# Zoning L2s: Scaling your Blockchain with Lessons from Urbanism [kiwi challenge] Source: https://app.t2.world/article/cm13qufk6123220621mctlubmq9e Kiwi News: https://news.kiwistand.com/stories/Zoning-L2s-Scaling-your-Blockchain-with-Lessons-from-Urbanism-kiwi-challenge?index=0x66e727af11fdf50864c96b1af5680e6f39803c76c369643821a2d2772421015221b68063 Submitted by @simondlr on 2024-09-15 UTC, 20 upvotes, 3 comments ## Summary The author argues that L2 scaling solutions should be designed like nuisance-based zoning, which is common in Japan, rather than like Euclidean single-use zoning. Nuisance-based zoning lets any use exist in a neighborhood as long as residents tolerate its nuisance, and the author suggests L2s should aim for generality up to a certain scale while L1s subsidize diversity and L2s subsidize specificity. Examples given include zkSync Lite as a Euclidean L2 and Gnosis Chain for its use of the xDAI stablecoin for fees, with Optimism and Arbitrum cited as nuisance-style L2s that have their own tokens. ## Article This post is taking part in the Kiwi L2 Writing Challenge Blockchains can feel like cities: they inhabit a built environment which captures a culture. Like cities, blockchains can keep going even if the city is destroyed because of the relationships that were embedded in it. People can move in and out of cities based on their needs, leaving behind a history, compressed like an asphalt tag into the city’s streets. Urbanism can give us some useful metaphors and frameworks for thinking about how to design blockchains, especially as it pertains layer 2 scaling solutions. A popular city is usually dense in its center: diverse, general, and costly. It has commercial, entertainment, residential, offices, etc at its core. For city dwellers, despite it being costly, this diversity is desirable because of its ease. This is the layer 1 of a city. The layer 2 parts of a city is its expanded neighborhoods: whether zoned for residential or industrial or other uses. A common form of zoning is single-use zoning, otherwise known as exclusionary zoning or Euclidean zoning named after the town of Euclid, Ohio where its constitutionality in the US was first established in a 1926 Supreme Court Case. It is characterized by explicit separation of uses within a city, requiring residents to commute between them. It states (broadly) that: you can *only* have one use in this zone and nothing else. Another form of zoning that I personally adore is nuisance-based zoning that’s common in Japan. It states that a new neighborhood is zoned based on its maximum nuisance level. Anything else is allowed in that neighbourhood if you can tolerate the nuisance to your liking. For example, you can have a commercially zoned area, allowing shops and retail, and you would be allowed to build homes there, next to your shop if you are willing to tolerate loading trucks at 5am in the morning. Nuisance-based zoning is often seen as desirable in urbanism because it gives flexibility to citizens, requires less public transport or commuting (you live close to schools, offices, retail, etc), and requires less up-front planning to ensure its success. It’s more self-contained and gives the people in it, the freedom to shape their neighbourhood. Euclidean Zoning: vs Nuisance Zoning: Zoning design and L2 scaling have characteristics in common: Both ask the question of how to expand a costly (and diverse) center. Both ask the question of whether to design for specificity or generality. Both ask the question of how to incentivize people to move away from the center and into an expansion such that all economic and cultural activity is buffeted by this process. Both ask the question of how to connect centers and satellite conurbations, if at all. Generally, all L2s are cheaper, both because of its economic distance to its center (less demand initially), but also due to explicit design tradeoffs. However, if you were to design L2s and take metaphors from zoning, you’d go about in different forms: Euclidean L2s: focus on specificity at cost of generality. In some instances they technically explicitly exclude certain technical possibilities which is a hallmark of a Euclidean L2. zkSync Lite is an example. are more reliant on the L1 as the specific use relies on users willing to commute (bridge) from the center (L1) to the neighbourhood (L2). More often than not, this L2 doesn’t have its own token that might increase complexity. Gnosis Chain is an example as it uses xDAI stablecoin for fees. more often than not it relies on its L1 to provide supporting services. A Euclidean L2 likely uses the L1 for data availability in the same way that a neighbourhood might borrow policing, energy, and other resources from its city center to sustain itself. A Euclidean L2 likely relies on optimistic fraud proofs (it relies on a nearby court and doesn’t have its own judicial jurisdiction). Nuisance L2s: focus on generality up to a certain scale. It’s as close as possible to a full, diverse, compute environment. In some instances, the L2 might be subsidized (eg, Optimism funding public goods), but it doesn’t exclude other activity explicitly. thrives by proximity to its L1, but aims for a certain degree of self-sufficiency. eg, it might have its own token that lives in parallel to its closest L1. For example, OP (for Optimism’s governance) or ARB (for Arbitrum). more often than not, it focuses on providing its own supporting services (a local police, firefighting, energy, water, etc). In other words, its data availability might be managed on its own. more likely rely on zk-esque validity proofs (equivalent to having its own district court). Which type of L2? This graph from Vitalik speaks to choosing along the axes of scale-demanding & security-demanding. That’s one way. But, a key value-prop (for me at least) of a blockchain is its ability to gather history. The problem with more centralized components (like validiums doing off-chain data availability), is that you hamper the long-term viability of it. If we want more cross-pollination and collaboration between L1 and L2 there has to be a longer-term belief that it would remain intact indefinitely. Thus, I’d lean more towards L2s being zoned for nuisance than