a16z: Why are we investing in Espresso, a shared sequencer network?

Original title: Investing in Espresso

Original author: Ali Yahya, a16z partner

Original compilation: xiaozou, Golden Finance

Editor's note: On March 21, 2024, a16z announced that it had led a $28 million Series B round of financing in Espresso, a shared sorter network. a16z partner Ali Yahya wrote an article explaining why a16z invested in Espresso.

The endgame of Ethereum’s scalability is all about Rollups – possibly millions of Rollups, each of which is its own mini-ecosystem or An application built on the security cornerstone of Ethereum. Vitalik first proposed this idea in his famous Rollup-centric roadmap article a few years ago. Since then, other ecosystem players, such as zkSync, Optimism, and Polygon, have expanded on this vision with hyperlink roadmaps (Polygon has adopted the AggLayer roadmap). For the first time, Ethereum sees a bright path to scale to support millions of applications and billions of users.

However, this plan is not without limitations. The biggest problem in the future centered on Rollup is the fragmentation of the Ethereum ecosystem. Today, on the Ethereum main chain, every application (i.e. smart contract) can interact seamlessly with other applications. In a world of millions of Rollups, composability with applications will become more difficult. This is because each individual Rollup is its own independent blockchain. They share Ethereum's security, but calculations are performed independently. Each Rollup is driven by a so-called "sequencer". The sequencer is currently a centralized party that performs all calculations of the Rollup on the server.

Today, if an application on one Rollup wants to interact with an application on another Rollup, it must do so through the Ethereum main chain or a bridge. Both methods are slow and make it difficult for developers to synchronize state across Rollups (they are asynchronous solutions). In a more ideal world, different Rollup sequencers will have a mechanism to cooperate with each other, resulting in a smoother, faster, and cheaper interoperability experience for developers and end users.

1. Espresso Team

Before I introduce the Espresso system, I want to introduce the team behind it. I knew Ben Fisch and Benedikt Bünz before joining a16z. It was early 2017, and I was working at Google Brain. Ben and Benedikt were both PhD students under Professor Dan Boneh of Stanford University, whom I had known since my undergraduate days. Thanks to Dan, we were able to connect and work together to advise a new crypto company, which became Eco and is now part of the a16z crypto portfolio company. I remember being very inspired by their technical brilliance. For a moment, I even thought about pursuing a PhD in cryptography under Dan's supervision, as they were doing at the time.

What impressed me most about Ben was how clearly he thought about the new technology he was building at every level of abstraction - from the bottom up encryption primitives, to various business and product considerations, all the way to the broadest social impact. I should have anticipated his inevitable transition from an academic role to a startup founder and CEO.

As it turns out, I did not pursue a PhD. Instead, I left Google and joined a16z to become a venture capitalist, which is pretty much the same thing, right? Shortly thereafter, I met Jill Gunter through the crypto community when she We became friends very quickly while working at Slow Ventures. What always impresses me about Jill is her insane ability to think strategically. She has the keenest intuition about how the world works and how people might function within it. So when she joined Ben, Benedict, and Charles Lu at Espresso in 2021, it was impossible not to notice.

I also got to know Charles through his work at Espresso. He's technically savvy, and like everyone else at Espresso, he also worked with Dan at Stanford. But most importantly, he is the perfect partner for Ben, Benedikt and Jill due to his operational excellence. Without Charles, Espresso wouldn’t be what it is today.

Last year, as the limitations of Ethereum’s Rollup-based roadmap became increasingly clear, Ben and his team brought us what we heard The most fascinating solution to the fragmentation problem I've ever seen.

2. Espresso system

Espresso is building a decentralized network that will serve as the coordination mechanism for Rollup sequencers. It is a marketplace where sequencers can both sell their block space and join a mechanism that unifies the ordering of transactions across Rollup. With Espresso, Rollup will be able to sell block construction rights to block proposers who bid on the network. These proposers can also bid for multiple Rollup blocks at the same time and become co-proposers of multiple chains. This allows Rollups to continue to evolve independently while also interoperating more seamlessly with other Rollups.

At its core, crypto is a technology movement that creates better tools for human collaboration on a larger scale, especially among the parties involved without mutual trust. Espresso and Ethereum are the perfect embodiment of this beautiful ideal.

We are very excited to work with Ben, Benedikt, Jill, Charles, and the Espresso team to help them bring a more seamless interoperable future to Ethereum.

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