Before the arrival of Layer2 on a real scale, the first problem facing us may not be the composability of DeFi, but the usability.
We should know that users need to pay a lot of Gas fees when transferring assets across the Rollup chain or to the Layer 1 smart contract, especially when crossing the Rollup chain, which reduces the enthusiasm of retail investors to use the Layer 2 scheme and the utilization rate of capital to a certain extent.
Hermez, who went online on March 24th, tried to solve the usability problem. Hermez is a special expansion scheme, which is built based on ZK Rollup and focuses on the "transfer" scenario. It was launched by iden3 team, hoping to reduce Layer2 interaction fees through "large-scale migration mechanism".
- the large-scale migration mechanism
Let's understand Hermez's large-scale migration mechanism by analogy.
Suppose Alice decides to go to the destination T, and the only means of transportation in front of her is a private car. Therefore, Alice had to take a private car and pay a fare of $80 to get to T ..
At this time, Bob discovered the business opportunity, and he decided to open a special line (with 10 seats) to provide services for people in need like Alice. The specific operation is as follows: wait for passengers who need to go to T at location P, charge each passenger 30 dollars, and earn 250 dollars after excluding the cost.
Therefore, Alice arrives at the destination t at a lower cost. At the same distance, the cost is reduced by changing the means of transport (from expensive private cars to buses with lower fares).
Corresponding to Hermez's mechanism, Alic's funds are transferred from independence to a certain contract address, paying the Gas fee, and the funds with a common destination (a smart contract) are sent to the target address together, and then the Gas fee payment is completed. That is, the assets of users are summarized, and the cost of Layer2 interaction is reduced by sharing the handling fee. The vehicle for running Alic funds has changed from private cars to buses.
In terms of implementation, Hermez pointed out in his official blog, "First, the Layer 1 smart contract needs to have a Layer 2 address (users need to know the address to transfer funds to this address). “
After that, the Hermez protocol will group and extract the Layer 2 transfers received from the target address of the same Layer 1 smart contract on Layer 2.
The user's funds are going to the destination Rollup smart contract will use Hermez function to extract the total amount of the same batch of transfers from Layer 1. Although the contract needs to pay the withdrawal Gas fee, this fee can be allocated to all transfers in the same batch, so the cost is not high.
The L2 network coordinator of the receiver (that is, the node/miner) needs to handle the withdrawal transaction of L1, and resolve the capital flow from the information, and then remit it to another Rollup corresponding to the aggregate account of the initial Rollup.
In the design of large-scale migration mechanism, Hermez realized the transfer by summarizing the user's assets, and shared the Gas fees that users need to pay, which is beneficial for retail investors to participate in Layer2 interaction.
According to Hermez, these can be realized because the protocol reconstructs the information needed for the original transfer in Hermez Layer 2 and the corresponding account information on the target Rollup.
"The maximum number of summary transactions is 2000, and compared with the cost of transferring tokens once, users can save 97% of gas expenses at most".
- the donation certification mechanism and token economy
In the large-scale migration mechanism, we know that there is a coordinator in the Hermez network, who is responsible for processing the transaction data and ensuring that the network operates in a decentralized state.
How to be a network coordinator. Anyone can be, by using the HEZ Token (Hermez native token) to participate in the auction. In a limited time (about 40 Ethernet blocks, about 10 minutes), the person with the highest bid can become a coordinator, have the right to package data and earn transaction fees.
After winning, the bidder's HEZ will enter a smart contract and be divided into three parts:
- 30% tokens are destroyed.
- 40% of the tokens are donated, which may be provided to gitcoin or other donation platforms.
- The remaining 30% token is used for network incentive to improve the adoption rate.
The whole process is called proof of invention.
Since 30% of the bidder's token will be destroyed, this means that the Hez token is deflationary.According to the HERMEZ white paper, the total number of Hez is 100 million, of which 65% is used to motivate or allocate to strategic partners, 20% to founders and 15% to development teams.
All tokens held by the founder and team of HERMEZ will be unlocked within 3 years (October 2023), and the remaining tokens will be fully unlocked within 2 years (October 2022).
At present, the circulation volume of Hez is 6978722, accounting for 6.98% of the total, with a market value of US $44.66 million.
- Conclusion
In terms of operation mechanism, HERMEZ's "large-scale migration mechanism" is friendly to retail investors and improves capital efficiency.The design of "donation certificate" provides ideas for the development of other layer2 projects. After all, many projects have not announced how to coordinate network nodes.
At the application level, HERMEZ, which focuses on the "transfer" scenario, has announced the integration of usdt to increase users' asset options.
Usdt ranking in gas consumption of Ethereum network
But in the long run, if HERMEZ wants to develop further, it needs to support more assets and cooperate with the exchange to connect the asset side with the demand side.Otherwise, it is likely to become an expansion scheme independent of the layer2 world.