Equilibrium Infra Bulletin #22: State Growth Is The Final Boss, Cryptoeconomic vs ZK Coprocessors, and Anti Superchain Thesis
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.
Research, Articles and Industry News:
📚 Mastering the Final Boss in Blockchain Scalability: State Growth - Recommended by Hannes:
The three main bottlenecks for scaling blockchain networks are execution, data (both storage and availability), and state. A lot of focus has been placed on the first two, whereas state growth often gets less attention and remains largely unsolved (often deemed as a future problem because it’s not yet at a critical stage).
State growth refers to the ever-increasing accumulation of data that must be stored and managed by nodes in a blockchain network. Besides being a potential bottleneck for performance, it also affects the decentralization of the network as higher storage requirements for nodes lead to higher hardware requirements. Some potential solutions to state growth are:
Letting the state grow - Accepting state growth in exchange for greater bandwidth usage, which also increases node requirements. Solana has tested this internally and it seems to be less of a problem than most people think though, but probably not the sole solution.
State rent - Charging fees for storing state data. However, a potential downside from this approach is “tree rot” where branching paths are corrupted.
Statelessness - Full nodes don’t need to store state, relying instead on state proofs included with transactions and blocks. This is the direction that for example Ethereum is taking.
Fuel’s solution leverages the UTXO model, which gives some benefits such as localized state trees (each smart contract has local state tree), native assets (don’t need to be merkelized) and no approval state (eliminates unnecessary state changes). In addition, Fuel leverages native state rehydration (allows for re-accessing the state when needed) and other techniques, such as scripts and predicates, to minimize the burden.
Key Takeaway: While a lot of the public debate has been around scaling execution and data access, state growth is a third big problem that will need more attention as the adoption of blockchains increases. While it doesn’t command the same priority as the other two given it isn’t a huge problem yet, there are solutions being worked on, such as stateless validators or state rent.
📚 Coprocessor Market Structure: Cryptoeconomic vs ZK - Recommended by Hannes:
Coprocessors enable (off-chain) computation on on-chain data while guaranteeing results either cryptoeconomically using value at stake or cryptographically using ZKPs. These are not fully identical in capabilities with some differences listed below, although as Rob lays out in the post they are partially substitutable.
Cryptoeconomic coprocessors have access to hash functions, cryptography, data structures, etc. that ZK coprocessors don’t.
ZK coprocessors, on the other hand, can handle larger amounts of data (since computation is done off-chain) and are better suited for those use cases.
Rob makes three key claims based on two different properties of coprocessors - cost and price-elasticity:
Cryptoeconomic coprocessors will be able to sustainably undercut ZK coprocessors on price: While hardware acceleration and software optimization will bring down the cost of generating ZKPs, the overhead today is still estimated to be 5-6x higher compared to just executing the computation. ZKPs do benefit from much cheaper verification (compared to all validators re-executing) - something that proof aggregation will only accelerate. However, all these things considered, before the cost of generating ZKPs for general-purpose computations comes down by orders of magnitude, cryptoeconomic coprocessors can undercut ZK ones and still be profitable.
As ZKPs become cheaper, the intersection point moves further to the left (source) There is an effective price ceiling for cryptoeconomic coprocessors: It’s hard to think of a reason why someone will pay more for using a cryptoeconomic coprocessor than ZK, which means that the cost of ZK coprocessors acts as a soft ceiling for cryptoeconomic.
Cryptoeconomic coprocessors can operate profitably in this environment: Combining these two claims means that cryptoeconomic coprocessors can undercut ZK and make a profit, whereas ZK would need to burn through a lot of capital to subsidize fees and be price-competitive with cryptoeconomic.
