Our project aims to simulates potential exit games and propose a robust withdrawal design of inception layers.
Layer 2’s Exit Game
Layer 2 is a separate blockchain that extends Ethereum and inherits the security guarantees of Ethereum. Should issues arise within Layer 2, it is essential that users have the ability to safely withdraw their assets back to Ethereum.
Taiko is on track to develop the first rollup system that fully decentralizes both the roles of proposers and provers. Should all existing proposers decline to submit a user's particular transaction to Ethereum, Taiko allows the user to act as their own proposer and directly submit their transaction. Other rollups with a single sequencer still enable users to force their transactions through to Ethereum after a specific time frame has elapsed.
Moreover, Taiko empowers any user to serve as a prover. If the existing provers refuse to generate a ZK proof for a particular L2 block, users have the option to generate this proof themselves. Most existing rollups have not yet transitioned to permissionless validators or provers.
Layer 3’s Exit Game
Many layer 2s are rushing to launch layer 3, such as Arbitrum Orbit, zkSync Hyperchain, and Taiko Inception Layer. However, the crucial topic of Layer 3 exit games has not been adequately addressed. This oversight must be corrected to ensure the integrity and security of assets within the Layer 3 architecture. If the possibilities of problems arising in Layer 2 are not considered, then layer 3 does not depend on Ethereum’s security, making it reasonable to see Layer 3 as another Layer 2 of Layer 2, rather than layer 3 on Ethereum.
Objectives
Our research aims to investigate scenarios in which users may be unable to withdraw their assets back to Ethereum because of limitations in Eldfell's existing L3 design. Our objective is to redesign this architecture to enable a reliable exit game under any circumstances.
We will begin by examining the withdrawal procedures in the following scenarios: Layer 2 halts, Layer 3 halts, and Both Layer 2 and Layer 3 halt. Based on these analyses, we will design a new L3 architecture resilient to each scenario, and create an L3 bridge contract on Ethereum while estimating the associated costs.
At the project's conclusion, we will produce a technical article detailing the new Layer 3 architecture. This article will provide a comprehensive understanding of both the Layer 3’s exit game and the new Layer 3 architecture. Also, we will develop poc-level L3 bridge contract on Ethereum to see how it actually works.
Category
Surprise Us 🤫
Timeline
We expect 4-month timeline for the project.
Interval 1
Month 1: Research and Understanding
Conduct an in-depth review of the existing Eldfell L3 design
Identify scenarios where users may face difficulties in safely withdrawing their assets back to Ethereum.
Month 2: Design and Initial Testing
Complete the architectural design for the new L3 framework, ensuring that users can withdraw their assets under each identified scenario.
Conduct initial tests to validate the proposed design.
Interval 2
Month 3: Refinement and Contract Development
Optimize the L3 architectures based on results from Month 2.
Develop and deploy L3 bridge contract on Ethereum.
Month 4: Finalization and Dissemination
Finalize the new L3 architecture.
Finalize and review the technical article detailing L3’s exit game and the new L3 architecture.
Address any remaining issues in the L3 bridge on Ethereum.
Project Plan
Our project focuses on identifying scenarios where users are unable to withdraw their assets back to Ethereum due to limitations in the existing Eldfell L3 design. Specifically the current design does not account for situations where Layer 2 operations are halted. Our goal is to develop a new L3 architecture that ensures a reliable exit game in all circumstances.
To achieve this objective, our first step will be to conduct a comprehensive analysis of the various scenarios where asset withdrawal might be problematic. Following this, we will redesign the L3 architecture to enable to a reliable exit game in each identified scenario. As part of this effort, we will also develop an L3 bridge contract on Ethereum.
Once our current project is concluded, we aim to partner with the Taiko team to integrate our new L3 design, ensuring it operates reliably under real-world conditions. During this implementation phase, we will continuously monitor the situation and will be prepared to make proactive adjustments should unexpected challenges emerge.
Project Impact
Exit games have been a top priority for Layer 2 projects ever since the introduction of Plasma. However, none of Layer 2 projects have yet considered the exit game mechanisms for Layer 3.
Many believe that Layer 3 will catalyze mass adoption of blockchain technology by enabling a greater variety of on-chain games and other as-yet-unimaginable use cases. Given the enhanced security, we anticipate that an increasing number of dApps will be deployed on Taiko, attracting more users to the Taiko ecosystem.
Taiko will be the first Layer 2 that allows users withdraw their assets back to Ethereum without other parties’ help. Furthermore, by the research that our team conducts, Taiko will be the first Layer 3 that allows users withdraw their assets back to Ethereum independently.
Team Information
Lano Technology, a web3 research and development company that specializes in DeFi mechanisms. Currently, we are collaborating with Alphanonce, a crypto native trading & investment firm in Asia, has +5 years of track record in crypto/web3 space with extensive DeFi experience. Aside from trading & investment, Alphanonce also contributes to Nansen, one of the biggest on-chain analytic platforms in the world, as an official Research Partner of Nansen and publishes reports to Xangle, the largest crypto data platform in Korea, which help Taiko improve awareness in Korea, one of the most activated crypto/web3 markets in the world.
