Taiko - The real Ethereum space L2

Key Points

• Due to the increase in volume, the Ethereum network is facing scalability issues, resulting in fee pump and transaction processing latency. Many Layer 2 projects on Ethereum have not paid enough attention to the close connection with Ethereum, leading to fragmentation between L2 and centralization issues in the sequencer.
• Taiko is committed to becoming a true Layer 2 solution for Ethereum, prioritizing Decentralization and providing comprehensive support for developers by maintaining full interoperability with Ethereum.
• Taiko has made significant progress in its Mainnet launch and community interaction, successfully addressing Ethereum’s scalability issues while adhering to its core principles.

Ethereum was first launched in 2015, aiming to maximize the potential of blockchain technology through smart contracts and Decentralized Applications (dApps). However, with the sharp increase in the number of users and volume on the Ethereum network, it has encountered serious scalability issues.

Initially, the number of transactions on the Ethereum blockchain was relatively low, so the processing capacity of the blockchain was not a significant issue. Users could process transactions quickly and at low cost, and the network operated stably. However, as Ethereum gained popularity, various decentralized applications (such as Decentralized Finance, games, and the Non-fungible Token market) emerged, and the number of transactions rose rapidly. As a result, the time required to package transactions into blocks increased, and money laundering also increased significantly. This is particularly burdensome for users engaged in microtransactions or those who require fast transaction processing.

To address these issues, the Ethereum Foundation and the community have explored various solutions. One of the most prominent solutions is Sharding. Sharding is a scalability solution that divides the Blockchain network into smaller ‘Shards’, significantly increasing transaction processing capacity. Similar to multiple computers being able to process tasks simultaneously, Sharding technology allows the Ethereum network to process more transactions faster and more efficiently. Ethereum plans to introduce this technology to significantly enhance the network’s processing power.

Despite the promising benefits brought by Sharding technology, concerns about centralization and the development latency caused by technical challenges have led Ethereum to shift from directly adopting Sharding to the Layer 2 solution.

With the comprehensive acceptance of L2 solution by the Ethereum community, multiple Ethereum Layer 2 projects have emerged. Taiko is one of these Ethereum L2 solutions, but its development direction differs from many other Ethereum L2 solutions. As Taiko aims to comprehensively address the existing issues faced by Ethereum L2 solutions, before delving into Taiko, let’s first understand the development path of Ethereum L2 and the challenges it encounters.

1. The Golden Age of ETH L2 Blockchain

1.1 The Rise of ETH L2 Blockchain: Different Approaches and Philosophies

Etherum Layer 2 includes blockchain infrastructure aimed at improving transaction processing speed, reducing costs, and maintaining the security of the Ethereum mainnet (Layer 1). The most famous L2 types include Plasma, Optimistic Rollup, and zk Rollup.

The ETH2 L2 project has begun to develop its own ETH2 L2 blockchain based on its respective ideas, methods, and beliefs, while pursuing the common goal of solving the scalability issue of ETH2. As a result, users enjoy lower fees and faster transaction speeds. However, is this a directional issue or a speed issue? Against the backdrop of the emergence of numerous ETH2 L2 blockchains, Ethereum and its scalability issue are starting to be overlooked.

Essentially, ETH L2 is created to address the scalability issues of Ethereum, but many projects are gradually starting to focus more on promoting their own Mainnet rather than addressing the core problem. Many ETH L2 projects are operating in a way that intentionally weakens the connection with Ethereum, only providing limited value connection through bridges, and in some cases, not supporting the connection with Ethereum at all. This has resulted in the emergence of independent blockchains that are essentially unrelated to Ethereum.

For example, Blast launched its Mainnet on February 29, 2024, as reported by Cointelegraph, emphasizing its direction and narrative as an L2 solution for Ethereum. However, on a certain Node, it began to refer to itself as a “full-stack chain,” gradually distancing itself from Ethereum. It is no coincidence that Blast changed its official account from @Blast_L2 to @blast on the X platform (formerly Twitter).

Source: Jim X

This indicates that although many L2s of ETH claim to emphasize their connection with ETH and expand its scalability, it seems that there is no real ETH L2 that can truly adhere to the narrative of common development with ETH. So, where is the problem?

