Equilibrium Infra Bulletin #18: Eigenlayer x Cosmos, DA Layer on Bitcoin, and ZK in 2024
Equilibrium Labs builds the state-of-the-art of decentralized infrastructure. We are a global team of ~30 people who tackle challenges around security, privacy, and scaling.
This newsletter allows us to share more about what we read, what excites us, and what we think is relevant to the space. In addition, you will get a glimpse into the organization and our culture. You can also find us on Telegram.
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Research, Articles and Industry News:
📚 Cosmos. Ethereum. EigenLayer. - Recommended by Hannes:
Bootstrapping economic security (decentralized trust) is hard, which increases barriers to entry and acts as friction for innovation. This is the problem that EigenLayer and other restaking protocols are trying to solve by allowing middleware protocols and alt-L1s to re-use existing security (such as Ethereum) with validators opting in for additional slashing conditions.
We’ve already seen this concept tested on Cosmos, which launched Interchain Security (ICS) in May 2023. This enables the Cosmos Hub - one of the largest chains on Cosmos and backed by ~$2.4bn of staked ATOM - to lease its security to consumer chains. The same validator set that powers the Cosmos Hub also validates blocks on the consumer chain. However, it seems that the ICS has struggled to gain adoption and there are currently only two live consumer chains (Neutron and Stride).
Soon Cosmos developers will be able to spin up a new PoS chain and tap into Ethereum’s security by leveraging EigenLayer, instead of using the ICS. While this is positive for Cosmos developers who have more options to choose from and can become more “Ethereum aligned”, it also seems to directly undermine the efforts of ICS and the value proposition of ATOM.
Key Takeaway: Bootstrapping economic security in a decentralized manner is hard and only a few chains have succeeded in this at scale. Hence it seems natural to try to re-use it, rather than each protocol bootstrapping its own. Cosmos developers can soon tap into Ethereum’s security by leveraging Eigenlayer, rather than just ICS. We believe this trend will continue and restaking will consolidate around a few high-quality assets, as the quality of economic security depends on security budget, node decentralization & robustness, and more. While there are several restaking solutions for different assets popping up, not all restaked capital is the same and most will likely fail to gain traction.
📚 Introducing Nubit: The First Bitcoin-native Data Availability Layer - Recommended by Hannes:
With the rise of Ordinals and L2 scaling solutions on Bitcoin, storage is becoming a bigger bottleneck. Nubit is trying to solve this by building a data publication layer for Bitcoin, which reduces transaction costs by storing data on the DA layer and only posting the corresponding DA tag to the Bitcoin blockchain. Nubit also plans to offer a programmable settlement layer, which would enable more complex interactions within the Bitcoin ecosystem (e.g. validation of ZKPs for zkOracles or states of validity rollups). However, the team hasn’t revealed many details about how the settlement layer would work.
Nubit aims to serve a growing number of use cases on Bitcoin How would this work in practice? Let’s consider inscriptions as an example: Instead of directly inscribing the full image onto the Bitcoin blockchain, users can upload the image to Nubit. They then inscribe only a 16-byte Data Availability (DA) Tag and a 2-byte special identifier on Bitcoin, totaling 18 bytes. This would result in a significant reduction in both network fees (90%) and use of block space (99%). A hard commitment for data is only achieved once the DA tag is permanently committed to the Bitcoin blockchain, which includes creating a Merkle tree of the state and recording the root on Bitcoin.
Overview of the architecture and workflow (source) Riema, the team behind Nubit, is also working on BRC-1310 - a specialized Bitcoin-native DA standard. It contains other features as well which are aimed at reducing trust assumptions through things like staking native Bitcoin, data availability sampling techniques, attestation of data directly on the Bitcoin network, and a decentralized bridge.
Key Takeaway: With more activity and rising fees on Bitcoin (largely led by Ordinals, but also many upcoming L2s), the scaling limitations of the base layer are becoming more obvious. We’ve seen several different implementations of alternative DA solutions on Ethereum and other ecosystems - Nubit is aiming to bring some of those techniques to Bitcoin. This fits into the larger theme of innovation around the Bitcoin base layer to enable a wider variety of use cases.
