The co-founder of the Ethereum network, Vitalik Buterin, wishes to maintain decentralized finance (DeFi) composability and synergy by connecting different layer 2 DeFi protocols.
Buterin’s proposal outlines how two different protocols, that use rollups, can communicate with each other without damaging their interconnectivity. While rollups are basically a layer 2 solution that uses smart contracts to process and store information off-chain, different DeFi projects tend to use different smart contracts, such as optimistic and zero-knowledge. Because of the difference in the smart contracts, these projects are currently unable to communicate with one another directly on layer 2, and instead need to connect through the Ethereum mainnet, which comes with high gas prices.
While there are already some proposals on how two rollup protocols can interact with each other, such as the Hop rollup-to-rollup bridge, they mainly assume both protocols have full smart contract support. Buterin’s idea focuses on what to do when one of the protocols can only process simple transactions, while the other one has full smart contract support.
In his proposal he explains how two “isolated” contract networks can be connected in a simple way. By programming the contracts to accept “memos” — that include additional information on a sender — Buterin wishes to create a sort of a connecting layer that keeps track of all deposits in the contracts. He explained with an example:
“Ivan has an account IVAN_A on rollup A (that he fully controls). Ivan also has some funds deposited in a smart contract IVAN_B on rollup B. Alice sends a transaction to IVAN_A with N coins and a memo ALICE_B. Ivan sends a transaction sending TRADE_VALUE * (1 – fee) coins through IVAN_B to ALICE_B.”
Buterin then described the “worst-case scenario” that can happen with this kind of a solution, which is “Ivan” not sending funds to”ALICE_B” as he is expected to. If that happens, Buterin explained, Alice can still wait until the rollup A transaction is confirmed, and then “find some alternate route to getting coins on rollup B to pay fees” in order to claim the funds herself.