The Bigger Picture: Varna, Hashcast, and Quasar

In Blog, Community by TXH

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Where Are Layer-2s At The Moment?

Scaling Ethereum is likely to be a never-ending battle. Users will always be on the hunt for faster and cheaper transactions.

Although ETH 2.0 will increase transaction speeds and decrease gas fees, the upgrade will not be enough to support all the potential use-cases on Ethereum. Some of these use-cases would be better executed on a Layer-2 solution – as long as the solution is secure.

However, although Layer-2s help scale Ethereum, that is not their main or only function.

The blockchain industry moves quickly, which creates a lot of competition. There are multiple Layer-2s for Ethereum and multiple non-Ethereum rootchains that have their own unique constructions. This fragmentation makes it difficult to transact value or communicate across different chains. And despite the recent emphasis on composability within networks, there is a lack of interoperability between them.

Where Do OMG Network Dapps Fit?

Let's break it down based on the high-level overview above:

Plasma Scales Alongside Ethereum

The OMG Network Plasma Childchain can handle far greater TPS than Ethereum at a much lower cost. As ETH 2.0 rolls out, the increase in TPS on Ethereum, along with the decrease in transaction costs, will also scale Plasma. Plasma will always have higher throughput and lower costs than the rootchain – this is even before considering adaptable fees and nested Childchains.

Hashcast & Varna: Plasma Is More Than "Just" A Scaling Solution

The OMG Network is best known as an Ethereum scaling solution that benefits from Ethereum's security guarantees. However, the dApps being built on top of the OMG Network show that OMG isn't 'just a scaling solution.'

Hashcast, a broadcast/subscribe messaging protocol, and Varna, a privacy-preserving DEX, are two examples of applications that use more than just Plasma's scaling capabilities.

For example, Hashcast uses the Plasma metadata field to store hashes that point to cleartext or encrypted payloads, and Varna uses atomic swaps coordinated through Hashcast.

OMG Network's Quasar: Solving The Biggest Problem In The Layer-2 Space

One of the biggest hurdles current Layer-2s face is the difficulty of moving assets back to Layer-1. The reason for this is the 'exit challenge period' – a 14-day time delay before assets can be moved from Layer-2 to Layer-1. Exit periods exist across all Layer-2s that use 'fraud proofs'. The OMG Network also uses fraud proofs but has built a solution to overcome the exit challenge period problem, and enable fast exits: 'Quasar.'

Quasar will require liquidity to function effectively and so it also creates a new opportunity for users to generate yield on their assets while contributing to the wider ecosystem. Good news all around!

More information about Quasar and its incentives for liquidity providers will be coming soon. In the meanwhile, remember the issue of chain fragmentation?

Imagine if there was a decentralized protocol that would allow you to transfer assets between multiple Layer-1s and Layer-2s. Well, the Quasar can tackle that too.

Other Updates

To summarize some of the other developments from the OMG team this week, we have:

  • Smarter block logic for v1, reducing unnecessary block submission (and therefore gas costs) with no detriment to the end-user.

  • Enhanced UX for exits via the Web Wallet.

  • For v2: an increase in inputs and outputs per transaction, which makes more complex atomic swap situations easier to handle; support for zero-value transfers; and support for UFOs ('unfinalized outputs')