How ETH 2.0 could become the VISA of crypto

High fees and low transaction speed are the main limitations affecting the Ethereum network. These issues will remain even after the imminent Transition to Ethereum 2.0.

And Ethereum after Proof of Stake, still really, really needs scaling solutions.

Zkevm, a new scaling technology, aims at solving Ethereum's bottleneck once and for all.

In terms of throughput, ZKEVM might even outpace Visas.

We sit down with Mikhailo Bielic, the co founder of Polygon, to find out how ZKEVM work and how they could transform E into a truly global monetary network. Before we start, don't forget to subscribe to our channel. I'm Giovanni, your host, and this is a cointelegraph interview. Ethereum merge is upcoming. It should happen finally in September. How is this event going to impact Layer two scalability solutions such as Polygon?

So, as many people are aware of pos, Merge does not affect throughput of Ethereum in any way. The very positive thing about the merge is that Ethereum is migrating from Proof of Work, which is quite wasteful technology and has a high environmental impact in terms of carbon footprint and everything else. And it's a very, very important event for Ethereum to actually to finally migrate to Proof of Stake as much more environmentally friendly technology. In terms of throughput. Nothing really changes. So Proof of Stake and Ethereum after Proof of Stake still really, really needs scaling solutions. So the impact will be positive in a sense that, for example, Polygon, we use Proof of Stake from the very beginning and we were very, very proud that we're using this green, environmentally friendly technology. But there were some concerns with regards to when we communicated our carbon footprint. And it is indeed very small, people said. But yes, your underlying layer is Ethereum, which is using Proof of work and it is, it has, you know, high level of a high carbon footprint, et cetera, which is true. So. So for us, it is a really positive change that even the underlying kind of security layer that we use, which is Ethereum layer 1, is now also using the same green technology. So it's a very positive thing for us.

You recently said that the holy grail of Web3 infrastructure should have three major scalability, security and Ethereum compatibility. So I thought that the third component of that would have been decentralization. So could you expand on this thought and explain what you meant by that?

Yes. So ideally, when you refer to decentralization, decentralization is indeed important, but decentralization security is normally derived from decentralization. So Ethereum, for example, Ethereum layer 1 is the most secure programmable blockchain in the world. Why is it secure? Because it's very, very decentralized. There are thousands of nodes around the world that people run and you can not enforce anything on such a network. You cannot stop a network like that. You cannot inject malicious transaction in a network like that. And so as I said, security is mainly derived from decentralization mainly. But to establish such network, you cannot have many networks like that. Establishing and running such a decentralized network is very expensive. So for scaling solutions, and it cannot have much, you cannot have that high throughput that we normally need, that we necessarily actually need. If you want to onboard the message to web3. So for scaling solutions, that trilemma or that triangle that we are trying to square, so to say is EVM compatibility or Ethereum compatibility, security and scalability, of course. So when I say security scaling solutions, layer 2s normally try to derive security from Ethereum. So we already have this highly decentralized, highly secure layer which we ideally can leverage security from.

You recently launched this zkevm Zero knowledge Ethereum virtual machine, which is a new scaling solution for Ethereum based on zero knowledge proof technology. And it aims at outpacing Visa when it comes to transactions per second. So could you tell us shortly what the novelty of this technology is compared to other scaling solutions available?

Yes. So in terms of throughput, ZKEVM might even outpace Visa. So we have the first version of zkevm. This is the first time Polygon is the first to deliver full featured zkevm. So ZKVM is evm. For those who don't know, EVM is eternal Ethereum virtual machine. It is basically the core component of Ethereum, the component that is processing and executing all the transactions. That's where the logic of all Ethereum applications, smart contract, is actually being interpreted and executed. So it's like, like the engine of, of Ethereum. So to say if you are Ethereum compatible or EVM compatible, your developer experience remains the same. Like on Ethereum, Ethereum is absolutely dominant community in blockchain. In web3 in terms of developer mindshare, innovation, development activity, I think there's still 90% plus of activity still happening on Ethereum. There is this very vibrant and mature at this point ecosystem of tooling, wallets, developer tools, block explorers, wallets, everything generally a blockchain ecosystem needs. So that's already in place programming languages that developers are familiar with, like solidity and ideally, when you launch scaling solution, you ideally want to preserve that developer experience, otherwise there will be a lot of friction. Developers will have to learn new programming language, you will have to introduce these tools like that I mentioned previously, because you now don't have them basically. So it's a huge effort if you don't have the CVM compatibility. So that's one thing that we offer with zkvm. For those again who don't know, ZK proof is you can consider it a single transaction. Let's say you have 1 million transactions and you generate this one transaction which is called a ZK proof, which is actually proving that these 1 million transactions were correct. And then you submit that one transactions, which we call again ZK proof, you submit it to Ethereum, it gets executed there and all of a sudden you are basically leveraging Ethereum security. So these 1 million transactions that happened in this scaling solution of yours are now being verified by Ethereum, which is again the most secure programmable blockchain in the world.

That sounds incredibly exciting. And actually I'm curious to know at what stage is this technology at the moment when will average Ethereum user would be able to benefit from this zkevm.