1.1.1 The connectivity with Ethereum is gradually weakening.

Many L2 solutions are increasingly emphasizing their unique features and characteristics, leading to a gradual decrease in connectivity with the ETH network. This desire to establish an independent ecosystem stems from the pursuit of autonomy. However, this independence may hinder interoperability with the ETH Mainnet, making it difficult for users to expect seamless interaction between L2 and ETH. As a result, the L2 blockchain, which was originally born to solve the scalability problem of the ETH network, ultimately weakened the overall integrity of the network. This goes against the original intention of the ETH scalability solution and may cause confusion throughout the entire ETH ecosystem.

1.1.2 Introducing centralization for efficiency

Some L2 projects have introduced centralization elements in the pursuit of efficiency. Although centralized methods may bring higher performance and lower costs in the short term, they undermine the fundamental principle of Decentralization that blockchain technology relies on. This may lead to long-term trust and security sacrifices in technology. In addition, centralized structures create single points of failure, increasing the risk of security vulnerabilities, which is a major threat to both users and developers.

1.1.3 Ignored the needs of developers

When building their ecosystem, L2 projects often bring confusion and burden to developers. Due to the adoption of different technical approaches by each L2 project, developers have to understand and adapt to multiple platforms. This creates significant barriers for developing new dApps or porting existing dApps to the L2 Blockon-chain setting. In addition, due to the lack of standardized protocol between L2Block chains, developers have to modify code for different infrastructures. This situation not only drops the productivity of developers but also hinders innovation and rise in the Ethereum ecosystem.

L2 projects may argue that they have no choice but to make these decisions to expand their ecosystem and gain capital support. However, this trend ultimately weakens the security of the Ethereum Mainnet and has a negative impact on the entire Ethereum ecosystem.

1.2 Return to the Core

Source: Vitalik Buterin Warpcast

In July 2024, Vitalik Buterin, the founder of Ethereum, published an article criticizing the excessive investment in infrastructure in the current blockchain industry. Vitalik pointed out that this excessive investment in infrastructure resources indirectly invests in technology rather than directly investing in coins or tokens to satisfy their moral conscience. His observations seem to coincide with the chaotic emergence of L2 projects. With a large amount of capital flowing into the infrastructure field, projects that only focus on profit and neglect the narrative of Ethereum’s scalability continue to emerge, gradually excluding Ethereum and its scalability issues from the L2 narrative.

Of course, investment in the L2 ecosystem itself is not a bad thing. Capital is crucial for the operation of the project. However, this capital should not be the highest priority. The most important thing is the problems that the L2 solution aims to solve and how it solves them.

L2 projects must not forget their original intention to solve the scalability issue of Ethereum. The key is to maintain interoperability with Ethereum, adhere to the principle of decentralization, and provide an environment that developers can easily participate in. If the L2 solution fails to find this balance, it will not only threaten the development of the Ethereum ecosystem, but also jeopardize the long-term trust and security of blockchain technology. When L2 projects return to their core principles and contribute to solving the scalability issue of Ethereum through close collaboration with Ethereum, true progress in blockchain technology can be achieved.

2. Taiko: The real Ethereum L2

So, what are the conditions for becoming a true ETH L2 that solves the scalability problem of ETH? There seem to be three key factors here: 1) Is it fully integrated with ETH? 2) Is it fully decentralized? 3) Has it fully considered the needs of developers operating in the ETH environment? Let’s examine the efforts made by Taiko in becoming a true ETH L2 based on these factors.

2.1 Ethereum equivalent L2

The solution to the scalability problem of Ethereum must naturally be well integrated with Ethereum. Here, integration not only refers to integration at the system level, but also includes integration at the value level and the philosophical level. Of course, the word “integration” does not mean complete sameness or repetition in many respects. However, this is still one of the virtues necessary for a true Ethereum L2, as many blockchains continue to operate as Ethereum L2, but do not adhere to these basic principles.

2.1.1 Type-1 EVM Blockchain

On August 4, 2022, Vitalik Buterin published an article titled ‘Different Types of ZK-EVMs’ (https://vitalik.eth.limo/general/2022/08/04/zkevm.html), analyzing and classifying zkEVMs. According to his analysis, zkEVMs are divided into types 1, 2, 2.5, 3, and 4. The higher the number, the greater the interoperability and compatibility with Ethereum, but the higher efficiency in proof generation and overall performance. In other words, zkEVM types with higher numbers involve modifications to the EVM core or the introduction of additional modules to optimize performance.

