The Privacy & Scaling Explorations team is excited to announce the winners of the Layer 2 Community Grants 2022.

The Layer 2 Community Grants round started on October 24th, 2022 and was open for 6 weeks. In total we received 130+ proposals and thank each project for taking the time to apply.
The wishlist compiled sought applications from all areas including Layer 2 explorers, cryptography, and education.

This chart shows percentage of initial applicants by category:

Due to the high quality of proposals, we raised the budget from an initial 750k USD to a total of 948k USD.

The awarded applications percentage per category:

Grantees

We congratulate the 22 grantees awarded and present their project descriptions broken down by category:

Cybersecurity

• Candidelabs – ERC-4337 Public Infrastructure

  • An open source bundler and a paymaster service as public good infrastructure for ERC-4337 smart contracts wallets, layer 2 focused.

• Quantstamp – Rollup Security Framework

  • The project will create a detailed security framework for unique features of rollups. They want to establish a foundation for basic best practices and transparency for these features to assist new developers of these systems and enable the community to assess the security risks of a particular rollup before they use one. Similar to those that are available for smart contract development and the very high-level overviews of rollup security like L2Beat.com. The framework will discuss concerns and details of escape hatch development and operational risks for end-users and developers and establish a consistent language for these and other features.

User Experience

• Spiro – zkWallet

  • Multi-party wallets (e.g. Gnosis safe multisigs) are a proven way for a group of users to share control over an account’s digital assets and behaviors. Unfortunately, current implementations of multi-party wallets expose the privacy of their total number of operators and their associated externally owned accounts. The goal of this project is to build a private multi-party wallet that shields end users by employing account abstraction (EIP-4337) and zero-knowledge proofs.

• Kautuk Kundan – Stackr Network

  • Stackr network is an SDK for launching standalone customizable app-specific rollups using familiar web2-like tooling. It focuses on the core principle of a roll-up, that is, to run a state machine off-chain and use L1 to store transaction details. This can be achieved by general-purpose languages that can maintain the app-state off-chain and provide an interface to interact with it, thus acting as a standalone L2. It allows building a new class of applications that will have more freedom over their execution choices.

• ScopeLift – L2 Optimizors

  • Layer 2 networks share security with main-net by posting transaction call data to Layer 1. As a result, Layer 2 users pay their portion of the main-net gas costs when executing transactions. Layer 1 gas can be >25,000x more expensive than Layer 2 gas, so paying for call data dominates L2 transaction costs. With custom router contracts that use less call data than standard methods, we can significantly reduce transaction costs to interact with popular protocols.

• Testinprod – Layer1.5

  • Layer 1.5 enables anyone to launch their own Layer 2 by providing easy tools. It provides an easy application that launches your own Layer 2 with necessary tools—for example, block explorer, token bridge, monitoring tools, etc.

• ScopeLift – Layer 2 Governance with Flexible Voting

  • Flexible Voting is an extension of the popular Governor system used by many DAOs. It allows new kinds of delegation contracts to be written, making it easier for governance token holders to participate in on-chain votes. One such use case is the subject of this grant: Layer 2 governance voting. Holders of bridged governance tokens could vote from Layer 2, paying the cheaper gas prices available there. These votes would be trustlessly reflected on L1 where the DAO’s Governor system is deployed.

• Clement Walter – Starksheet

  • Starksheet aims to democratize the access and usage of on-chain resources (data and logic). It leverages a familiar spreadsheet to help the user query and link on-chain resources. The work is saved on-chain as NFTs and can be queried later-on from any other dApp/contract

• Kristof Gazso – Typescript ERC-4337 Bundler

  • The project will include the development of an ERC-4337 bundler in Typescript and the relevant modifications to a Geth node for simulation purposes so that the bundler can run on any directly Geth-compatible chain (which includes most L2s) with little modifications. The bundler will also expose the RPC calls defined in the specification, and maintain an internal mempool to be future-proof when P2P propagation will be developed.