In terms of timelines, as I said, we published the code. EVM is full, ZKEVM is full featured. We are covering all the opcodes of EVM and we are kind of marching towards the public test net, which should happen in two or three weeks from now, something like that. And then after a period of extensive testing, audits and code base maturing, we're looking to launch the Mainnet towards the end of the year. So towards the end of 2022 it should be in actual production where any user basically can start using it and benefiting from it.

Okay, that's awesome. And Sandeep Naiwal, the co founder of Polygon, your friend just said that the transaction fees will be sliced by 90% compared to Ethereum and also the network will be able to support 40 to 50 transactions per second compared to the 15 transactions per second now available on Ethereum. Can you confirm those kind of numbers?

These numbers are kind of hard to estimate, like 90%. I believe it's a practical estimate that Sandeep gave you and it might be right. But as I said, the actual cost of transactions is below $0.01. So it's 90, let's say 98 down from what you're paying now on Ethereum. But again, you need to have some fee market on top of that and fee markets are not really predictable. So I was, I believe Sandeep was talking in A practical way, and then it really might be 90 decrease compared to Ethereum. That might be a fair practical estimate in terms of XOR throughput. It's even harder to give an estimate there because I believe that's an estimate. I think that's a current estimate for one single prover. But what we can easily do, it's really relatively easy to do, we can pipeline multiple provers. For example, if one prover takes one minute to generate a proof and that is actually impacting your actual throughput, your chain, you can just pipeline 20 of them and just schedule them to work in parallel, I mean, as a sequence. And then you practically have proof every, every, every five seconds instead of, sorry, every six seconds instead of one minute. So there are many things that we can do there to increase the throughput.

And now I would like to get more of, I would like to get your understanding of the future landscape of Defi. So we know that there are Alternative Layer 1 solutions to Ethereum, like for example, Solana, Cardano, Polkadot and so on, which are basically directly competing with Ethereum and consequently they are competing also with layer 2 solutions like Polygon. These protocols aim to become the Ethereum killer. What is the future of these layer one alternative solutions?

That's a great question. I mean, ever since Ethereum became, so to say, the standard, we have witnessed, I don't know, at least five, six, maybe even more of these prominent alt layer one approaches and they normally come and become very popular, at least in terms of narratives and marketing, for maybe a year or so or two and, and then they normally start fading away or losing traction if they ever achieved it. It's really challenging. It's of course not great to disregard innovation in these other alt layer ones. So I can now name at least five projects that have very interesting technology actually being developed as we speak. And that's great and that's net positive for the industry. Everyone can learn from great technologies that these teams are building. It's only that these alt layer ones are facing one huge, huge obstacle and that is actually winning over strong network effects of Ethereum and strong and mature, as I said, ecosystem that Ethereum established in terms of developers, programming languages, tooling, liquidity, users, applications, it's a really, really a strong moat and it's really hard to kind of penetrate or win over that for sure.

Ethereum has the first mover advantage from that point of view. It's going to be difficult to compete with Ethereum on that side. But now I would like just to ask you one last Question, which is something that I read on Twitter lately, which is an interesting concern that people have. So some people are concerned that layer two solutions like Polygon might eventually take away some value from Ethereum itself. So basically somehow compete with Ethereum in terms of attracting value to their network. How could you comment on this types of concerns?

Yeah, it's also a great and valid question. I would say like to me it's pretty simple in a way that you also have applications on top of Ethereum and for example you have Uniswap or many other popular applications and they have their own tokens and these tokens capture significant amount of value. But would you say that these applications are actually taking value away from Ethereum or adding value? You might argue that token I can really trying to kind of argue or discuss with an open mind. You might argue that the token itself, if there was no token and it was like a public infrastructure on top of Ethereum without any token, you can argue that then all the value would be captured to Ethereum. But I think you really need to take look at the wider picture in a sense that when there is a token token was instrumental for example for Ethereum and Ethereum applic sorry for Polygon and these project tokens like Uniswap tokens, very instrumental for these projects in establishing their user base, in funding development, in doing everything these projects really need to do. So Polygon would have never been here if there wasn't for the token that enabled us to have strong treasury, that enabled us to invest near $1 billion at this point in ZK technology, to be the first one to deliver ZKEVM. If we were just a public effort on top of Ethereum without the token, we would have never been here.

Yeah, for sure. And at the end of the day basically people transacting on those layer two solutions will always rely on Ethereum as the base layer. And so Ethereum will still be necessary and fundamental for those layer two solutions.

What you said also just to your point, it's like strictly in terms of numbers like we will always and we still rely on Ethereum and I would have to look at the latest numbers, but I think for sure millions and millions of dollars have been burned using EIP 5059 and Ethereum through checkpoints that Polygon is constantly submitting to Ethereum. So in that way technically also the value is being added to Ethereum and Ether as the native asset. So yeah, there are really multiple aspects there.

Thanks a lot Mikhail for the interesting chat and good luck for the further development of zkevm.

Thank you so much. It was great chat. It.