The battle between Ethereum Layer 2 chains and Cosmos

At the moment we see a battle between Layer 2 chains and multi-chain ecosystems like Cosmos. I’d like to explain:

Layer 2 is the term of separate blockchains (or “side chains”) which are running next to Ethereum to bring in more scalabolity and cheaper transaction costs without losing the security guarantees that Ethereum provides thanks to its decentalized nature and its battle tested protocol.

Layer 2 blockchains settle their transactions on Ethereum Mainnet using so-called Rollups (e.g. Zero Knowledge Rollups or Optimistic Rollups). Most of them even allow assets from Ethereum to be bridged over and used on their sidechain. They run in parallel with Ethereum and interact with Ethereum through bridges.

Rollups bundle (or ’roll up’) hundreds of transactions into a single transaction on layer 1. This distributes the L1 transaction fees across everyone in the rollup, making it cheaper for each transaction and thus each user.

However. What most people are not yet aware of is, that most (or even all) current existing Layer-2-Solutions for Ethereum come with a centralization vector that L2s currently have in their sequencers. Also, Polygon for instance uses a Root-SmartContract on Ethereum MainNet which is managed by a MultiSig-Wallet, where only the half of all 6 participants are known to the public. This is an known issue and heavily discussed in the community.