Although Vitalik also pointed out in the article that there is no zkEVM type that is absolutely superior technically, and various types may coexist, he concluded this article with the following statement:

“Personally, I hope that with the combination of ZK-EVMs and the improvement of Ethereum itself, all zkEVMs will eventually become type 1, making them more ZK-SNARK friendly.”

• Vitalik Buterin (Ethereum Founder)

In the choice between interoperability and performance, Vitalik supported interoperability in the scalability of ETH. Although this article was written two years ago in 2024, the emergence of numerous ETH L2 blockchains now makes it worth reflecting on. To truly be a true ETH L2 blockchain, its ultimate goal should be to achieve a type 1 zkEVM.

Although Vitalik’s article only categorizes zkEVM, if we take a broader perspective, the structure of L2 itself can also be extended to EVM type or L2 type, depending on whether it is fully integrated with Ethereum. From this perspective, Taiko aims to provide the scalability of Ethereum by using a type 1 EVM equivalent to Ethereum.

As Taiko aims to be an Ethereum equivalent L2 blockchain, it inevitably shows relatively lower performance compared to other types of Ethereum L2 blockchains (such as Type 2 or Type 3). However, considering that previously mentioned L2 blockchains have not fully devoted to Ethereum scalability, this trade-off may be understandable. It is worth noting that this is not a major issue, as the Taiko team is aware of it and has set a goal to improve performance through internal protocol design.

2.1.2 Based on Rollup

Source: MEV for ‘Rollup-based’ Analysis

Taiko not only fully integrates with the system infrastructure of Ethereum, but also attempts to fully align with the security aspects of Ethereum. Taiko adopts a concept called “Rollup-based”, which operates without a centralized sequencer. Instead, Ethereum’s validators also serve as Taiko’s sequencers, responsible for sorting transactions and Blocks. Due to these features, the fragmented Ethereum ecosystem may be reintegrated into the overall Ethereum network.

Due to the nature of Rollup, the Ethereum Block proposer is the sorter for Taiko. This role comes with specific responsibilities, including maintaining their profits as maximal extractable value (MEV) beneficiaries of Taiko and as active sorters. This additional incentive mechanism encourages them to operate with greater caution.

2.2 The Road to Complete Decentralization

From a systemic perspective, Decentralization is a cumbersome and inconvenient concept. Frankly, if everything is handled and managed by a single point, efficiency will undoubtedly be higher, and maintenance will be simpler. Therefore, many Ethereum (ETH) L2 solutions adopt a centralized sequencer model. However, this approach also has drawbacks, such as the potential for malicious sequencers to censor transactions or amplify the impact of single point failures. In this case, who would trust this system? The emergence of the blockchain industry is precisely because no one can be trusted. To eliminate these potential risks, complete Decentralization is crucial.

Source: Controversial Rollup (BCR): A Configurable Multi-proof Rollup Design

What are the conditions for complete Decentralization? Taiko thought about this question and introduced the controversial Rollup (BCR). The key to avoiding centralization is to ensure the presence of multiple participants, prevent collusion, and encourage competition. The BCR adopted by Taiko is a Rollup based on competitive mechanism, covering all necessary elements.

34,469 lines of code will not be without vulnerabilities for a long time.

• Vitalik Buterin

Taiko chose the BCR structure to create a fully Decentralization environment. Vitalik Buterin’s argument emphasizes that zk-SNARKs are not currently a completely reliable module. Especially with the latest zk-SNARK system becoming very complex, it greatly increases the possibility of errors. As this technology is still improving, it is expected to become more complex, making it easier to make technical errors. When such vulnerabilities exist, centralized Rollup may not make the problem too bad because there is an entity responsible and able to solve any technical errors or specific risks. However, for Taiko, its goal is a completely Decentralization environment, so it is difficult to clearly address these issues. Therefore, Taiko avoids blindly trusting the structure of zk-SNARKs. In other words, through the BCR structure, Taiko has prepared for the possibility of proving errors in Rollup and established a system that allows challenges to erroneous Rollup proofs.

