Author: William M. Peaster (Senior Analyst at Bankless)

Translation: Deep Tides TechFlow

Deep Tides Guide: The governance of All Core Developers (ACD) and the protracted cycles of hard forks have historically been the main bottleneck in the evolution of Ethereum's underlying rules. However, recently, a series of intensive combinatorial breakthroughs in Ethereum's peripheral infrastructure has emerged:

The newly launched compiler Solar from Paradigm has achieved a reduction of up to 35% in contract deployment and operational costs;

The Ethereum Economic Zone (EEZ) testnet Rollup X has demonstrated L2 signatures with L1 spot cross-layer atomic settlement and post-quantum signature verification;

The FCR rules have compressed L2 recharge confirmations to 13 seconds; evm.fast has established formal mathematical boundaries for block proof in the worst-case scenario.

Ethereum is reconstructing the decentralized finance paradigm by bypassing the lengthy hard fork process through modular collaboration.

Imagine a new decentralized finance lending market: it is fully built on a particular Ethereum Layer 2 Rollup network, but when liquidation occurs, it can directly penetrate collateral sales into the vast liquidity pool of the Ethereum L1 mainnet.

It can even achieve more impressive feats: this lending market not only has extremely low startup and deployment costs, but also significantly reduces interaction thresholds and gas fees for ordinary users; funds can arrive at lightning speed within a few seconds; and the underlying Rollup can robustly submit state proofs to the Ethereum mainnet every 12 seconds, even in the worst network congestion.

There is no denying that the ideal system I have sketched out above has not yet fully materialized today. However, the distance between such a system and reality is much closer than it was a month ago. More intriguingly, all the core modules required to build this system have been collaboratively nurtured entirely outside of Ethereum's slow and rigorous hard fork process.

In fact, the key pieces necessary to assemble this financial engine have made significant leaps in just the past week. Specifically, they include:

1. Solar: a brand new Rust language Solidity compiler from Paradigm;

2. Rollup X: the first experimental network built on the Ethereum Economic Zone (EEZ) architecture;

3. Fast Confirmation Rules (FCR): has welcomed a milestone public testing version;

4. evm.fast: an open challenge focusing on the theoretical upper limit of formal Ethereum block proofs.

Next, let's break down the underlying logic of these core Lego blocks and reassemble them to present more clearly the technological qualitative leap they bring.

Four New Pillars Without Hard Forks

First, Solar is an extremely impressive underlying heavy instrument in the recent ecosystem. In simple terms, it can significantly reduce the deployment and execution costs of Ethereum smart contracts without any intervention from Ethereum Improvement Proposals (EIPs).

On November 2, top venture capital institution Paradigm officially released the v0.3 version of Solar. This is a new Solidity compiler (the core tool responsible for compiling high-level language code into executable bytecode for the Ethereum Virtual Machine) completely rewritten in Rust, and it is the first true milestone version capable of producing production-level bytecode. Developers can now seamlessly invoke it directly through command line parameters in the Foundry development suite.

According to the test data published by Paradigm, compared to the traditional solc compiler long used in the industry, smart contracts compiled by Solar have an average deployment cost reduction of about 26%, and the subsequent runtime gas consumption for execution is also reduced by approximately 5%.

These figures have also been strongly validated in early real DeFi project tests. For example, in the codebase of the stablecoin protocol Origin, without making any modifications to the business logic code, the contract deployment cost dropped by 35%, and the gas expenditure per call decreased by about 4%.

Of course, currently the only limitation is that Solar's official documentation clearly indicates that due to the project being in a rapid iteration phase, it is not yet recommended to apply it directly in mainnet production environments holding large amounts of funds. Additionally, optimization effects vary between different projects. When the decentralized exchange Ekubo moved its development branch to Solar, while 166 gas test metrics showed a decrease, 12 metrics experienced slight increases. Nevertheless, the efficiency potential demonstrated is undoubtedly significant.

Secondly, Rollup X has established a new benchmark for seamless cross-chain interactions on Ethereum.

The Ethereum Economic Zone (EEZ) is a core cutting-edge initiative led by Gnosis and ZisK, funded in collaboration with the Ethereum Foundation, with the primary goal of granting “synchronous composability” to the Ethereum mainnet and various Rollups. In other words, it allows a smart contract on one chain to cross-chain call the logic of a contract on another chain and consume the returned data within the same atomic transaction, where if any one branch fails, the entire transaction will roll back without loss.

