “geth” component.
op-geth: This module represents the execution layer close to the EVM.
op-batcher: This module compresses blocks into batches and publishes them on L1.
op-proposer: This module handles the submission of proofs.
contracts-bedrock: This module includes the contracts part on both L1 and L2.
fault-detector: This module offers fault-detector services.
SDK: This module provides a JavaScript SDK for contract developers.
chain-mon: This module supports monitoring services.

All of these components work together to provide the functionality and implementation of OP Stack. The modular design allows for a more organized and scalable approach to building the Optimism ecosystem. With all of these modular designs combined, OP Stack provides the standard solution for rollups and becomes the cornerstone of Superchain.

The latest major release of OP Mainnet, called Bedrock, was launched on June 6, which is a huge leap for OP Stack. The upgrades to the base layer not only have a significant impact on the developer side, but they also improve the user experience dramatically. According to the stats from DUNE, Bedrock has saved nearly 60% of gas per transaction compared to the legacy version, which has inspired more users to use the cheaper network. Before Bedrock, Optimism was often criticized for its higher gas fees, but now it can offer nearly the same, or even lower, gas fees than Arbitrum. While Arbitrum has the largest market share in L2s, OP Stack has assembled various rollups around it. It’s the battle between smart contract platforms and a rollup ecosystem.

https://dune.com/oplabspbc/optimism-bedrock-migration-impact-dashboard

A Thriving Ecosystem

The technology stack is only one aspect of crypto protocols. However, the open community within this field is where the most significant value lies. OP Stack understands this value and not only ensures EVM compatibility in rollups but also prioritizes a community-driven approach to building the ecosystem. Through the concept of co-building, anyone can contribute to the stack itself. Additionally, Optimism has created an extra space for the community to build around OP Stack, allowing for the development of variants or derivations from the original OP Stack.

These principles guide the development and evolution of OP Stack, resulting in a thriving community of contributors. Each colored circle represents a rollup within OP Stack, with the vibrant red at the center representing Optimism, surrounded by a diverse and thriving ecosystem. In this section, we will explore the existing ecosystem to dive into what OP Stack offers and what these protocols contribute in return.

If we want to explore the broad Optimism ecosystem, another group of entities that may adopt OP Stack is the protocols on the Optimism mainnet. Essentially, the Optimism mainnet serves as an experimental rollup for OP Stack. Successfully onboarding projects onto the Optimism mainnet carries significant symbolic value, as it verifies the feasibility of the technology. In addition to deploying on other OP Rollups, complex protocols can also initiate their own rollups when smart contracts are unable to meet their demand.

Worldcoin is a typical case. It does not use OP Stack to initiate a rollup. Instead, it plans to migrate its contracts from Polygon to the Optimism mainnet, thereby bringing its 500K monthly active users (MAUs) to Optimism. Furthermore, Worldcoin intends to introduce Tools for Humanity (TFH) to aid in the growth of the identity system for Optimism.

Standalone Rollups

In the OP Stack ecosystem, the largest category is made up of various types of rollups. Many entities have chosen to use OP Stack to launch their own rollups for different reasons, such as reducing operational costs, lowering gas fees, increasing control capacity, and enhancing flexibility.

Below is a list of online rollups that are currently in the testnet phase. Most of these rollups have a similar configuration to Optimism’s mainnet. However, opBNB stands out by expanding the blockspace to accommodate larger capacity, aligning with the performance requirements of the Binance Smart Chain (BSC) as the base layer. As the testnet has low transaction throughput, gas fees may be slightly higher than expected at present. Nevertheless, once these rollups transition to the mainnet and attract more users, the increased user base will help lower gas fees.

Going forward, we’ll analyze the reasons behind each rollup in the ecosystem and how they contribute to OP Stack.

By examining the motivations behind each rollup, we can better understand why they chose to adopt OP Stack. We’ll also explore how these rollups help grow and develop the OP Stack ecosystem. Through this analysis, we can gain more insight into the overall value that each rollup brings to OP Stack.

Coinbase: Base

Base, as the first major client to adopt OP Stack, is a significant milestone for the framework. Coinbase’s decision to adopt OP Stack not only provides an endorsement but also brings their large user base into the OP Stack ecosystem. The main focus of the next wave is mass adoption, so Coinbase’s millions of users are invaluable to Base. Many protocols, especially DeFi protocols, will try to migrate to Base Network to capture these users. The statistics show that there are 5 million unique addresses on Base testnet, and nearly half of them are smart contracts, which is higher than the ratio of contracts on peers. Furthermore, many of Coinbase’s clients are institutions holding significant assets in traditional finance markets. If they enter space, this would represent a significant capital inflow on the chain. In addition to the endorsement, potential users, and capital, Coinbase claims that it will contribute part of the transaction fees back to the OP treasury.

