On May 23rd, Taiko released its first round of airdrop query page, which sparked a wave of debate in the community about fairness. Despite the response from its founder, Daniel Wang, the community does not seem to be convinced.
At the same time, on May 25th, Vitalik Buterin, the co-founder of Ethereum, proposed the first block on the Taiko mainnet as a block proposer and stated in the postscript of the block, “I am glad to see Taiko launching as a Based Rollup platform. Ethereum benefits from adopting different L2s using various methods, and I appreciate Taiko being one of the first projects to develop in this direction.”
With the upgrade of Cancun, the Ethereum ecosystem has once again focused on the L2 field. Unlike other Rollup projects, Taiko is developing a solution based on Based Rollup and has attracted the attention of multiple VC firms, including Sequoia China, Generative Ventures, Hashed, Lightspeed Faction, Token Bay Capital, and Flow Traders. It is curious to know what sets Taiko apart from other well-known ZK scaling projects and how its scaling solution will affect the L2 ecosystem.
With these questions in mind, ChainFeeds had a discussion with the Taiko team to explore the origin of Taiko, its vision, Ethereum scaling solutions, and more.
Key excerpts:
Taiko founder Daniel Wang hopes to expand Ethereum without sacrificing decentralization, achieving a balance between centralized and decentralized layer 2 networks, allowing dApps to make decisions between these two choices.
Contestable Rollup is an abstraction of zkRollup and Optimistic Rollup. In the future, if zero-knowledge proofs become cheap enough, Contestable can be configured as a pure zkRollup.
During the development of the SGX proof, the Taiko team gradually realized the importance of stateless clients and firmly believes in the feasibility of running stateless clients to generate zero-knowledge proofs in zkVM.
Taiko has already launched its mainnet, and block submission and proof are permissionless, but the contract still has an owner. The Taiko team plans to transfer ownership of the contract to Taiko DAO after about a year on the mainnet, completely relinquishing ownership and control over the network.
Origin of Taiko: Expanding Ethereum without sacrificing decentralization
Taiko founder Daniel Wang created Loopring, the first Ethereum ecosystem DEX protocol built on ZKRollup, in 2017. However, Loopring’s architecture did not align completely with Daniel’s vision. Daniel wanted to expand Ethereum without sacrificing decentralization, achieving a balance between centralized and decentralized layer 2 networks, allowing decentralized applications to make wiser decisions between these two choices. However, Loopring could only be built as a non-programmable layer 2 network, lacking a virtual machine structure, and its block mechanism was also centralized to reduce costs.
Before founding Taiko, Daniel Wang and like-minded developers had several discussions focusing on two directions: decentralized social networks or the infrastructure needed for decentralized social networks, the “permissionless layer 2 network.” After careful consideration, it was generally believed that entering the field of decentralized social networks posed higher risks, while permissionless layer 2 networks had greater differentiation and competitive space, leading to the birth of Taiko.
Taiko is a Type-1 zkEVM that provides the same opcodes and features as Ethereum, ensuring high compatibility with the existing Ethereum ecosystem. The Taiko team emphasizes that the original design of Taiko is based on the structure of Based Rollup, which means that Ethereum validators are ultimately responsible for block production in Taiko, achieving decentralization of proposers. As of now, Taiko has over 30,000 decentralized proposers and over 14,000 decentralized validators. In March of this year, Taiko completed a $15 million Series A round of financing led by Lightspeed Faction, Hashed, Generative Ventures, and Token Bay Capital, with a total funding amount of $37 million. Regarding the favor from VC firms, the Taiko team said they attach great importance to the synergy between investment institutions and Taiko’s strategy. Moreover, the support from investors played a crucial role in Taiko becoming one of the largest Discord communities globally (over 1.07 million members) and attracting hundreds of dApps for deployment, in addition to the advantages of being Type-1 and fully decentralized.
Exploring the Ethereum Rollup Design Framework: BCR and BBR
One of the main differences between Taiko and other Rollups is that it has chosen the Based Rollup mechanism, which does not rely on a centralized sequencer but instead relies on Ethereum validators to order transactions and blocks. Furthermore, Taiko co-founder Daniel Wang proposed the concept of “Based Contestable Rollup (BCR)” at the end of 2023. This concept introduces a contestable mechanism because ZK-EVM code cannot be error-free forever, and Taiko is decentralized with low tolerance, so a cautious attitude is needed.
The Taiko team also explained the main considerations for choosing the Contestable design:
First, Based Rollup is permissionless and requires “higher-level proofs” to address potential bugs in the software. This avoids the need for a centralized network to shut down for data correction. Of course, as the Taiko network operates for a longer time, this error correction mechanism can be gradually removed.
Second, although SGX proofs are thousands of times cheaper than zero-knowledge proofs, they are not the most ideal or decentralized verification method. The Contestable design allows challenges to be raised when there are doubts about SGX proofs, requiring higher-level proofs to revalidate the blocks. This not only reduces costs but also increases the credibility of verification.
Finally, Contestable Rollup is flexible and scalable, and it can be seen as an abstraction of zkRollup and Optimistic Rollup. For example, if zero-knowledge proofs become cheaper in the future, Contestable Rollup can be configured as a pure zkRollup, or it can be configured as a pure Optimistic Rollup based on the needs of the application, adapting to different verification requirements.