• Soul Wallet – Open-source ERC-4337 wallet

  • Easy-to-use browser wallet implementation powered by ERC-4337.

Community and Education

• Jose Figueroa – L2 en Español
  
  • L2 en Español is an open community that aims to research, educate and drive the adoption in all these Ethereum’s scaling solutions. They focus on both developers and new users in their quest to stay up to date with these technologies and their utility. We create content and carry out different activities from publications to workshops for free, while supporting the different projects that innovate in this space, while maintaining also its core neutrality.

• Bruce Xu – MyFirstLayer2
  
  • This will be an open-source, community-driven, and educational project. This will be a website for people curious about Layer2 but without prior knowledge about Layer2 or Blockchain. We aim to use well-designed diagrams and interactive animation to help people get the idea behind Layer2 in 30mins. Afterward, we will guide people to some real-world Layer2 apps step-by-step and let them feel the benefits of Layer2.

Data Analysis

• Blockscout – Blockscout Block Explorer
  
  • An open-source block explorer is currently needed for the L2 ecosystem. Blockscout is already used by many L2 projects, and additional customizations specific to L2 data requirements will increase usability. In addition, a new interface, features, analytics and developer friendly improvements will help create a more transparent and usable community explorer.

• Quantstamp – Evaluating Rollup Compression
  
  • Compression is often overlooked when discussing rollups. By design, rollups are required to make data available in order to verify state transitions or state roots; however, the method for this publication varies, and may include compressed data. There is also variability in the compression techniques used. This project will explore the use of compression in the rollup setting. First, the project will explicate places where compression is used and document the techniques that may be used. Second, the project will survey existing rollups to investigate the approaches that are actually used in practice. Third, the project will evaluate approaches proposed or used across similar systems and attempt to identify why a particular approach is used. Finally, the project will use the insights collected in order to suggest new approaches for compression of rollup data and pose open problems to the community.

• Diablobench – Performance and Security Evaluation of Layer 2 Blockchain Systems
  
  • The University of Sydney and the EPFL have designed a benchmark suite to evaluate the security and performance of blockchain systems. The first evaluations compared layer 1 blockchains such as Algorand, Solana and Diem and will be published soon in a peer reviewed international conference (Eurosys). This project aims at adding layer 2 blockchain systems to the Diablo benchmark and to use it to produce the first extensive and realistic benchmark evaluation of layer 2 blockchain systems on a worldwide deployment.

• Web3-data – Layer 2 Activity Tracking & Comparison Suite
  
  • Through this project, we aim to deliver a high-quality set of Dashboards that help enable data scientists, researchers, and all community members to better understand Layer 2 Activity
  • We will aggregate data across Layer 2 networks leveraging sources such as Dune, L2Beats, Santiment, CoinGecko, Github, Discord, and, in many cases, directly from the project APIs/RPCs.
  • We will clean and organize this data to provide a suite of displays that will allow the community to visualize changes across key L2 metrics (e.g. tps, rent paid to Ethereum, growth in TVL, daily active addresses, new addresses, total addresses, fees paid, and developer activity based on GitHub affiliated repo commits).
  • We aim to label smart contracts (and ultimately enable the community to label smart contracts) by usage categories (Native transfer, DeFi DEX, DeFi other, NFT, CEX, Stablecoin, ERC20 other, L2 rent, Bridge, Arbitrage/MEV, Utility). This labeling will allow us to analyze and visualize the usage patterns on a high level and also show the “hottest” smart contracts in the different usage categories. We are leveraging known labels from Dune, Arbiscan, Etherscan, and others.

• L2 Beat – L2 Beat
  
  • Continue to work on transparent and verifiable insights into emerging layer two (L2) technologies with expanded metrics and education.

