Vitalik Buterin – founder of Ethereum – is one of the most important figureheads in the crypto industry. When he speaks, the crypto world listens. Since ETH’s release nearly a decade ago, Buterin has focused his attention on improving various aspects of the decentralised finance (DeFi) ecosystem. As Ethereum Virtual Machine (EVM)’s smart contracts have become the gold standard for decentralised computing, the demand for data space on the ETH blockchain has surged. The result has been a simultaneous increase in gas prices (transaction fees) and a decrease in settlement times. So, the importance of scaling solutions to reduce the impact of this congestion has become more and more important.
Plasma is a class of blockchain scaling solutions that allow all data and computation, except for deposits, withdrawals and Merkle roots, to be kept off-chain. This opens the door to very large scalability gains that are not bottlenecked by on-chain data availability.
Plasma: What is it and How Does it Work?
Plasma was first invented way back in 2017 and has seen many variations of the technology, although most have been abandoned. In simple terms, Plasma is a scaling solution that ensures “all data and computation, except for deposits [and] withdrawals… to be kept off-chain”. However, the tech was largely thrown by the wayside in favour of rollups (like Optimistic) which were cheaper and better suited to processing data other than payments (e.g., supply chain verification).
However, the introduction of validity proofs (zero-knowledge rollups) has the potential to bypass the original limitations of Plasma tech. Validity proofs allow transaction data to be verified between two parties without any of the information being shared. In the context of a Plasma chain, these proofs significantly reduce the effort required to verify transactions, resulting in “greatly reduce[d] transaction fees”. Additionally, it adds an extra layer of security as it becomes much harder for Plasma operators (those verifying transactions) to compromise the security of the blockchain.
Ultimately, Buterin acknowledges Plasma solutions still need some refining, but should be revisited as a means to improving DeFi scalability.
Plasma lets us completely sidestep the data availability question, greatly reducing transaction fees. Plasma can be a significant security upgrade for chains that would otherwise be validiums.
OMG Shows Signs of Life
Thanks to Buterin’s advocacy of Plasma technology, the OmiseGo project has shown some signs of life after years of poor performance. OMG Network is an Ethereum L2 scaling solution and one of the last active projects attempting to utilise Plasma architecture to improve the blockchain’s throughput.
The native coin of the project, OMG, has surged 11.34% in the 24 hours since Buterin’s blog post was released, demonstrating just how influential the Ethereum founder is on the community. Buterin strongly asserted that Plasma technology requires some redevelopment to become effective, but if he’s correct about its potential, OMG Network may be the first cab off the rank thanks to its pre-existing infrastructure.
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