🎧 Zero Knowledge Podcast: ZK in 2024 Predictions - Recommended by Joakim:
Making predictions is hard (even for smart people), so it’s better to treat these predictions-episodes/posts more as potential idea-generators than the definite truth. In 2023 we saw more implementations of ZKPs in practice with several zkEVMs hitting mainnet, storage proofs, and ZK co-processors gaining traction - but there is still much work to do as the ZK industry remains research-heavy.
Some of our highlights with added commentary from the episode were:
TEE gets more adoption (unfortunately): Trusted execution environments are hardware-based solutions for private compute, where data is only decrypted within a secure enclave (“black box”). This is cheaper and faster but has some security concerns due to side-channel attacks etc. We generally prefer the software route over the long term due to higher flexibility and believe it will eventually become competitive on cost and performance.
More focus on client-side proving: Client-side proving enables better privacy guarantees as one doesn’t need to share data with third-party provers. Instead, users compute locally (on their own device) and generate a proof which is posted on-chain for verification. This is still a relatively nascent area with more work needed to optimize proving schemes for client-side proving and bring down proving times.
Non-financial use-cases of ZKPs: Private payments & defi use-cases are tricky due to the compliance requirements and regulatory headwinds. However, many non-financial use cases benefit from either the privacy or succinctness that ZKPs can offer - including gaming, identity, and zkLogin/zkEmail. We expect to see more innovation in these areas.
Apple adding attestation to photos: What if every photo taken with an iPhone would be cryptographically signed so that it could later be verified to be “real” (taken by a human)? This would help alleviate the problem around deep fakes, i.e. AI-generated images that are starting to look more and more realistic. This extends beyond both Apple and photos - it seems plausible all devices will eventually roll out some type of signature & verification scheme.
Verifiable FHE/MPC gains more interest: The combination of ZKP, FHE, and MPC is an active area of research and would enable blockchains with shared private state and provable state transitions (for example a ZK-FHE rollup). However, it still seems to be at least a few years away from being practical and cheap enough (Guy Zyskind from Fhenix thinks 5+ years). On the other hand, the timeline around ZKPs accelerated significantly as attention increased and more capital flowed into the ecosystem. We may see a similar acceleration for verifiable FHE/MPC, if there’s enough demand.
Key Takeaway: ZK is still quite a research-heavy industry, but we’re starting to see more focus on engineering and hardware acceleration - generally aiming to make ZK more practical. In addition, there are attempts to abstract away the complexity for users and developers alike with several new DSLs (Leo, Noir, 01JS…) and low/no-code platforms like Succinct which make it much easier to write applications that utilize ZKPs. While there are still very few (if any) ZK applications that have scaled beyond a small set of specialized users, we remain confident that non-financial use cases offer a large playground for builders to play around in. What will the 0-to-1 moment look like for ZK applications?
News From Our Partners:
StarkNet v0.13 is live on mainnet: The upgrade includes benefits such as lower transaction cost (50% gas reductions for average transactions), support for fee payments in the native token STRK, and reserved fields for future features such as Volition and payment master.
Eiger Is Taking Ownership and Continuing Development of Beerus, a Starknet Light Client: An early goal for the team is to integrate Beerus into web-based wallets, enabling users to switch seamlessly to a light client mode. This transition is crucial for those who prefer not to rely on untrusted RPC providers. Eiger is part of the Equilibrium Group.
Personal Recommendations From Our Team:
📚Reading: The Unincorporated Man - Dani and Eytan Kollin: What if every individual was formed into a legal corporation at birth, spending many years trying to attain control over their own life by getting a majority of his or her own shares? Instead of taxes, the government owns 5%. Instead of loans, you give out stock. Siblings don’t fight because they own stock in each other and any trauma they induce could result in poor returns. If this piqued your interest, we’d recommend reading the full book!
🎧Listening: Pokemon x Linkin Park: If you’ve ever wondered what it would sound like if Linkin Park had made the Pokemon theme, this AI-generated cover answers that question.
💡Other: Finland has the most metal bands per capita in Europe by a wide margin🤘