It appears that Coinbase brings users, capital, and income to OP Stack. Many may wonder why Coinbase chose OP Stack over other solutions. In reality, OP Stack provided the best solution for Coinbase at the time. Other rollup solutions lacked a benchmark like Optimism, and adopting OP Stack was a more cost-effective approach without the need for a separate set of validators to maintain the network. Moreover, having a single sequencer allowed Coinbase to have full control over the network, enabling them to tailor the architecture to their own business needs. This control facilitated tasks like censorship and KYC compliance. Furthermore, OP Stack’s EVM equivalence aligned well with Coinbase’s goal of building its own ecosystem. Migrating the existing Ethereum ecosystem and onboarding most developers with OP Stack was the optimal path for Coinbase to realize its ultimate vision of an open financial ecosystem.

Looking back, the cooperation between Coinbase and OP Stack has proven to be a mutually beneficial alliance. Coinbase and OP Stack share many inherent similarities. They both align with Ethereum’s values, provide lots of public education material on their websites, and are very developer-friendly, with detailed and clear documentation. Developers can easily get started building upon their platforms.

Recently, Base announced the launch of their mainnet for builders to access. Developers can deploy their contracts and prepare for the public launch a month later. This is a great strategy to give developers the opportunity to build first, then open the UI for users with an existing ecosystem. The bridge contracts show that the TVL of Base mainnet achieved half a million quickly in the first week. We are looking forward to the progress for Base by early August, as it may surprise us with a thriving DeFi ecosystem. In the long term, it has the potential to become the DeFi hub in the OP Stack ecosystem, like what Osmosis stands for Cosmos ecosystem.

Binance: opBNB

Binance Smart Chain (BSC) is technically a separate EVM-compatible ecosystem. Binance used an open-source repository to scale BSC, similar to how they forked Ethereum in its early days. Currently, opBNB on BSC serves a role similar to Optimism on Ethereum. This shows that Binance’s adoption of OP Stack is also a strong endorsement, further cementing its legitimacy.

However, Binance has different reasons for adopting OP Stack. They plan to introduce opBNB to support high-frequency interactions, particularly in gaming applications. Test data shows that opBNB can achieve almost 5000 TPS (transactions per second). In addition to these reasons, Binance takes advantage of the modular design of OP Stack. Since they have their own base layer and future storage solution, opBNB is combined with BSC as the data availability layer, together with the potential for BNB Greenfield unleashed in the future.

For Binance Smart Chain (BSC), opBNB is a conservative scaling solution, alongside their alternative zkBNB. However, for OP Stack, being forked and adopted in another ecosystem like BSC is a significant milestone, indicating its versatility and traction beyond the whole Ethereum ecosystem.

Zora: Zora Network

Zora Network, an NFT platform on the Ethereum mainnet, has taken a different approach other than Coinbase and Binance by using OP Stack to create an app-specific rollup. This move has a couple of benefits. Firstly, using layer 2 solutions can significantly reduce gas fees, which could help more people adopt the technology. Secondly, OP Stack provides the computational power of a full chain while accommodating specific NFT contract platforms.

OP Stack sees Zora Network as an excellent example of how to implement App-specific Rollups. Previously, appchains were the only option for more complex protocols to expand. However, not all protocols could afford the associated initiation and operational costs. With the deployment of OP Stack, the threshold has been lowered considerably, paving the way for more app-specific rollups like Zora Network to emerge and enrich the ecosystem.

Adventure Gold DAO: Loot Chain

Loot has built a strong community and created the Lootverse, which is a combination of various loot collections. This has made them a remarkable player in the recent wave of developments. Recently, Adventure Gold DAO (AGLD DAO) proposed building an L2 rollup specifically for the Lootverse. This presents an exciting opportunity for the loot ecosystem to regenerate and thrive further.

AGLD DAO chose to adopt OP Stack for similar reasons as Zora Network. However, AGLD modified the derivation logic to ensure that both the mainnet and testnet only produce blocks when transactions are submitted. This showcases the flexibility offered by OP Stack’s configuration options. As a result, Loot Chain becomes an additional and valuable component of the broader ecosystem.

Gitcoin: Public Goods Network

Gitcoin recently announced the launch of a Public Goods Network (PGN) to host the original Gitcoin contract. Because Gitcoin faces a challenge where donations on the Ethereum mainnet incur high gas fees, which can exceed the value of small donations. This makes it impractical for someone wanting to donate $5 to end up paying $10 in gas fees. Therefore, the need for lower gas fees provided by L2 solutions is crucial to scale the user base for Gitcoin.