Our team consists of three researchers and three software engineers. Our research team specializes in DeFi mechanisms, including the design of stablecoins, DEX mechanisms, the development of automated yield farming bots, and other protocols. Furthermore, our research team has strength in on-chain data analysis which is mostly done on Dune Analytics. Meanwhile, our development team is comprised of frontend/backend developers and designersFollowing are list of our team members.
Taeheon Lee: Senior researcher, M.S. in Computer Science
5 years of experience in quantitative research
Moonsoo Kim: Senior researcher, Ph.D. in Electrical Engineering
7 years of experience in quantitative research and simulation
Woosik Yoon: Researcher, B.S. in Mechanical Engineering
1 year of experience in blockchain research
May Jang: Researcher and technical writer, B.S. in Business
2 years of experience in blockchain research
Haesung Park: Senior developer, M.S. in Computer Science
5 years of experience in Backend, Contract development
Sungjae Kim: Senior developer, B.S. in Computer Science
5 years of experience in Backend, Contract development
Our previous experiences can be listed as follows. In the Relevant Links section, you can find some of our previous works.
In-depth investigation on stablecoins (Frax, MakerDAO, Terra, Liquity) and report publication. Design of stablecoin
Designing and operation of delta-neutral farming bots on Uniswap V3 pools
Experience in designing incentive schemes for L2 validators
Within the optimistic rollup framework, validators are tasked with uploading the output root of a block and raising challenges in case of discrepancies. Our incentive mechanisms prioritize encouraging validators to expedite both the upload and challenge processes. We believe our expertise in L2 validator incentive structures will enhance our understanding of Taiko's context and derive better project outcome.
Our team has conducted in-depth research on various stablecoins, specifically investigating the risks associated with each parameter of stablecoin design. You can find our previous analysis on stablecoins in the links below. Furthermore, following article written by us would help you understand our expertise:
In addition, to improve Taiko community awareness, Alphanonce team can leverage various research distribution channels such as Nansen ([website](https://www.nansen.ai/), one of the biggest on-chain analytic platforms in the world with +189k Twitter followers), Xangle ([website](https://xangle.io/en), the largest crypto data platform in Korea with +11k Telegram channel audiences), Twitter research [account](https://twitter.com/alphanonceStaff) (Alphanonce Internal with +6k followers, and Coinness ([website](https://coinness.com/), the largest crypot/web3 news platform in Korea with +40k DAU)
Agreement
[X] I agree to comply with the terms and conditions of the grants program
Project Description
Our project aims to simulates potential exit games and propose a robust withdrawal design of inception layers.
Layer 2’s Exit Game
Layer 2 is a separate blockchain that extends Ethereum and inherits the security guarantees of Ethereum. Should issues arise within Layer 2, it is essential that users have the ability to safely withdraw their assets back to Ethereum.
Taiko is on track to develop the first rollup system that fully decentralizes both the roles of proposers and provers. Should all existing proposers decline to submit a user's particular transaction to Ethereum, Taiko allows the user to act as their own proposer and directly submit their transaction. Other rollups with a single sequencer still enable users to force their transactions through to Ethereum after a specific time frame has elapsed.
Moreover, Taiko empowers any user to serve as a prover. If the existing provers refuse to generate a ZK proof for a particular L2 block, users have the option to generate this proof themselves. Most existing rollups have not yet transitioned to permissionless validators or provers.
Layer 3’s Exit Game
Many layer 2s are rushing to launch layer 3, such as Arbitrum Orbit, zkSync Hyperchain, and Taiko Inception Layer. However, the crucial topic of Layer 3 exit games has not been adequately addressed. This oversight must be corrected to ensure the integrity and security of assets within the Layer 3 architecture. If the possibilities of problems arising in Layer 2 are not considered, then layer 3 does not depend on Ethereum’s security, making it reasonable to see Layer 3 as another Layer 2 of Layer 2, rather than layer 3 on Ethereum.
Objectives
Our research aims to investigate scenarios in which users may be unable to withdraw their assets back to Ethereum because of limitations in Eldfell's existing L3 design. Our objective is to redesign this architecture to enable a reliable exit game under any circumstances.
We will begin by examining the withdrawal procedures in the following scenarios: Layer 2 halts, Layer 3 halts, and Both Layer 2 and Layer 3 halt. Based on these analyses, we will design a new L3 architecture resilient to each scenario, and create an L3 bridge contract on Ethereum while estimating the associated costs.
At the project's conclusion, we will produce a technical article detailing the new Layer 3 architecture. This article will provide a comprehensive understanding of both the Layer 3’s exit game and the new Layer 3 architecture. Also, we will develop poc-level L3 bridge contract on Ethereum to see how it actually works.
Category
Surprise Us 🤫
Timeline
We expect 4-month timeline for the project.
