Introduction

With the widespread adoption of blockchain technology, especially with the advent of the Bitcoin breakthrough in 2017, several new blockchains have emerged since then, taking various roles to solve several blockchain and crypto problems. Ethereum stands out and has been the chain of choice for many projects due to features such as faster transaction speed compared to Bitcoin, security, and ability to innovate and experiment—which led to the introduction and adoption of several tokens and the advent of DeFi (Decentralised Finance) and lower fees.

However, Ethereum has a scaling issue; it can only process fewer transactions per second, leading to high fees and longer wait times for transactions to be processed. This problem with Ethereum necessitates the advent of new solutions to solve the issue of Ethereum scaling. Several layer 2 blockchains have been built to solve Ethereum’s scalability issue, leading to an even wider adoption of Ethereum. These Layer 2’s have driven Ethereum to another level by improving scalability, reducing transaction fees considerably, and introducing security; these led to even more innovation in the crypto space, including the widespread adoption of DeFi. However, L2’s face on Ethereum faces another problem of interoperability—the ability for the different blockchains to interact and share liquidity. Although these problems have been solved with bridges and rollups, they are often ladled with security risks, inefficiencies, and fragmented liquidity.

Polygon is trying to solve the interoperability issue with its new solution, "AggLayer.”. Polygon is a leading Layer-2 solution, offering various chains like PoS, zkEVM, and supernets. Managing and integrating zero-knowledge proofs (ZKPs) across diverse chains can be problematic. The AggLayer was introduced to combat these problems.

Understanding Polygon

Polygon was founded in 2017 by Sandeep Nailwal, Jaynti Kanani, and Anurag Arjun as MAtic Network. Polygon was founded to create a scalable and user-friendly network for developing and connecting blockchain networks. It is a layer 2 blockchain that enables fast transactions and minimises transfer fees.

Ethereum’s high transaction fees and high transaction wait-time, which limited the applicability of Ethereum, birthed the Polygon solution. Polygon’s solution addressed Ethereum’s inherent weaknesses while complementing it. Polygon was initially meant to implement the Plasma chain proposed by Vitalik Buterin, but they discovered they needed a novel approach to addressing the Ethereum problem.

Matic Network was rebranded as Polygon in 2021 to enable them to move towards a new goal of becoming the “internet of blockchains.” They moved beyond developing single-scaling solutions to developing one that encompasses a wide range of blockchain scaling technologies, which includes optimistic rollups, ZK-rollups, and sidechains, which allowed developers to choose solutions relating to their needs.

The AggLayer concept was borne from this expansion, and it became a key core of Polygon’s vision to interconnect blockchains.

Introducing the AggLayer

Polygon’s AggLayer, short for Aggregation Layer, is a significant enhancement to the Polygon ecosystem designed to facilitate seamless connections between blockchains. The AggLayer is a decentralised protocol that aggregates proofs from all connected chains whilst also ensuring safety for fast cross-chain transactions.

Ethereum scaling challenge

Although lots of tokens operate on the Ethereum network, it presents scalability issues, as addressed in the introduction. Ethereum’s throughput is limited to 15 transactions per second, which severely limits its widespread adoption and user experience. As more people are onboarded into the network, the network gets congested during peak times, which leads to higher-than-normal gas fees and slower transactions. During peak times, the gas fees become especially problematic, rendering it financially unviable for users to engage with the network.

To address these problems, several solutions have been proposed to solve the scalability issue. The two main solutions are optimistic and zk rollups. Both operate differently as layer 2 solutions on Ethereum to enable scale transactions and reduce gas fees significantly. While transactions on optimistic rollups are assumed to be valid by default and only checked later if disputed, transactions on ZK rollups are bundled together and verified using zero-knowledge proofs (ZKPs). Let's briefly examine optimistic and ZK rollups.

Optimistic rollups

Layer 2 solutions allow transactions to be processed and bundled off-chain while still leveraging Ethereum’s security. Later, the transaction is submitted as a single transaction to the Ethereum mainnet. Transactions performed on optimistic rollups are assumed to be valid. However, network participants can dispute a transaction’s validity during a challenge period. If the transaction is proven to be fraudulent, the rollup reprocesses the transaction, adjusting its state while the sequencer who added the transaction is punished. Examples of optimistic rollups are arbitrum, optimism (OP), base, zora, and mantle.

ZK rollups

ZK-rollups also process transactions off-chain but use cryptographic proofs called zero-knowledge proofs to ensure transactions are valid before submitting them on-chain. Off-chain state changes are validated on-chain through the use of zero-knowledge proofs, which determine the mathematical certainty that the state changes are correct. zkRollups have several advantages over-optimistic rollups:

1. Security: zkRollups validate transactions using cryptographic proofs, providing stronger security compared to optimistic rollups that depend on participants challenging the validity of transactions.