Moving public goods to a rollup is a strategic move that benefits both Gitcoin and Ethereum ecosystem. By moving the burden of running public goods off the mainnet, Ethereum can function primarily as a pure settlement layer. This aligns with the overall vision of OP Stack, which helps Gitcoin advance further. Additionally, PGN has the potential to collect fees from the sequencer and allocate them towards funding public goods, forming a virtuous circle. As more details emerge in the future, we eagerly anticipate further disclosures about this exciting development.

Manta: Pacific

Manta Network has recently introduced Manta Pacific, an EVM-native L2 solution, in addition to its parachain built on Polkadot which is now rebranded as Manta Atlantic. It’s worth noting that a zk protocol has adopted OP Stack. Mina and Risc0 are providing zk proof systems because they don’t have an existing ecosystem. Manta Network, on the other hand, has already established a large user base within the Polkadot ecosystem, indicating a potential step-by-step migration strategy.

According to their latest announcement, Manta Pacific differs from zkEVM in several ways. Firstly, Manta has renamed its previous parachain to Atlantic and kept it alive. The new Pacific rollup can fully leverage the modular design and unlock its complete potential without being constrained by previous technology. Secondly, Manta has invested considerable effort in circuit development over an extended period, enabling them to handle larger circuits. They have also integrated their previous contracts on L2, such as zkNFT and zkSBT. Thirdly, they have integrated additional circuits like privacy and reputation protocols from the PSE team. By combining all these aspects, Manta Pacific can offer a broader range of possibilities and enhanced composability.

While there may be trade-offs involved, we eagerly await further details to confirm Manta Pacific’s EVM compatibility, developer experience, and the interaction between Atlantic and Pacific. Monitoring these developments will provide insights into the potential of Manta Network’s L2 solution.

Celo: Proposal Draft

Celo has announced their return to Ethereum with OP Stack, joining the ranks of the latest chains to do so. They recently proposed their governance draft on their forum and announced their transition at EthCC. Celo is a PoS Ethereum-compatible L1 that focuses on payments. While there are many EVM-compatible L1s on the market, many have suffered user loss and capital burn during bear markets. Celo is no exception, and their decision to seek transformation is reasonable.

Unlike Manta Network, Celo is not starting a new chain to adopt OP Stack. Instead, they are working to integrate Celo directly into OP Stack and make modifications to some layers. However, they do not want to abandon their existing ecosystem, user base, or token, so the transition comes with the burden of history. Firstly, Celo reuses the consensus layer from previous validators, with rotating block proposers becoming the new rotating transaction sequencers. Secondly, the existing consensus is the source of transaction fees. Celo cannot use Ethereum as the DA layer, as the transaction fees will not be affordable for users. Instead, they have to choose an off-chain DA and submit the DA certificate on Ethereum. Even then, the transaction fees will be slightly higher than before. Thirdly, the complicated layers introduce more security assumptions, and the security of the entire ecosystem depends on the weakest layer. Fourthly, Celo reuses CELO as gas fees, so they must manage the exchange rate between CELO and $ETH and design a new gas model.

In summary, Celo’s dilemma is common among EVM-compatible L1s. They want to align with Ethereum via OP Stack but must navigate all the historical issues. Celo’s proposal reveals the price of reusing the stack, including higher fees, more security assumptions, and longer finality. Nonetheless, we may see more transitions from existing L1s, and it will be interesting to observe how they make trade-offs.

Open Contribution

Apart from the different kinds of standalone rollups, the community is also actively involved in co-building and contributing to the development of the OP Stack. This collaborative effort is a positive signal, as it highlights contributions from various teams at different levels, which helps to promote the decentralization of the technology stack.

a16z: Magi

a16z, as an early investor in Optimism, is committed to co-building the ecosystem. In addition to their role in promotion and marketing, they are now making direct contributions on the technological front. Recently, a16z open-sourced the rust version of op-node, which has been named Magi.

Magi is designed to be compatible with execution clients like op-geth, and as an independent implementation, aims to enhance the overall safety and liveness of the OP Stack ecosystem. This is a significant milestone for OP Stack in terms of decentralizing the client during its early stages. Furthermore, Magi offers faster block derivation compared to the current op-node implementation, providing an additional advantage.

Curio: Keystone

Curio is a team that has been working quietly on developing Keystone, a specialized chain within the OP Stack ecosystem that is specifically designed for on-chain games. While the terminology may seem complex, in simpler terms, Keystone has made significant modifications to the native layer to accommodate gaming requirements.

