Hi everyone,
if you're visiting this page, congratulations!
You're still early in the crypto industry. I assume you're now ready to learn more about the cryptocurrency buzzwords you've heard in Web2 and you want to have some real experience interacting with the blockchains. When I started my part-time as a regular user on Ethereum related blockchains, I realized it's quite complicated to manage risks. And this year, there have been exposed to many risks that I never thought could actually happen. Fortunately, I survived most of them, but I also lost some money due to the extremely high volatility of cryptocurrencies themselves and a loss from USDC stablecoins' value on Fantom due to the Multichain incident.
Therefore, I understand that it takes some courage to be on-chain (this term means you're actually using blockchains, not just buying and selling cryptocurrencies on CEX, centralized exchange). For those not ready to risk fiat money on blockchains and want to have some on-chain experience, this is the guideline you might want to follow for the upcoming 2024. Below, I summarize what the current key trends, focusing on Ethereum infrastructure technologies.
Note: This guildline should not be understood as a financial advice.
Layer-2 Scaling
First, I would suggest you to start your on-chain career by researching about L2 blockchains and ask why “L2 (Layer-2) scaling” is one of the most famous trend in 2023. You may also encounter the buzzword “Zero-Knowledge (ZK)” frequently but we will discuss about this topic in later article. To sum up now, L2 and ZK are the current destination many blockchains aspire to reach (search for the why). So now, you might ask what is the difference between L1 and L2 blockchains? Have any L3 blockchains emerged yet? Don’t worry I will give some idea later on. However, if I have to choose again one L2 blockchain to start practicing on-chain experience and playing around with, I would pick up the Eclipse Testnet
https://twitter.com/EclipseFND/status/1704178668543824309
as the best starting point for practicing an on-chain experience, by following their guideline in the documentation.
https://docs.eclipse.builders/building-on-eclipse/quick-start-hello-world/testnet
Testnet refers to blockchains using tokens with almost no value, whereas mainnet means you are using real money on blockchains. After you have completed every steps in the documentation, you will essentially learn
The basic experience of using Web3 wallets, such as MetaMask and Phantom
The experience between Ethereum and Solana
How to use a faucet to obtain test tokens for each testnet blockchain
How to use the Command Line Interface (CLI), which is useful for developing tasks such as running nodes
Below is the guildline of using Eclipse Testnet, in Thai.
https://mirror.xyz/lordachita.ecc.eth/v8LKz4iO0XLx1cmgvsxbW2fzLsTINGxjrixa7d4CJqA
For some blockchains such as the Linea network, one of L2 blockchains, you could even earn a $200 USD NFT (another famous buzzword, Non-Fungible Token) by simply completing testnet quests (to earn points which might benefit you in an airdrop, or you may call a reward money for using the technology).
You may also start learning by doing quests from the following platform:
Layer3: where you can complete many quests from famous blockchains, primarily on the mainnet.
https://layer3.xyz/?ref=lordachita.ecc.eth
Galxe: where you can engage more frequently with the testnet.
Intract, the current host of Linea mainnet quests
You may look at a list of current L2 blockchains on L2BEAT.
https://l2beat.com/scaling/summary
The following L2 blockchains are now essential to study:
Arbitrum
Optimism
Polygon (zkEVM)
ZkSync Era
as they are encouraging Alt (Alternative) L1 blockchains to enhance themselves as an L2 blockchain with their technology
Arbitrum Orbit
https://twitter.com/arbitrum/status/1717571952599089388
OP Stack
https://twitter.com/optimismFND/status/1683918572811337729
Polygon CDK
https://twitter.com/0xPolygonLabs/status/1719784276596609124
Zk Stack
https://twitter.com/zksync/status/1673317167628967936
These represent the ongoing competition, which I personally named “L2 wars”. I suggest using these keywords for further research to keep this article concise, as it's an introduction to using blockchains, not a comprehensive guide to L2 technology.
While L2 scaling appears to be a promising solution, it's important to note that current L2s still incur some amount of gas fees. Fortunately, ongoing updates to Ethereum, one of which is the incoming EIP-4844 (detailed in the provided link),
https://consensys.io/blog/ethereum-evolved-dencun-upgrade-part-5-eip-4844
may reduce fees for some L2 blockchains. Thus, another critical aspect for your study in addition is to identify current challenges of L2 scaling technologies. You may view the following post as an idea
https://twitter.com/MetisDAO/status/1729508362553880715
and also testing it with me in 2024.