Data Visualization

• Quantstamp – Back-End API Standard for L2 Block Exporers
  
  • This project will clearly define properties that a block explorer should implement in order to be considered feature-complete in the general layer two setting. Additionally, our goal is to propose and specify a standard API interface that the layer two networks should expose to general block explorers. We envision that such a standardized interface will enable and greatly simplify the development of multiple block explorers that will plug-and-play reusable with all the layer 2 networks that support the standard. In the ideal scenario, the standard would turn the development of the core of a new block explorer into a project that could be completed by an experienced team during a weekend hackathon. Our goal will be to also define a standard that is consumer-agnostic. As such, it will not matter whether it is consumed by a block explorer that is provided commercially, is open source, or potentially even decentralized. The project will pay special attention to what unique layer two data a block explorer should provide, with an emphasis on those related to security of the chains monitored by it.

• Blossom Labs – Blobscan
  
  • The first explorer for the EIP-4844 shard blob transactions. It indexes and presents them in a searchable format that the user can visualize and navigate through in an easy way, providing the necessary infrastructure to scale Ethereum.

Cryptography and Zero-knowledge proofs

• Zhe Ye, Ujval Misra, and Dawn Song (University of California at Berkeley) – Specular
  
  • The most popular optimistic rollups (ORUs) today, Arbitrum and Optimism, strive to extend existing Ethereum client software (Geth) to support interactive fraud proof (IFP) construction, aiming to reuse prior L1 engineering efforts and replicate EVM semantics at L2. Unfortunately, to do so they tightly couple their on-chain IFP verifier with a specific client program binary—oblivious to its higher-level semantics. This approach (1) precludes the trust-minimized, permissionless participation of multiple Ethereum client programs, magnifying monocolture failure risk; (2) leads to an unnecessarily large and complex trusted computing base (TCB) that is difficult to independently audit; and, (3) suffers from a frequently-triggered, yet opaque upgrade process—both further increasing auditing overhead, and complicating on-chain access control in the long-term.
  • We are therefore focused on building a secure, trust-minimized ORU that addresses these problems, while preserving scalability and dispute resolution efficiency. To do so, we have designed an IFP system native to the EVM, that enforces Ethereum’s semi-formally specified semantics [5] precisely at the level of a single EVM instruction. As a part of this work, we built Specular, an ORU which leverages Geth—modified minimally with only 99 lines-of-code to support IFP construction—demonstrating the practicality, extensibility and trust-minimal nature of our approach.

• Nethermind, Justin Thaler (Georgetown University), Matthew Green (Johns Hopkins University), and Pratyush Tiwari (Georgetown University) – Concrete Security Analysis for L2 Deployed Proof Systems
  
  • We propose to analyze the concrete security of the proof systems (SNARKs, STARKs) that secure -rollups. We observe that some proof systems have security analyzed in the interactive setting, while their security after applying the Fiat—Shamir transformation is only conjectured. Furthermore, we believe that in some cases more efficient attacks are possible than the claimed security level asserts.

• Ethstorage – Proof of Storage on L2 Dynamic Datasets with an Ethereum L1 Contract
  
  • Given a list of commitments of BLOBs (e.g., KZG commitments from EIP-4844/Danksharding, indexed from 0…n-1) in an L1 contract, the project is to study an efficient proof system to efficiently verify on L1 that the BLOBs are stored off-chain with the desired redundancy (e.g., 30~50 physical replicas). By putting these storage nodes in an L2 network and assuming 1/m of nodes is honest, we could build an L2 storage network that reuses mainnet security while extending Ethereum scalability dramatically.
  • Further research will attempt to answer the questions of how to build the proof/verification system if the BLOBs and the commitments are constantly changed (e.g., new BLOBs are appended to the list or a BLOB of an index is changed); and how to build incentivized/payment system to ensure desired replication factor using ETH as payment; it is possible to ask a storage node to store partial BLOBs while maintaining the same level of security of Mainnet?

We were extremely happy with the quality of applicants for this grants round. The research and work they produce will have a positive impact on the ecosystem. We suggest keeping an eye on them!