To understand how Taiko’s BCR works, a simple example may be more effective than a complex explanation.

1. Alice proposed a new Block.
2. Bob submitted a proof of state change from H1 → H2. H1 is the parent hash, and H2 is the new block hash. Bob staked 10,000 TAIKO as a deposit. His proof enters the cooling-off period.
3. The status information and accompanying proof proposed by Bob are publicly disclosed.
4. Cindy believes that Bob’s state change should be H1 → H3, not H1 → H2. Cindy staked 10,000 TAIKO as a competition deposit during the cooling-off period and challenged Bob’s proof.
5. The disputed status changes between Bob and Cindy are kept in a cooling-off period, waiting for higher-level evidence. This higher-level evidence allows Bob and all other verifiers to challenge it.

Scenario 1 - If Bob’s proposal is correct:

H2 proposal, indicating that Bob is correct. David received a reward of 2,500 TAIKO for performing the high-level proof and became the prover of H1 2. Cindy lost all her deposit for proposing incorrect modifications. 3. Bob withdrew the original 10,000 TAIKO deposit and received an additional 2,500 TAIKO bonus for submitting the correct proposal. 4. David’s new proposal and the cooling-off period for the proof begin.

Scenario 2 - If Bob’s proposal is wrong, David makes a new proposal:

1. David provided a three-step state transition proof from H1 to H4, showing that Bob’s state transition is incorrect. David received a reward of 2,500 TAIKO for executing this proof and staked 20,000 TAIKO as a deposit to provide a capital base for his modified state information and proof.
2. Cindy withdrew the original 10,000 TAIKO deposit and received an additional 2,500 TAIKO reward for legally challenging the incorrect status change information about Bob.
3. Bob forfeits all the deposit because of providing incorrect state transition information and proof.
4. David’s new proposal and the cooling-off period for the proof begin.

The structure incentivizes validators of Proof-of-Stake to maintain responsibility during challenges and prevent unnecessary attacks through a competitive deposit mechanism. It is worth noting that as the number of verification rounds increases, the required deposit for participating in the competition significantly increases, effectively avoiding excessive competition rounds.

In addition, Taiko introduces a multi-proof system in the BCR structure. Different stacking proof systems (such as SGX, ZK, SGX+ZK, etc.) can be used according to the needs of different stages, which provides flexibility and more stable operation for the system. However, this design also has a drawback: when the competition frequency is low, the activity of the prover decreases. Since this structure relies on frequent competition to generate profits, provers may choose not to participate in environments with scarce competition. To solve this problem, Taiko implements a dynamic adjustment mechanism, which can switch between different stacking proof systems to ensure the system’s activity in a low competition environment.

2.3 For EVM Builders

The various claimed features of various ETH Layer 2 and more Decentralization Layer 2 are attractive and necessary. However, we have overlooked a crucial question: what is the purpose of ETH Layer 2? Or, who are they serving? The answer is simple, their purpose is to serve the participants in the ecosystem, those who want to use these ETH Layer 2. Among them, builders who attract a large number of users and drive the development of the entire L2 ecosystem are the most important. However, in this golden age of the ETH Layer 2 blockchain, a large number of infrastructures created based on individual rules have emerged. In short, it is like operating the same service in multiple countries with completely different laws and regulations, which requires unnecessary time and money to resolve.

So, how can we help builders efficiently concentrate resources to develop services? The answer is standardizing rules to narrow the gap between infrastructures. To achieve this, it is necessary to introduce infrastructures that have been historically precipitated or widely used by numerous builders. Yes, we need to introduce the infrastructures used in the Ethereum environment. This allows builders to easily adapt to the Ethereum L2 blockchain, using the methods and experiences they have already developed on the Ethereum platform.

Taiko only works when it helps others succeed.

• Taiko Labs

In this regard, Taiko is demonstrating a true commitment to builders. The above Taiko blog post emphasizes that Taiko will enable ecosystem participants, especially builders, to work freely for profit. To fulfill this commitment, Taiko continues to release all development implementations as Open Source and has adopted a structure called Based Booster Rollup (BBR) to help EVM builders transition faster and easier.