Interval 1
Interval 2
Project Plan
Our project focuses on identifying scenarios where users are unable to withdraw their assets back to Ethereum due to limitations in the existing Eldfell L3 design. Specifically the current design does not account for situations where Layer 2 operations are halted. Our goal is to develop a new L3 architecture that ensures a reliable exit game in all circumstances.
To achieve this objective, our first step will be to conduct a comprehensive analysis of the various scenarios where asset withdrawal might be problematic. Following this, we will redesign the L3 architecture to enable to a reliable exit game in each identified scenario. As part of this effort, we will also develop an L3 bridge contract on Ethereum.
Once our current project is concluded, we aim to partner with the Taiko team to integrate our new L3 design, ensuring it operates reliably under real-world conditions. During this implementation phase, we will continuously monitor the situation and will be prepared to make proactive adjustments should unexpected challenges emerge.
Project Impact
Exit games have been a top priority for Layer 2 projects ever since the introduction of Plasma. However, none of Layer 2 projects have yet considered the exit game mechanisms for Layer 3.
Many believe that Layer 3 will catalyze mass adoption of blockchain technology by enabling a greater variety of on-chain games and other as-yet-unimaginable use cases. Given the enhanced security, we anticipate that an increasing number of dApps will be deployed on Taiko, attracting more users to the Taiko ecosystem.
Taiko will be the first Layer 2 that allows users withdraw their assets back to Ethereum without other parties’ help. Furthermore, by the research that our team conducts, Taiko will be the first Layer 3 that allows users withdraw their assets back to Ethereum independently.
Team Information
Lano Technology, a web3 research and development company that specializes in DeFi mechanisms. Currently, we are collaborating with Alphanonce, a crypto native trading & investment firm in Asia, has +5 years of track record in crypto/web3 space with extensive DeFi experience. Aside from trading & investment, Alphanonce also contributes to Nansen, one of the biggest on-chain analytic platforms in the world, as an official Research Partner of Nansen and publishes reports to Xangle, the largest crypto data platform in Korea, which help Taiko improve awareness in Korea, one of the most activated crypto/web3 markets in the world.
Our team consists of three researchers and three software engineers. Our research team specializes in DeFi mechanisms, including the design of stablecoins, DEX mechanisms, the development of automated yield farming bots, and other protocols. Furthermore, our research team has strength in on-chain data analysis which is mostly done on Dune Analytics. Meanwhile, our development team is comprised of frontend/backend developers and designersFollowing are list of our team members.
Taeheon Lee: Senior researcher, M.S. in Computer Science
Moonsoo Kim: Senior researcher, Ph.D. in Electrical Engineering
Woosik Yoon: Researcher, B.S. in Mechanical Engineering
May Jang: Researcher and technical writer, B.S. in Business
Haesung Park: Senior developer, M.S. in Computer Science
Sungjae Kim: Senior developer, B.S. in Computer Science
Our previous experiences can be listed as follows. In the Relevant Links section, you can find some of our previous works.
Point of Contact
tg:@thlee93 | email: research@lano.im, taeheon@lano.im, susuk0830@gmail.com
Previous Work
We provide a link to a page summarizing our previous works: https://lanotechnology.notion.site/Lano-Company-Profile-for-Web3-Clients-4d6741235dcc43908adcdfc60836fb5e?pvs=4.
Experience in designing incentive schemes for L2 validators
Within the optimistic rollup framework, validators are tasked with uploading the output root of a block and raising challenges in case of discrepancies. Our incentive mechanisms prioritize encouraging validators to expedite both the upload and challenge processes. We believe our expertise in L2 validator incentive structures will enhance our understanding of Taiko's context and derive better project outcome.
Experiences in creating dashboard
Our team has an experience in making dashboard for wide range of web3 projects (Liquity Chicken bond, OnePlanet, Layer 2). Among them, we received a Liquity grant for making dashboard for chicken bonds (https://dune.com/haechi_research/chicken-bonds-statistics, https://twitter.com/LiquityProtocol/status/1600882964123959296).
Expertise in stablecoins
Our team has conducted in-depth research on various stablecoins, specifically investigating the risks associated with each parameter of stablecoin design. You can find our previous analysis on stablecoins in the links below. Furthermore, following article written by us would help you understand our expertise:
https://stablelabs.substack.com/p/ecosystem-soundness-novel-criteria.
Profiles
Previous works
Partner teams Alphanonce:
Additional Information
In addition, to improve Taiko community awareness, Alphanonce team can leverage various research distribution channels such as Nansen ([website](https://www.nansen.ai/), one of the biggest on-chain analytic platforms in the world with +189k Twitter followers), Xangle ([website](https://xangle.io/en), the largest crypto data platform in Korea with +11k Telegram channel audiences), Twitter research [account](https://twitter.com/alphanonceStaff) (Alphanonce Internal with +6k followers, and Coinness ([website](https://coinness.com/), the largest crypot/web3 news platform in Korea with +40k DAU)
Agreement