Unlike the previously mentioned rollups, which primarily involve configuration changes and layer replacements, Keystone aims to create a comprehensive stack tailored specifically for game-specific rollups. By taking advantage of lower gas fees and the full computational power of OP Stack, Keystone integrates the game cycle directly into block production to ensure precise timing. Additionally, they have abstracted game components into pre-compiled contracts, enabling higher performance and significantly reduced gas fees. Overall, their efforts contribute to expanding the possibilities for gaming applications within the broader OP Stack framework

Lattice: OPCraft

OPCraft, a Minecraft project on the blockchain, generated a lot of buzz at ETHDenver last year. It relies on OP Stack technology and the MUD framework developed by Lattice. MUD is a versatile framework designed for complex Ethereum applications, not just gaming. However, its Entity Component System (ECS) provides a standardized approach for organizing state storage, architecture, and protocol interactions, which makes it a natural fit for gaming applications.

While the MUD framework is flexible as a contract toolkit, complex applications like OPCraft require higher performance and lower gas fees. This is what OP Stack can boost it.

Lattice’s flourishing ecosystem is one of its notable contributions. With its slogan “Engine for the autonomous worlds,” Lattice has attracted many hackers to build upon its framework. Many games are in the pipeline and will launch in the near future. OPCraft serves as an important benchmark and guide, leading these projects into the OP ecosystem.

Robust Solution with First-Mover Advantage

To sum it up, let’s compare OP Stack with Ethereum to explain why OP Stack is in the leading position. While there are various rollups building their own protocols, Optimism stands out as the only one with an operational mainnet, providing a benchmark for the ecosystem. This first-mover advantage is significant, as there were no other choices available at the time. Optimism has consistently implemented its go-to-market-first principle, launching ahead of competitors like Arbitrum. Similar to Ethereum’s early days, Optimism’s technology may not be the best, but it is usable, which gives a time window for projects to build its community over time. Once the community has grown into a strong alliance, developers will get used to the language and toolchain, and users will get used to the products and experience. We can learn many lessons from the Layer1 wars. Those alt Layer1s have better performance and much more capital support, but none of them eventually became the Ethereum killer. This could also happen in Layer2 wars, making it hard for the latter to flip the first. OP Stack has established a solid moat around it.

In addition to the first-mover advantage, Optimism demonstrates better the utmost alignment with Ethereum compared to other competitors. We previously highlighted the importance of EVM compatibility, and the modifications of Optimism are much less than Arbitrum and other competitors. Besides that, the inherent value of Optimism is totally aligned with Ethereum. When considering the rollup stack landscape, we can observe that only OP Stack is focused on helping Ethereum scale through rollups, while many other rollup stack services aim to build their own independent ecosystems rather than purely Ethereum L2 rollup stacks. When we analyze the success of Ethereum, we always mention its open mind and community-driven culture. From this point of view, Optimism is the benchmark among all Layer2 rollup solutions.

Looking ahead, the battle-tested nature of OP Stack is crucial for its future development. The original codebase of Ethereum has been tested by many hackers. For OP Stack, there are fewer modifications, meaning more security. And the modifications of OP Stack have been tested by many rollups, and we haven’t heard of any hacks in the OP ecosystem until now. This testifies to the robust solution offered by OP Stack. For both new entities entering the web3 space and existing web3 protocols considering migration to rollups, technology risk is a primary concern. They prefer to adopt more mature solutions like OP Stack. The RaaS track will also follow the flywheel effect, with more rollups coming in, more developers keeping an eye on the codebase, and more security. And because OP Stack is an open community, rollups in OP Stack can learn from each other’s bugs.

Furthermore, we must consider the composibility and interoperability among those various rollups. The broad ecosystem of OP Stack has the potential to foster the development of more innovative protocols. We have seen the thriving ecosystem with so many implementations from OP Stack, such as DeFi, NFTs, Public Goods, Games, and more. There is synergy that exists between many protocols, and DeFi LEGO also builds up from the base layer of Dex. We can’t imagine what kind of new things will grow from OP Stack, but the infrastructure layer of OP Stack could be the only ecosystem of Rollup Stack that can provide unlimited possibilities.

Combining the four advantages mentioned above, we believe that OP Stack has paved the way to lead in this domain at the current stage. It creates a self-reinforcing loop so that the community can grow by itself organically.

P.S.: We will continue to monitor developments in other rollup stacks. Subscribed for our future research series, where we will dig deeper into analyzing the trade-offs, pros, and cons of different RaaS protocols, stay tuned.

Reference

Disclaimer: This article is provided for informational purposes only and should not be considered as financial advice. The cryptocurrency market is highly volatile and unpredictable. Always conduct thorough your own research and consult with a qualified financial professional before making any investment decisions.