ArkStream×Caldera: Modular wxpansion|The endgame for ethereum

Good morning, everyone!I’m Matt, the co-founder and CEO of Caldera, one of the largest and fastest-growing rollup ecosystems on Ethereum. We are best known for our flagship product, Rollup as a Service, which helps teams launch their own customizable, dedicated Layer 2s and Layer 3s, all secured by Ethereum or similar chains.

Topic Introduction

Today, my talk will focus on what we’re dubbing “modular exception.” Initially, I thought it wouldn’t be too controversial to create a talk centered around Ethereum, effectively making a bull case for it. However, in the past couple of months, you may have noticed a lot of negativity surrounding Ethereum on platforms like Crypto Twitter.

There have been discussions about decreasing fees, complaints about the lack of value capture for ETH holders, and concerns about the roadmap. While some of these critiques may seem hyperbolic, they reflect a general sentiment of uncertainty among community members regarding Ethereum’s future. My goal today is to dispel some of the FUD (fear, uncertainty, doubt) surrounding Ethereum’s modular rollup-centric roadmap and to explain how Caldera fits into this landscape.

Defining Modularity

First, let’s define modularity. We believe that modularity is analogous to Ethereum’s general roadmap. We take a broad definition of modularity, which involves using another chain to perform key functionalities for your launching. This includes Layer 2s and Layer 3s that rely on a minimum for settlement and other functionalities, such as those provided by Celestia chains.

The State of Rollups

Now that we have our definitions in place, let’s discuss the state of rollups and how we arrived here. For those who have been around for a while, you’ll remember that Ethereum was considered slow, and many applications couldn’t be built effectively on it prior to the rollup roadmap.

When discussing Ethereum’s performance, I often compare it to an Altair 8080 computer from the mid-1970s, which processes about one million instructions per second — similar to Ethereum’s capabilities. However, unlike that personal computer, Ethereum serves as a global computer for everyone, meaning it’s even slower on a per-user basis.

Historical Context

During the last bull run, Ethereum transaction costs soared, with fees reaching as high as $40, and at times, even $100 or $200 during peak usage. This backdrop created urgency for the development of Layer 2 solutions.

In early 2021, Ethereum faced competition from other players in the blockchain space, such as Terra, Binance Smart Chain, Avalanche, and Solana. Many interesting applications were being built outside of Ethereum, especially in areas like gaming and social platforms. This led to a growing belief in the necessity for Layer 2 solutions.

Achievements of Layer 2s

Fast forward to today, Layer 2s have succeeded in scaling Ethereum and securing significant value. They have achieved practical scaling, with a scaling factor of about 30x, meaning there’s approximately 30 times more activity happening on Layer 2s and Layer 3s compared to Ethereum itself. This activity is crucial as it would have otherwise migrated to other ecosystems.

Currently, there are 94 live Layer 2s and Layer 3s on Ethereum, and this number continues to grow. Caldera is playing a significant role in this ecosystem, enabling teams to launch their own chains in just a few clicks.

Infinite Scaling Potential

Thanks to these advancements, we now have the potential for what can be described as “infinite scaling.” While “infinite” might be an exaggeration, in practice, we can significantly expand to meet growing demand. Today, Layer 2s are not just extensions of Ethereum; they offer a broader range of possibilities, allowing developers to build a variety of applications.

Modularity as Freedom

We believe that the ability to launch Layer 2s and Layer 3s on Ethereum grants developers greater freedom. This freedom contributes to the antifragility of the Ethereum ecosystem. In the past, many projects relied on specific narratives, which could lead to volatility. Now, because we can build nearly anything in a scalable manner, Ethereum remains flexible without being overly dependent on any single narrative.

Addressing Developer Pain Points

Many developers do not want to use Solidity for programming. Through modularity, Ethereum is internalizing many activities, allowing the use of other languages for development. For example, Arbitrum recently introduced a service that allows users to natively run different languages on its network. This flexibility will attract more developers looking to create innovative projects.

Ethereum’s Hegemony

In my view, one of the most critical aspects is Ethereum’s hegemony. Just as the stability of the US dollar is vital for the economy, Ethereum remains a primary value store among emerging chains. Most new projects still rely on Ethereum, ensuring its continued importance in the ecosystem.

Interoperability as the Final Frontier

I believe interoperability is the last major challenge we need to tackle. We want users to have a seamless experience when jumping between different chains. We are building a project called the “Meta Layer,” which will serve as developer tooling to facilitate communication across all chains in our network and ideally beyond.

Conclusion

In summary, through modularity and the development of Layer 2s, Ethereum is achieving unprecedented scaling capabilities, allowing developers to build a wide variety of applications. We at Caldera aim to make this process simpler and more efficient.

ArkStream Capital is a venture capital firm specializing in early-stage investments in Web3 unicorns.

Founded by crypto experts with pedigrees from MIT, Stanford, Tencent, Google, and BlackRock, ArkStream leverages eight years of deep Web3 expertise to drive the zero-to-one growth of its portfolio companies.

ArkStream Capital is managing a portfolio of over 100 companies, including Aave, Flow, Sei, Manta, Fhenix, Merlin, Particle Network, and Space and Time.