Ethereum’s rollup was pitched as a way for airlines and superhighways to speed up transactions and solve congestion problems within the ecosystem. However, reality hasn’t quite veiled in the way that many rollup enthusiasts had predicted.
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A Huobi Research report by Barry Jiang looked at some of the problems with the rollups that may be behind their slow adoption rate and relatively low total value locked in. [TVL] share. One main factor, it found, is the unsatisfactory user experience. For example, less-than-ideal transaction fees and the long time-frame required to complete cash-out potentially worry users when dealing with volatile assets.
In addition, Jiang also cited security risks and the lack of interoperability between the rollups.
The report went to the state,
“According to rough estimates of publicly released addresses from multiple rollup blockchain browsers, there are 1 million rollup addresses compared to 185 million addresses (less than 1%) on Ethereum.”
It is also worth noting that other blockchains offer cheaper alternatives.
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Some of the solutions proposed by Huobi Research’s report include improving the overall user experience to increase rollup adoption. It proposed increasing bridge speed while reducing fees, and making the system more decentralized for security reasons. However, the report also proposed a dAMM, or L2 mock exchange, to streamline the trading process.
Huobi Research said,
“Various projects including Arbitrum, Optimism, Metis and StarkX etc. have proposed a work target on decentralization in their roadmaps or white papers. Surrounded by all kinds of Layer 1 chains, Rollup has no excuse not to decentralize. “
Additionally, more bridges and links between rollups can increase interoperability. This in turn can make the user experience more enjoyable.
“Furthermore, cross-chain bridges can strengthen interoperability between rollups. The higher the amount of capital on rollups, the wider the bridges between rollups, and the greater the number of transactions for assets to cross-chain. Giving is so easy.”
On the other hand, Ethereum’s falling gas fees need to be considered. A sudden drop in prices could further damage rollup adoption. If a large number of users decide to return to the mainnet, the fees rise again.
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While the TVL of the rollup has recovered substantially since the end of January 2022, the total TVL is still a short distance from the 2022 initial high of $6.8 billion.
Additionally, Arbitrum with TVL of $2.86 billion is down 4.58% in the last seven days.