BBR is a solution that extends the advantages of Based Rollup from the perspective of builders, answering the question of what would happen if we could apply Based Rollup’s advantages to the application end of blockchain core infrastructure. With Taiko’s BBR, builders can deploy their dApps on L1 Ethereum all at once and experience automatic deployment of dApps on all L2s without additional work or resource expenditure.

The operation of BBR is similar to adding additional CPU or SSD to a laptop. By adding additional module components to the existing computer to improve performance without changing the basic structure, BBR enables applications and services to run faster and more significantly within the existing structure of L1 Ethereum.

In this way, Ethereum validators can propose blocks for the entire BBR network, and with fully integrated L2 advantages, BBR can serve as a solution for instant scaling of Ethereum. Ultimately, this approach can solve the fragmentation problem faced by all rollups currently. In other words, while maintaining the sorting and all related advantages of L1, it realizes cross-rollups among all L2 networks associated with L1, thus achieving the scalability that Ethereum has been pursuing for a long time.

3. Taiko’s Vision: Ethereum Integration Infrastructure and Community

We have discussed the target direction of Taiko. Although it has three strong narrative foundations, ideas alone are not enough to make it an industry disruptor. Ideas must be implemented within a planned timeframe, allowing others to benefit from these implementations, thus forming a virtuous cycle and ultimately becoming an industry disruptor. So, let’s examine how Taiko plans to become an industry disruptor from the perspectives of the past, present, and future.

3.1 Ethereum Integrated Infrastructure

One of the key pillars is infrastructure. As the cornerstone of becoming a true ETH block L2, Taiko is leveraging various technological advantages to build this infrastructure. Let’s take a look back at the development of Taiko’s infrastructure.

3.1.1 So far - From Taiko Testnet to Mainnet

Taiko did not attempt to achieve all goals at once. In order to achieve the major goal of launching the Mainnet, it went through no less than seven Alpha testnets, gradually preparing the concept of Taiko. Let’s first take a look at the content of these seven stages of the Alpha testnets.

Alpha Testnet-1 (Snæfellsjökull)

All developers can deploy Smart Contracts, and users can use all ETH chains and Solidity tools just like on the ETH chain. This allows everyone to test and generate some transactions. This version allows anyone interested to run L2Nodes and invites participants as proposers. To do this, Taiko plans to run some Nodes and propose Blocks, inviting everyone to participate. The Testnet includes a bridge for transferring assets between Testnet and the ETH chain, as well as a Block explorer for checking transaction history.

Alpha Testnet-2 (Askja)

This is the first successful test network that verifies the network can operate through a proof mechanism open to everyone. It lays the foundation for complete Decentralization in this version. In addition, monitoring and alert functions for the Blockchain network have been implemented, allowing developers to deploy their dApps directly to this test network without modifying the code they use on the ETH network.

Alpha Testnet-3 (Grímsvötn)

This version establishes and implements the tokenomics foundation based on a new fee and reward model. It also includes testing of the necessary proof cooling process in the proof mechanism, as well as initial testing of the Taiko L3’s starting layer.

Alpha Testnet-4 (Eldfell L3)

This version deploys the initial layer of L3 for the first time, and introduces the concept of rollup-on-rollup. Due to the full integration of Taiko L2 with ETH, Taiko actually treats L2 as L1, and attempts to expand to L3. In addition, a staking-based proof mechanism is introduced to prevent centralization of provers and ensure they receive fair rewards.

Alpha Testnet-5 (Jólnir)

This version includes new proposals and proof implementations based on the Proposal-Builder Separation (PBS). PBS is a series of economic mechanisms involving proposers and verifiers to ensure the Decentralization of Block construction. Unlike previous Testnets, this version introduces this mechanism, and Block construction now adopts an open market form.

Alpha Testnet-6 (Katla)

The sixth TestnetKatla implemented the initial version of BCR. As Taiko aims to be an L2 equivalent to the ETH chain, this version is prepared and tested for integration with the latest updates of the ETH chain, such as EIP-4844, although these updates have not been activated yet. In addition, the bridge has been updated, and the blockchain explorer has been enhanced to provide more comprehensive information.