During this year’s Devcon conference, EEZ officially launched its first public test network, Rollup X, and simultaneously demonstrated shocking landing cases. In one scenario, the aggregator CoW Swap successfully matched a trading order signed by users on Rollup X directly cross-layer with the Ethereum L1 mainnet's order book, and returned the exchanged assets back to Rollup X within the same atomic transaction; while in another scenario, Rollup X rapidly validated a post-quantum signature algorithm off-chain, allowing contracts on the L1 mainnet to execute secure operations based on this.

Undoubtedly, this technology is still maturing. Real-time zero-knowledge proofs (Real-time ZK proofs) are expected to be fully realized by 2027, and Gnosis has prudently pointed out that this testnet is currently not suitable for holding large-scale real assets. However, Rollup X has already given the entire industry a glimpse of the future technological endgame.

Again, Fast Confirmation Rules (FCR) can compress the processing delay of key scenarios like cross-chain recharges from ten minutes down to mere seconds.

In the current public chain environment, the vast majority of L2 expansion networks and cross-chain bridges must wait for the Ethereum mainnet to achieve finality before initiating recharge confirmations for Ethereum. This waiting period usually lasts up to 13 minutes. According to the authoritative explanation from the Ethereum Foundation, the FCR mechanism can mark a block for quick confirmation within a single block slot (approximately 13 seconds) by directly counting the real-time witness attestations submitted by the validator nodes.

The theoretical model of FCR did not just come out of nowhere; the Gnosis cross-chain bridge has been applying it to Ethereum-initiated asset transfer channels since October 8. What truly ignited the industry was the dramatic reduction in the difficulty of developer integration. On November 4, mainstream node service provider QuickNode officially launched the public testing version of FCR, seamlessly embedding it into the existing security block marking interfaces widely called by various applications. As Ethereum researcher Julian Ma remarked, “The technical barriers to the industry-wide adoption of FCR have been completely cleared away.”

It should be noted that the security foundation of FCR is built on the assumption that at least 75% of staked validator nodes are honestly online and deliver witness attestations on time. In extreme network fluctuations, the system will automatically revert to the conservative traditional finality confirmation process to eliminate the rare risk of fast-confirmed blocks undergoing reorganization.

Finally, the evm.fast challenge is tackling the worst-case limits of mathematical zero-knowledge proofs for blocks.

The technical ambition of “millisecond-level real-time proofs for Ethereum” entirely depends on whether the proof generator (Prover) can keep up with the output rhythm of each block. Under normal conditions, this has already been basically achieved: according to Gnosis, ZisK is now able to compress 99.9% of Ethereum block proof times to less than 10 seconds. However, the real Achilles' heel lies in the long-tail extreme scenarios. To date, no one has been able to strictly define the maximum computational load of a single maliciously constructed block mathematically, which means that theoretically an extremely complex block could paralyze the prover.

To overcome this theoretical ceiling, the Ethereum Foundation, in collaboration with zkSecurity and Verity Labs, officially launched the evm.fast challenge on the Yukon research platform on November 2. Participating teams are required to mathematically deduce and rigorously prove the absolute upper limit of the number of RISC-V machine instructions required to verify any Ethereum block in the Lean formal theorem proving tool.

At the start of this mathematical competition, the theoretically recorded upper limit was infinite, which means that any team that derives the first finite constant that withstands mathematical verification will directly top the leaderboard.

Assembling Lego Blocks

The four cutting-edge pillars mentioned above each have transformative significance when looked at individually. However, only by organically assembling them together can we truly unlock a previously unprecedented new type of decentralized finance paradigm on-chain. Let's return to the next-generation lending market model mentioned at the beginning.

Figure: Next-generation DeFi lending model architecture bypassing hard forks

In this new architecture, these four key blocks will operate in perfect synchrony:

Relying on Solar to swiftly launch on the market: the vast majority of lending protocols require deploying new independent contract instances when opening new lending pairs; the significant reduction in compilation and deployment costs will generate substantial compounding effects as the protocol's business expands; more importantly, interest settlement and liquidation decision logic will be frequently called in every lending, repayment, and liquidation, so even a few percentage points of runtime gas savings per single interaction can accumulate massive wealth for end users over time.

Leveraging EEZ to solve cross-chain liquidation issues: in the past, lending markets on emerging public chains were always in a fragile high-risk state because, when a market crash occurred, there often was insufficient local spot liquidity to absorb the enormous collateral that was confiscated in time. However, with the support of EEZ, liquidators can directly and seamlessly penetrate collateral sales into the Ethereum L1 mainnet's substantial liquidity pool and complete the repayment of Layer 2 debts within the same atomic transaction, with any bottleneck in any step resulting in a complete rollback. This means that Rollup can boldly list those assets whose real liquidity is concentrated in the mainnet, allowing arbitrageurs to maintain price parity without assuming the risks of cross-chain bridge dislocation.

