Charles H. Miller
Joseph Poon — the guy behind the Lightning Network, a micropayments solution for Bitcoin — and Ethereum’s co-founder Vitalik Buterin have recently introduced Plasma, a scaling framework that has the potential to drastically optimize smart contracts and streamline the process of settling financial activities on the Ethereum blockchain.
Yes, it is important so we’re giving it some space on Wallet Weekly — here are five things you need to know about Plasma:
1. What is Plasma?
Similar to the Bitcoin Core development team’s scaling solution Segregated Witness (SegWit), Plasma is a framework that eliminates unnecessary data in smart contracts and only broadcasts “merkelized commitments” to the public Ethereum blockchain. By doing so, the Ethereum blockchain will be able to process smart contracts and transactions with lower costs and computation.
“As only merkelized commitments are broadcast periodically to the root blockchain (i.e. Ethereum) during non-faulty states, this can allow for incredibly scalable, low cost transactions and computation. Plasma enables persistently operating decentralized applications at high scale,” Poon and Buterin wrote in the whitepaper.
2. New system needs to support apps with millions of users
The two authors say that scaling is needed “to process not only financial activity, but also construct economic incentives for globally persistent data services, which may produce an alternative to centralized server farms.”
Coinbase co-founder Fred Ehrsam noted something similar in the past: “Large apps can’t run solely on-chain and likely never will,” he said. “They need off-chain scaling solutions. While it’s tricky to make accurate estimates when combining scaling improvements, it’s conceivable we could see a 100x improvement by the end of 2018, which would allow a 1-10 million user app.”
Beyond apps, Plasma should also enable a massive number of transactions per second!
3. Blockchains in blockchains
Plasma is a series of contracts which runs on top of a root (mainnet) blockchain. The root network contract processes only tiny amount of commitments from child blockchains that would be able to do large amount of computations in most cases. Commitments are broadcasted periodically to the root blockchain from the child.
With Plasma, not all data will be propagated to all parties, but only to those who wish to validate a particular state. Therefore, parties are responsible for monitoring the particular chain they are interested in periodically to penalize fraud. And if something goes wrong, they could simply leave the child chain.
The system would allow hierarchical arrangements of blockchains to maximize data availability/security and minimize costs. Mining is done with full security only on the root. Each child chain will be able to have its token to incentivize validators to keep it running and provide protection from faulty states.
4. Plasma may include technology used by ZCash
ZCash, for those of you who haven’t heard about it, is a novel cryptocurrency that offers privacy and selective transparency of transactions. It uses zk-SNARKs to protect both the amount and recipient of shielded transactions, and the same technology is considered for Ethereum to easily provide verification and authentication of complex problems.
“It is also possible to construct a zk-SNARKs proof of state transitions. For some computational constructions, a bitmap on state transitions may also be necessary in the reduce step (therefore more than one bit can be used per UTXO/account for these use cases). Withdrawals from Plasma chains could be secured by zk-SNARKs which gives the benefit of optionally not requiring the bitmap, which may allow for very small balances to be transferred,” the paper noted.
However, the paper presents many mechanisms that can achieve the aforementioned segregation of data and optimization of information sent to the Ethereum blockchain — so we may end up with some other (than zk-SNARKs) solution.
Related: 6 Things Everyone Should Know About Zcash
5. Complementary to current solutions
Buterin confirmed that solution proposed in the Plasma update is “independent of and strongly complementary to base-layer PoS and sharding.”
In other words, it is not the only way to solve the blockchain scaling problem, but since it’s coming from Ethereum’s co-founder, chances are it will be implemented in the near future. In fact, some companies have already declared their support for Plasma, and we hope to hear more about it in the near future…