Alpha Testnet-7 (Hekla)

The final Testnet Hekla focuses on activating EIP-4844, which was prepared in the previous Testnet. This successfully implements and enables Blob, the new rollup storage mechanism of ETH mainnet. In addition, this version of Testnet also introduces several improvements, including adjusting L2 block gas issuance, activating snap sync, and modifying EIP-1559 settings. Based on the features and testing in this version of Testnet, the Mainnet is now ready for deployment.

Source: Taiko Mainnet #1 Block

TaikoMainnet

After the content of the blockchain network verified and protected on the testnet is launched to the world through the Mainnet, it is worth noting that Vitalik Buterin, the founder of Ethereum, immediately generated the next block after the Genesis Block, adding significant significance to the Mainnet launch. Ordinary users can transfer ETH from Ethereum to Taiko Mainnet and directly interact with dApps on the Taiko blockchain through a bridge. In particular, builders can run nodes, propose and verify blocks, and actively participate in the Taiko blockchain, which is a platform with tremendous potential. From a technical perspective, Taiko has introduced implementation modules representing its vision, such as BCR and Raiko, demonstrating its commitment to becoming a true L2 for Ethereum.

3.1.2 Now - Pre-confirmation and Multi-proof System

Although Taiko has developed from six testnets to the Mainnet stage, it is also consolidating its internal structure to become a more advanced Ethereum L2. Two of the most significant developments are pre-confirmation and multi-proof systems, which we will further explore.

Preconfirmation

Even after the Mainnet is launched, Taiko continues to evolve towards inheriting the security and finality of Ethereum. However, this evolution brings a risk that Block proposers may face survival issues due to a lack of profitability. For example, in ecosystems like Taiko, Liquidity is scarce, and users typically provide Block proposers with tips far below the market rate, making Taiko’s 12-second Block time insufficient for any Block proposer to profit. Therefore, Taiko Lab operates proposers temporarily without seeking profit to prevent this situation. Without action, the Block time of Taiko Mainnet will continue to increase.

In order to address the profitability of L2Block construction, improve block time, and enhance data publishing efficiency, Taiko plans to introduce a concept called ‘pre-confirmation’. Pre-confirmation will be a major focus of research and development in the second half of 2024 and will play a crucial role outside of TaikoMainnet. With pre-confirmation, L2Block construction can become more efficient and stable, allowing users to experience faster transaction confirmations.

In addition, pre-confirmation may simplify and enhance the rollup structure by integrating the roles of L2 and L1 proposers. This is related to Based sequencing, and may not be smooth in practical operation when considering builder profitability, survival guidance, and fast Block time. However, if multiple pre-confirmers perform pre-confirmation, TaikoMainnet may experience a fork. Therefore, despite some controversy, mechanisms such as leader selection are being discussed as a practical compromise.

Multi-Signature System

Taiko’s another research and development topic is the multi-proof system, which aims to integrate multiple clients and various proof systems. The multi-proof method reduces the risks caused by client implementation and proof system vulnerabilities, ensuring that even if one proof method is compromised, other methods can prevent the exploitation of the same vulnerability.

Source: Taiko’s Multiple Proof Method

First of all, Taiko aims to establish an ‘open’ multi-client system where each client can independently verify Blocks. This allows users to choose their preferred client for Block validation, providing better accessibility and scalability. Additionally, this is also a fundamental measure to prevent single point of failure and helps to enhance the security of the Mainnet. However, as this requires Ethereum to support the multi-client functionality as an L1 network system, Taiko plans to use a ‘closed’ system with various improved validator types before fully implementing this support.

In addition, Taiko also operates a multi-proof system for a free market, where proposers seek verifiers, propose Blocks, and validate them using the proof system of their choice. In addition, this multi-proof system emphasizes modularity and openness, allowing multiple clients and proof systems to collaborate and generate multiple proofs. For this purpose, Taiko collaborates with companies such as Powdr Labs and Risc Zero to enhance interoperability between compilers and zk-SNARK systems, building a modular ZK stack.

The implementation of these concepts is called ‘Raiko’. Raiko supports various zkVMs and utilizes SGX to enhance security. The system improves the flexibility of Block proof through the ZK/TEE architecture and enhances zkVM and TEE through standardized input methods. Taiko plans to continue integrating more zkVMs and expanding Wasm zkVM. The system aims to provide a user-friendly and integrated environment for EVM-compatible Block proof.