Using FCR to eliminate deposit waiting friction: not all collateral assets will be injected via synchronous calls; a significant amount of liquidity will still come from centralized exchanges and other multi-chain ecosystems. By introducing FCR, lending markets can rapidly credit collateral in about 13 seconds, significantly reducing idle fund periods, prompting rapid entry of off-chain liquidity when lending rates soar. Moreover, in terms of risk control design, the protocol can set dynamic risk control discounts on quickly confirmed collateral before finality is reached, fundamentally eliminating the possibility of bad debts arising from occasional blockchain reorganizations.

Utilizing evm.fast to establish an absolute safety line for risk control: during market panics, blocks are often highly congested, making them most vulnerable to attackers who deliberately construct high-latency proof blocks to obstruct connections between Rollups and the mainnet. Once the absolute computational limit of block proofs has been formally proven mathematically, network operators can accurately allocate sufficient computational redundancy to ensure that even in the most extreme market conditions, valid proofs can be delivered timely within each time slot. Thus, the system truly transforms from “generally fast enough” to “mathematically absolutely fast enough.”

For end users, the experience brought about by this evolution is extremely intuitive: being able to borrow against mainnet-level deep liquidity, have collateral credited in seconds, enjoy extremely narrow price slippage, and pay lower gas costs. And all of this can be achieved without waiting for Ethereum's lengthy hard fork.

This Is Just the Tip of the Iceberg

The lending market case is merely the tip of the iceberg in this suite of application scenarios. Replacing the lending model with other directions can still empower the same logical architecture comprehensively.

For example, the post-quantum treasury architecture for decentralized autonomous organizations (DAOs):

The multi-signature signers of the treasury can use the quantum-resistant Falcon cryptographic algorithm to authorize and sign funding requests; the Layer 2 Rollup is responsible for centrally digesting and executing expensive complex signature verification calculations; subsequently, the Ethereum mainnet treasury directly executes fund transfers in the same atomic transaction based on this, fully reproducing the liquidation process demonstrated by Rollup X.

In this architecture, the Ethereum mainnet only needs to bear a small fraction of the total gas consumption of the Falcon signature verification, which could reach 5.5 million gas (with Gnosis's testing demonstration only needing about 495,000 gas). Solar can further reduce the operational expenses of verification contracts, FCR can accelerate the entry of donations and external funds, while the strictly formally proven computational ceiling ensures that the entire system will never be blocked.

From decentralized exchanges and cross-border payment networks to fully on-chain games, these next-generation infrastructures can reshape the entire landscape of decentralized applications. The innovation menu of the Ethereum ecosystem has been significantly lengthened, and the entire evolutionary process has not even touched any existing underlying protocol rules.

Bypassing Protocol Layer Bottlenecks

The slow pace of the governance process of all core Ethereum developers and the progress of hard forks has long been a well-known fact in the industry. However, this caution and slowness is not in itself a flaw; for underlying consensus rules bearing hundreds of billions of dollars in economic volume, any changes should be pushed forward in an extremely rigorous and steady manner.

Figure: Comparison of in-fork upgrades and out-of-fork evolution mechanisms

However, it is equally undeniable that the Ethereum ecosystem has the complete capability to expand technological boundaries by bypassing the governance bottlenecks of the protocol layer through self-organized collaboration. The series of breakthroughs we witnessed over the past week is a vivid evidence of this bottom-up engineering innovation.

The impact of this trend in the field of quantum resistance will be particularly profound. Ethereum core researcher Justin Drake has publicly pointed out that the core obstacle to Ethereum's quantum-resistant transformation is no longer the cryptographic technology itself, but the scheduling priorities of the all-core developer governance process.

Drake candidly stated that if all client development teams prioritize quantum safety as the highest priority, the related features could be delivered to the mainnet within a few months; but according to the current conventional deliberation pace, this process could be delayed until at least the end of 2028. However, the Falcon signature practice of Rollup X has proven to everyone that developers do not have to wait idly for the mainnet and can directly leverage cutting-edge results for practical use right now.

The pace of Ethereum's underlying hard forks will likely not significantly accelerate in the future. But what is even more fascinating is the question: in the gaps of mainnet protocol upgrades, how many ingenious side solutions can the peripheral ecosystem nurture, and can the decentralized supervision and evaluation system of the entire ecosystem steadily keep up with the pace of evolving times?