Key Takeaway: Even though the cost and speed of ZK-proving are improving rapidly, re-execution may be still cheaper in the long term if the number of nodes is low enough - especially for more general-purpose compute. In this case, cryptoeconomic coprocessors remain sustainably cheaper than ZK, as Rob argues in the post. More likely is that they will be tailored for different use cases, with ZK serving data-heavy use cases and those that require stronger guarantees (cryptographic> cryptoeconomic), and cryptoeconomic coprocessors are used for computation that’s more price-sensitive and not as data-heavy.
🎧 The (Anti) Superchain Thesis (Cooper Kunz) - Recommended by Joakim:
A superchain is typically thought of as a network of chains that share bridging, decentralized governance, upgrades, communication layers, and more. The term was first coined by Optimism but has since spread to other networks (zkSync Hyperchain, Polygon CDK…). While the details around flexibility and sovereignty differ between these different ecosystems, the idea is similar - chains building on top share governance and a common tech stack (sequencing, data availability, proof aggregation, etc.).
Source: Cooper Kunz Given the similarities in product offerings, how do superchains differentiate from each other and attract L2s/rollups to build on top of their stack? Today, most (transparent) L2s mainly compete on speed, cost, and safety, but these are all improving. Cooper argues that once those hit a certain threshold (cheap and safe enough), other things become more important. The longer-term differentiation is likely to happen around:
Customizability - Can the L2/L3s choose between different VMs? How about where their data will get published - Ethereum or an alternative DP layer? Is sequencing shared or can the L2s operate their own decentralized sequencing network? The tradeoff for more customizability is less composability (fewer shared standards).
Brand and BD/Sales - Who can attract partners (such as alt-L1s or companies that don’t yet have an on-chain presence) to build in their ecosystem? We are already seeing some of this with different ecosystems competing for partners (for example where Kraken’s L2 gets built), but expect things to accelerate.
Developer experience and funding - Ecosystem-wide grants, developer support, and funding are great ways to bootstrap and support a developer community.
Source: Cooper Kunz
The superchain thesis seems to be the consensus bet among most L2s, which is why Cooper’s anti-superchain thesis is refreshing. It rests on five key points:
There will be less than 25 meaningful rollups/L2s, meaning that <25 rollups consume 90% of DP (or other relevant resource). These large projects will want to differentiate, not compromise or collaborate with others.
Meaningful projects want to control monetization and economics. They might be OK paying rent initially (in terms of software license, fee splits, or MEV shares), but not forever.
Meaningful projects don't want to lose sovereignty, i.e. inherit additional governance surface or risks. Looking at the first chart (axis of sovereignty), they want to be as far to the left as possible.
Other solutions might prevail before superchains get prioritized, such as based rollups or using Ethereum as a shared sequencer. These align with Ethereum rather than a specific L2 ecosystem.
Those who opt into superchains will leave if they become truly successful. Due to the reasons listed above, the cost of staying within a superchain becomes too large compared to its benefits.
Key Takeaway: The superchain thesis enables features that are compelling to some chains, such as smoother and safer interoperability or shared governance. Cooper lays out an interesting counter-argument that superchains will end up serving the long tail of L2s (less valuable from an economic standpoint), as any chain that becomes successful enough will eventually outgrow the superchain. While it rests on many assumptions, it’s always valuable to consider alternative views - especially if they are strongly counter-consensus.
Personal Recommendations From Our Team:
📚Reading: Privacy and Freedom - Alan F. Westin: A classic from 1967 that laid the philosophical groundwork for much of the current debates around technology and personal freedom.
🎧Listening: Avishai Cohen Trio - Shifting Sands Session - ARTE Concert: Avishai Cohen is an internationally renowned bassist, singer, and composer. The video is from an exclusive concert at the Maillon Theatre in Strasbourg, where he’s accompanied by drummer Roni Kaspi and pianist Elchin Shirinov.
💡Other: World's Fastest Camera Drone Vs F1 Car (ft. Max Verstappen): The drone in question can accelerate two times faster than an F1 car, reaching 300 km/h in just 4 seconds with a top speed of over 350 km/h 🤯