Ethereum’s Future: The Rise of the ‘Based’ Movement

The Ethereum network is undergoing a transformative phase known as the ‘based’ movement, which is tackling the longstanding issue of fragmentation within the ecosystem. This innovative approach, particularly through based-sequencing and pre-confirmations, is set to redefine how applications and services operate on Ethereum’s Layer 1, according to the SSV Team.

Understanding the Fragmentation Issue

Fragmentation emerged as a significant challenge with the advent of rollups, which were developed to provide cheaper transactions and enhance throughput. Despite their advantages, rollups inadvertently created silos, each with its own developer ecosystem and liquidity pools, thereby diverging from the interoperability and shared liquidity that Ethereum’s Layer 1 is known for.

The rollup-centric roadmap introduced solutions like Optimistic and ZK-rollups, which process transactions off-chain to alleviate congestion. However, the fragmentation of liquidity across different rollups—currently estimated at $44 billion—has led to a breakdown in composability, increasing the risks for users who must navigate multiple rollups and associated smart contract risks.

Block Building and Sequencing

In addition to rollup fragmentation, the block-building ecosystem faces challenges from multiple sidecars, such as MEV, which can compromise network security and increase complexity. This is particularly challenging for home stakers who cannot run multiple sidecars, thus favoring large-scale staking protocols.

Sequencing plays a crucial role in managing transaction ordering within Layer 2 protocols. Different rollups employ varying sequencing methods, posing risks related to centralization and censorship. However, based-sequencing offers a promising solution by leveraging Ethereum’s validator set for enhanced decentralization and reduced fees.

The Based Movement Explained

The ‘based’ movement is not a new concept within blockchain but has gained momentum as a solution to Ethereum’s scalability issues. By utilizing Ethereum’s validator set, based-sequencing allows for decentralized transaction processing that preserves network effects while minimizing historical blockers like high fees.

Pre-confirmations further complement this approach by enabling validators to commit to transaction inclusion, thus reducing confirmation delays and improving user experience. These innovations are propelling the based ecosystem forward, with several projects already live and more anticipated by 2025.

Implications for Ethereum’s Future

The based movement holds the potential to extend beyond Layer 2 solutions, offering a framework for bootstrapping applications and services directly on Ethereum’s Layer 1. This would establish a shared security standard across the network, fostering frictionless interoperability and encouraging developers to choose Ethereum over fragmented sub-ecosystems.

An infrastructure layer that connects Ethereum’s validator set directly to applications could reduce operational complexity and streamline bootstrapping processes. As the based ecosystem evolves, platforms like SSV Network are poised to play a pivotal role, leveraging distributed validator technology to enhance the Ethereum network’s capabilities.

Image source: Shutterstock