3.1.3 From Now On - The Future BCR and BBR

Despite significant progress, Taiko’s goal of becoming an industry disruptor still seems distant. Ultimately, Taiko’s path to realizing its ultimate vision largely depends on two core elements - BCR and BBR, which have been preliminarily implemented but still need further refinement.

Although we have explained BCR and BBR in the previous text, let’s review them again.

BCR allows users and developers to propose Blocks, run Nodes, and deploy Smart Contracts in the same way as Ethereum. It introduces a dispute resolution mechanism that allows for quick resolution of errors in rollups. This ensures the finality and accuracy of the Blockchain, making BCR the cornerstone of Taiko’s core technology.

Source: Based Booster Rollup (BBR): New Important Milestone in Taiko’s Roadmap

BBR is built on the advantages of Based Rollup, providing higher efficiency and comprehensive Ethereum compatibility. This allows users to use integrated dApps on all L2s without the need to move between them, while developers can deploy dApps once and have them automatically scale on all L2s. In addition, BBR addresses the fragmentation issues present in all rollups, significantly reduces Transaction Cost, and increases throughput. Therefore, Taiko believes that BBR has the potential to fundamentally expand the Ethereum ecosystem, and once this technology is implemented, users and developers across the entire Ethereum network can expect a better experience.

Taiko’s Mainnet aims to support developers, users, and builders, enabling them to work freely and efficiently in the ETH network, with a focus on following these two core pillars. However, as these pillars are not yet perfect, they need to continue to evolve and improve to become key technological components for realizing Taiko’s vision. As these two pillars become stronger and more refined, Taiko will be able to propose a new L2 standard, providing comprehensive ETH compatibility, complete decentralization, and a closer connection to users and builders.

3.2 Community

Another key pillar is the community. To ensure that the space created by Taiko’s infrastructure is truly valuable, community participation is crucial. To this end, Taiko has made efforts in multiple areas, including token issuance, token economic model development, ecosystem activation, and governance environment establishment. Let’s take a look at some of Taiko’s efforts in these areas.

3.2.1 Up to now - TAIKO token issuance and distribution

After the launch of TaikoMainnet, an Airdrop of TAIKOToken was conducted. TAIKO is the native Token of the Taiko network and is the core of the Taiko economic mechanism and Token economic model, with an initial issuance of 1 billion Tokens. The Token Generation Event (TGE) of TAIKO occurred on June 5, 2024. The distribution is as follows: 11.62% of the total supply is allocated to investors, and 9.81695% is allocated to the Taiko Labs core team, as shown in the attached figure.

The allocated TAIKO Tokens are subject to an initial 12-month Lock-up Position period. After the Lock-up Position period ends, 25% of the Lock-up Position Tokens will be released, and the remaining 75% will be gradually unlocked over three years. This vesting structure is designed to reduce market fluctuations, encourage long-term participation in the Taiko ecosystem, and ultimately support the success of the Taiko project.

The TokenLiquidity release plan is explained in the figure below, with green representing the distributed Token, yellow representing the Token to be distributed in 2 to 4 years, orange representing the Token to be gradually distributed starting one year after launch for a period of three years, and pink representing the Token allocated to protocol development, DAO governance, and the network, with a release period of five years or longer.

3.2.2 Status - The expanding Taiko ecosystem

Source: Trailblazers Introduction: Explore Taiko and Get Rewards

Taiko’s Trailblazers program is a loyalty program where users can earn XP and rewards by participating in various on-chain activities on the TaikoMainnet. The program allocates 10% of the total supply of TAIKO tokens, and users can earn more XP and level up by participating in activities. Certain Non-fungible Token holders can also receive XP bonuses. The program offers a variety of activities and special events.

The program aims to encourage users to explore the Taiko ecosystem and actively interact with the community. Users can earn XP by participating in bridge, increasing volume, proposing Blocks on the Taiko Mainnet, and other activities. Rewards will be distributed based on the accumulated XP at the end of each season.

In addition, the Trailblazers program has introduced a faction system that allows users to form teams and compete in two factions (Based and Boosted). Users can collect badges related to each faction, which provide additional rewards such as XP. At the end of the season, the faction with the highest XP will receive additional rewards. Developers can also participate in the program and receive rewards for the best-performing applications.