Regarding the architecture of Based Contestable Rollup, Daniel Wang provided a detailed overview in the article. BCR is a Rollup with disputable features and based sorting. Under this design, anyone can dispute state transitions in a block but must pay a dispute bond in Taiko tokens and provide higher-level proofs to resolve the dispute and validate the block. If the challenger wins, they can recover the dispute bond and receive 1/4 of the original prover’s validity bond. The new prover will also receive 1/4 of the original prover’s validity bond as a proof fee, with the remaining 1/2 being confiscated. The mechanism involves multiple signers acting as the top level of proofs in the initial years. As the highest level of proof, in this case, state transitions are considered final and further questioning is not allowed.
Additionally, Taiko’s BCR architecture has a core feature that allows each level to use its own proof system. The Taiko team stated that in the architecture based on Contestable Rollup, different levels of proofs can be built, such as the lowest-cost Optimistic proofs, followed by SGX proofs, and then zkEVM or zkVM proofs. These different proof types are the embodiment of the Contestable concept, and they can also be combined into a hybrid multi-proof system, such as “SGX+zkVM,” which can be seen as a more reliable proof than using zkVM alone.
As a significant milestone, Taiko plans to test the practical operation of BCR on the Alpha-6 testnet, Katla, and then launch it on the mainnet. After that, Taiko plans to either upgrade the protocol to Boosted Based Rollup (BBR) or introduce an independent BBR layer as the second significant milestone. Taiko states that Boosted Based Rollup is a wise choice to achieve Ethereum’s native scalability. By allowing L1 validators to propose new blocks for the entire network, Ethereum will have out-of-the-box scalability. For developers, BBR enables transaction execution and storage sharding. For users, the user experience will be improved as dApps will be distributed across all L2s.
Narrative Upgrade: Transitioning to ZKVM?
While zkEVM is well-known, the EVM is not designed to run in zero-knowledge circuits, so implementing zkEVM often requires trade-offs. Unlike zkEVM, zkVM is a virtual machine implemented as a zero-knowledge proof system. Its advantages include ease of use, as it does not require knowledge of cryptography and ZKP systems; generality, as a Turing-complete ZK-VM can be used for any computation; simplicity, as a simple set of constraints is sufficient to describe the entire VM; and the ability to leverage recursion, as proof verification is just another program executed on the VM.
Taiko has already started transitioning from using the zkEVM model to the zkVM model. With the shift to the zkVM model, Taiko can modify and run a client to generate ZK proofs. To ensure robustness, Taiko diversifies encryption assumptions by building a multi-proof system and contributing to multiple zkVMs such as RISC Zero, SP1, and Powdr. It also enhances privacy and security using SGX without leaking data.
The Taiko team stated that they are one of the earliest teams involved in the development of the Ethereum Foundation’s PSE zkEVM and have made contributions and optimizations to critical circuit codes such as Keccak and Moorke. However, in this development process, they realized the limitations of this development mode, such as the low-level nature of the code, making it difficult to test and validate. It is not beginner-friendly either. Through continuous exploration during the development of the SGX proof, the team gradually realized the importance of stateless clients and, influenced by the progress made by the Risc0 team, firmly believes in the feasibility of running stateless clients to generate zero-knowledge proofs in zkVM. Taiko is now collaborating with Risc0 and will collaborate with SP1 and more zkVM teams in the future to aggregate these different proof systems through Contestable Rollup while keeping the design of the Taiko layer 2 fully decoupled from each zkVM.
In addition, Taiko has launched on the Ethereum mainnet on the 27th and has processed about 15% of the entire Ethereum network’s data blocks. The team emphasizes that although block submission and proof are permissionless in Stage1 mainnet mode, the contract still has an owner. The team plans to transfer ownership of the contract to Taiko DAO after about a year on the mainnet, completely relinquishing ownership and control over the network. The Taiko team also stated that they will invest more resources in the development of Preconfirmation, MEV, and the Taiko BBR solution, hoping to bring more surprises to ecosystem projects and community users in the future.
Airdrop Controversy: Can Taiko regain community confidence?
On May 23rd, Taiko announced the TKO token economics and announced that 5% of the initial token supply would be used for a genesis airdrop. According to the official FAQ, there will be 300,000 addresses eligible to claim over 50 million tokens. Although this measure was intended to give back to the community, it sparked controversy about the fairness of the airdrop. Some community members reported receiving fewer airdrop tokens than expected, and some users claimed to have participated in related tasks but did not receive the airdrop.
In response to community dissatisfaction, Taiko co-founder Daniel Wang also responded, stating that Taiko’s goal is fairness but cannot satisfy everyone, and he apologized to users who did not receive TKO tokens. However, the community does not seem convinced by his statement. Subsequently, Daniel Wang responded again in the Discord community, stating that if users did not receive the airdrop, it was because others scored more. As for the lack of transparency in the airdrop rules, transparency cannot resolve differences in defining “fairness,” as it is highly subjective. This statement once again put Taiko in the spotlight, and some community members called for a boycott of Taiko. However, it is not uncommon for projects that release airdrops to face community scrutiny, especially when airdrop manipulation becomes an industry involving many professional teams, which also become part of the ecosystem, and community opinions may be influenced by these teams. In the future, Taiko plans to carry out two more rounds of airdrops.