Modular Blockchains
After you have completed the Eclipse Testnet guideline above, you might already notice that Eclipse blockchain incorporates a variety of blockchains inside: Celestia, Ethereum, Solana as described in the article:
Data Availability: Celestia
Proving: RISC Zero
Settlement: Ethereum
Execution: Solana Virtual Machine (SVM)
https://mirror.xyz/eclipsemainnet.eth/me7bXLWJDS177V6nl8j1uzF1mxpX6nbGOLNeyBAwXgs
Why is that? What are Data Availability, Proving, Settlement and Execution? What is L2?
Let’s start from this. The previous crypto season was when developers tried to develop their own best L1 blockchain, but all blockchains fundamentally have common limitations known as the blockchain trilemma, which simply means you cannot achieve scalability, security, and decentralization all at once. Currently, they are collaborating by utilizing each other's technology, centralized around Ethereum's security.
Consider a general blockchain as a hamburger and developers as stores; each might believe they have picked the best buns, meats, and veggies, despite common limitations. But now, there are stores that start to use the bun from Store A, meats from Store B, and veggies from Store C, while still maintaining a perfect combination with better taste. This is the concept of modular blockchains, and also L2 blockchains.
To learn more about modular blockchains:
https://twitter.com/MessariCrypto/status/1699066238490804415
https://usa.visa.com/solutions/crypto/monolithic-vs-modular-blockchain.html
To clarify and distinguish between the terms Layer 2 and Modular, here's a summary:
Layer 2: refers to blockchains that are developed on top of existing Layer 1 blockchains. Most of the Layer 2 solutions on Ethereum, are execution technologies. For instance, Arbitrum and Optimism are known as Optimistic Rollups, while ZkSync and PolygonZkEVM are categorized as Zero-Knowledge Rollups. (Rollup is another essential term to understand when learning about Layer 2 (L2) technologies.)
Modular: is a broader term to describe blockchains designed with separate, independent layers. These layers include Data Availability, Proving, Settlement, and Execution. Each of these layers can operate independently and can be integrated with other blockchains. This modular design allows for greater flexibility and customization in blockchain architecture.
Restaking
First, let's begin with the concept of Staking within the framework of the PoS (Proof-of-Stake) mechanism. Staking means using your Ethereum (and applies for any blockchain that employs the PoS mechanism) to ensure the proper functioning of the network, potentially yielding substantial rewards. However, there is also a risk of losing your funds if you disrupt the mechanism. For a more precise explanation, you may read the following article.
https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-proof-of-stake
For some time now, there are protocols that allow you to stake with them, managing the process thereafter, sometimes even in a decentralized manner. Examples include Lido and Rocketpool. When you stake your Ethereum with these protocols, you receive what are known as Liquid Staking Tokens (LSTs), which serve as depository receipts for your staked Ethereum.
Restaking can be described as the staking of these depository receipts. Eigenlayer is currently the leading innovator of this process, which has recently introduced a number of promising innovations.
Ethos: focuses on enhancing the security of non-EVM (Ethereum Virtual Machine) blockchains.
https://twitter.com/eigenlayer/status/1737174994889904354
Altlayer: introduces the concept of Restaked Rollups.
https://twitter.com/eigenlayer/status/1737559292985974996
Obol: offers Native Restaking via Distributed Validators (a complex but important concept to grasp).
https://twitter.com/eigenlayer/status/1738248697379721566
Ether.fi: presents Liquid Restaking Tokens, or LRTs. After you stake your ETH with the protocol, you receive tokens known as LRTs, which act as depository receipts. This is different from LSTs because the protocol uses your ETH in conjunction with Eigenlayer, allowing you to utilize EigenLayer natively through your staking.
https://twitter.com/eigenlayer/status/1729999847598473329
Additionally, one can follow the documentation for using the Eigenlayer Testnet.
https://docs.eigenlayer.xyz/restaking-guides/restaking-user-guide/stage-2-testnet
Guidelines for using the Eigenlayer Testnet in Thai will be provided in the event of a migration from the Goerli Testnet.
In conclusion, I believe the recent post by the PoolTogether CEO highlights Eigenlayer's innovative contributions to the current cryptocurrency industry.
https://twitter.com/lay2000lbs/status/1737532450191155414
Conclusion
Congratulations, now I think you have familiarized yourself with the basics of on-chain experience. However, there are still many buzzword terms that I haven’t mentioned so far, like Account Abstraction, Dapps, DeFi, and Web3. Moreover, I have only explained how to explore blockchains, but not how to explore safely. This will be an important topic for later. Once you are familiar with the risks and safety measures and also aware that you might lose all of your money, you are ready for a real experience in cryptocurrencies.