2. Finality: zkRollups offer immediate finality for transactions, unlike Optimistic Rollups, which require a 7-day wait time for transactions to be considered final.

3. Data Compression: zkRollups efficiently compress transaction data, resulting in lower fees due to reduced data size.

4. Privacy: zkRollups ensures privacy by validating proofs without disclosing sensitive information, offering better privacy than optimistic rollups.

Examples of zk rollups are zkSync, zkSwap, Polygon Hermez, and mir protocol.

The AggLayer is based on aggregating Layer 2 solutions built on the Polygon blockchain. The AggLayer is explained in the next section.

AggLayer Explained

The AggLayer is a single bridge contract on Ethereum for all connected chains. It operates as a single contract to unify the multiple Layer 2 solutions plagued by limited liquidity. Additionally, it consolidates various frameworks, allowing for seamless interoperability and enhanced performance across numerous networks.

The AggLayer solves the fragmentation issue and enables seamless transactions between blockchains by operating as a single-layer (unified bridge). The unified bridge allows the execution of contracts between several blockchains while preventing fragmented liquidity, improving user experience, and potential gas fees.

The architecture can be broken down into the following steps:

Liquidity aggregation: AggLayer combines liquidity from multiple chains into a single accessible pool.

Cross-Chain messaging protocol: AggLayer ensures real-time data synchronisation between different chains.

Transaction finality layer: AggLayer provides low-latency confirmation mechanisms for transactions.

Developers have access to the bridgeAndCall() Solidity library, empowering them to create logic that can be executed across multiple chains. Users can transfer assets between chains and also trigger contracts on a different chain when the asset arrives. Also, users can send and participate in activities on another chain. This aggregation aims to establish a cohesive blockchain ecosystem that operates as seamlessly as a single chain. By removing the obstacles of siloed liquidity and fragmented user bases, it has the potential to pave the way for mass adoption.

Features of the AggLayer

1. Unified Liquidity Aggregation: AggLayer solves the liquidity problem by creating a unified liquidity network, allowing users to access liquidity across several chains without needing multiple bridging solutions.

2. Low-latency Cross-Chain Transactions: AggLayer minimises latency by optimising transaction routing systems, considerably reducing settlement times, and ensuring instant trade execution.

3. Enhanced Security: AggLayer improves security for cross-chain solutions, removing the need for wrapped tokens or centralised relayers by using cryptographic proofs and decentralised validation to ensure the trustless execution of transactions.

4. ZK Proof aggregation: AggLayer aggregates zk proofs from all chains, ensuring privacy and efficiency.

5. Scalability: AggLayer increases the transaction throughput of the polygon network by aggregating multiple scaling solutions.

6. Developer-Friendly Integration: AggLayer provides the bridgeAndCall() functionality to enable developers to create logic that can execute on different chains for asset transfers.

Use Cases and Applications

DeFi and Liquidity Protocols: AggLayer ensures that liquidity is consistently maintained and distributed across various protocols and chains, enhancing both the efficiency and adoption of DeFi. By integrating AggLayer, lending and borrowing protocols can boost liquidity and participation through efficient collateral management.

Decentralised exchanges: With AggLayer, tokens can seamlessly exist and be traded on multiple chains without the need for multiple bridges. Acting as a single unified bridge, AggLayer efficiently handles transfers and communications across different chains.

NFT Marketplace: AggLayer's unified bridge will enable NFTs purchased on one chain to be seamlessly traded on another, enhancing liquidity and facilitating efficient cross-chain asset transfers.

Single Unified Wallet: By utilising AggLayer's technology, assets can seamlessly move across various blockchains without relying on multiple bridges. This innovation allows users to manage their assets with a single wallet, eliminating the need for juggling multiple complex wallets across different chains.

Conclusion

AggLayer represents a significant innovation in the blockchain space, aimed at enhancing user experience and driving widespread adoption. Traditional bridging methods, while solving cross-chain communication, are slow, fragment liquidity, and can result in permanent fund loss if errors occur. Additionally, moving assets between multiple chains is both costly and complex. AggLayer simplifies this process, preserving liquidity, user experience, and speed.

As DeFi, web3 gaming, and blockchain adoption grow, seamless cross-chain communication becomes critical to the continued growth of web3. AggLayer's trustless and developer-friendly approach has the potential to redefine the blockchain industry, much like how TCP/IP improved the adoption of the internet.