The purpose of the Trailblazers program is to attract more users to the Taiko ecosystem and to allow them to accumulate experience and earn rewards through various activities.

Thanks to the active support of Taiko, the Taiko ecosystem is rapidly rising. More details will be discussed in Chapter 4.

3.2.3 Future - Achieving complete Decentralization through Taiko governance

To achieve complete decentralization, Taiko allows the community to participate in decision-making through DAO. Major decisions are determined by TAIKO Token holders through voting, thus determining the direction of the network’s operation. However, Taiko’s governance is still in its early stage and not fully active. Therefore, Taiko Labs will establish the first committee, and the addition and removal of committee members will be decided by voting in Taiko DAO.

3.3 A Challenging but Progressive Path

Taiko is steadily moving forward, although not at a fast pace, but its goal is to gradually realize its pursued ideas and philosophy. Taiko especially values becoming a blockchain that is user and developer-oriented, which is fully reflected in the expanding Taiko ecosystem after the Mainnet launch. In the next chapter, we will delve into the development of the Taiko ecosystem.

4. Current Progress After Mainnet Launch

Since the launch of TaikoMainnet, various aspects of the network have made significant progress. In the past 90 days, Taiko has shown significant growth in network activity, profitability, user engagement, and technological progress. In this section, we will delve into these key metrics.

4.1 Trading and User rise

The network activity of the Taiko mainnet has significantly risen, handling over 100 million transactions. The daily volume reaches a peak of 2,000,000 transactions, demonstrating its strong processing power and increasing adoption rate. The expanded user base also reflects the attractiveness of the Taiko ecosystem, with over 1,000,000 independent Wallet Addresses, indicating strong interest and active participation from users in Taiko.

4.2 Profitability and Decentralization

One of the noteworthy achievements after the Mainnet launch is the profitability of Taiko Labs proposers, which has become Decentralized, permissionless, and started making profit. This milestone challenges the current understanding of Ethereum and opens up new possibilities for Ethereum’s scaling solutions. Although Taiko has experienced losses in the past, it has steadily turned to profitability with more dapps joining. Looking forward to the next few months is crucial.

Source: On-chain profit - Growthepie

4.3 drop operational costs

Taiko has made significant progress in technology to optimize network performance and reduce costs. In particular, the Gas fees for Taiko L1 contracts have dropped by 30%, increasing the profitability of proposers. Additionally, the active Margin and the effectiveness of SGX proofs and disputed Margin of 50% have been reduced, thus reducing capital costs, allowing more participants to join Taiko’s permissionless transaction ordering.

5. It’s time to follow Taiko’s progress.

Source: Taiko Mirror

Since its first appearance on the global stage, Ethereum has been in existence for nine years. During this time, Ethereum has experienced tremendous growth and undergone many transformations to address the challenges of its expansion. Among them, the Layer 2 solution blueprint proposed to address Ethereum’s scalability issues has become a key choice for the future development of Ethereum, ushering in a new era of Ethereum Layer 2 rise. However, over time, some Ethereum Layer 2 solutions have gradually deviated from the original Ethereum Layer 2 narrative, resulting in increased competition or even hostility between these projects and Ethereum, ultimately weakening Ethereum’s security.

Now, the key is to identify the “true Etherium Layer 2”, those with the potential to be true partners of Ethereum, rather than threatening projects. We need to carefully identify which projects are indeed committed to solving the scalability issues that Ethereum originally set out to solve and moving in the right direction. As a result, Taiko has attracted widespread follow. Taiko is steadily developing with the narrative of “Layer 2 equivalent to Ethereum”, “fully Decentralization Layer 2”, and “Layer 2 prioritizing developers”. It is worth noting that Taiko has put a lot of effort into realizing these narratives, and has strong technical support behind it such as BCR and BBR.

Of course, many other Ethereum Layer 2 projects are also making efforts in their respective fields, so it is not yet certain which project can stand out and dominate in this Ethereum Layer 2 dominant era. However, Taiko’s future development trajectory is widely followed, not by chance, because it is gradually turning its clear development direction - solving the fundamental challenges of Ethereum Layer 2 - into tangible results.

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