euclidean. YIMBY Urbanists (pro development) often prefer nuisance-based zoning because it generally favors a denser city where citizens can have a variety of their needs in their vicinity. For example, in the US, when moving to a new suburb, it’s often desirable because it’s cheaper, quieter, and perhaps safer than urban centers. But it comes at cost of genericity: people, shops, culture, and commute often by car. Nuisance-based zoning tries to merge these two into one, allowing citizens to live closer to many diverse mini-centers. In essence, nuisance zoning is more decentralized. More general, it can be categorized as the choice between planned specificity vs unplanned generality. A well executed planned specific L2 *can* outperform an unplanned general L2. But, blockchains, like cities, are supposed to thrive indefinitely, taking in activity and letting it go again. They *will* change in different ways and over the long-term, it becomes differentiated by its history. While blockchains don’t have to consider geography, it does create a built environment through transactions. Liquidity, for example, can be seen as a city’s cultural and historical network effect. If you’re into book publishing, it helps to be close to New York City. If you’re in film, it helps to be close to LA, regardless of the historical reasons that made those cities destinations for those industries. Likewise, tokens, tools, protocols, NFTs, and all manner of activity result in that blockchain maintaining a specific momentum. It’s also the case that no matter how much cross-chain UX and technicals improve, it’s still easier to interface with local neighbors on your own chain (and by metaphor, your own city). With this in mind, if we want more nuisance-zoned L2s, what can help foster that? To reiterate the trade-offs: Design for unplanned generality vs planned specificity. Consider incentives for people to build out their own neighbourhood character (like, a separate token). Ensure some self-sustaining sufficiency (eg, its own data availability). More ZK roll-up than Optimistic roll-up. This does come across as being more of an L1 than an L2, but I think the key part is what I would propose next. Maybe something for the next 5-10 years of design. L1s should incentivize and subsidize diversity. L2s should enable diversity, but subsidise specificity. Part of the value prop of expensive city centers is that it’s cheaper to cross-pollinate in all forms. Thus, if L1s can subsidise transactions where it’s comparatively cheaper to do many things at once, it will attract usage that needs proximity, complexity, and atomicity. Think: transactions that interface many protocols at once. Simpler transactions are still possible, but it might be costlier. L2s on the other hand, should zone for specificity while allowing generality. In other words, simpler transactions around certain protocols can be cheaper such that it attracts usage in the same way that some neighbourhoods might be general, but have incentives to join: eg, attract students that graduate in the nearby university to start firms in the area. Those young people still need healthcare, food, etc, and so you shouldn’t encourage exclusion. Thus, its nuisance zoned to its maximally desirable nuisance (or it’s maximally desirable complexity). This means that L2s generally become self-sufficient but work more in tandem with L1s, where L1s become more maximally general and L2s become general, but foster subsidised specificity. It’s the same way that neighbourhoods attract their own culture, industry, and residents that agglomerate and benefit from economies of scale. Either way, blockchains function very similarly to cities and there are metaphors, tools, and frameworks that can help reason out design choices to ensure long-term cooperation and expansion of use. If you enjoyed this, please consider subscribing to my weekly newsletter: https://sceneswithsimon.com/ ## Comments **tim**: Thanks for writing this up Simon! I'm so grateful for you participating because, once again, you've inspired me by providing a useful metaphor for solving the problem through looking at it from the perspective of a foreign domain! But I'm actually a big train nerd and so to answer Vitalik's prompt: > What are specific things that L2s can do to make their relationship between each other and with L1 more collaborative, and maximize positive sum games? ...and to also stay in your Urbanism frame, I'd like to posit that a city's neighborhoods, and here I'm mostly talking about Berlin, reach more collaboration when there are great, multi-modal transportation to transfer between them. In Berlin, for example, I have friends in all parts of the city, and in fact, I often don't even know many people living close by! I've noticed that what makes both New York (which I have visited a few times) and Berlin uniquely connected across "boroughs" are their **subways**. Hey, I'm not a New Yorker and never spent much time there, but when I launched Kiwi I was living in a friend's apartment in Brooklyn, but to get to Manhattan, I noticed that there was an express train that would take me all the way into the city center without any other major stops along the way. Since making that experience, I badly want the same between Berlin Kreuzberg (where I often go to meet friends), and the North of Berlin (where I live). I think subways really differ from any other transportation in a city in that they aren't affected by other traffic and so sometimes, despite me wanting the personal intimacy of a rental car or the convenience of a taxi, or the freedom of a bicycle, I end up taking the subway because it is simply the fastest and most reliable way through the city. What if it rains while I'm on the bike. What if I get into a traffic jam with my Uber or rental car? I find the observation that subways are the "best" mode of city transportation incredible because it is the "iPhone plus rich person" effect of city transportation. They say that the iPhone is the best smartphone one can buy and that no amount of money can buy anything materially better than it. But I very much feel the same way for taking the subway in a city. Unless we're talking about being helicoptered out, in many cases, the subway of a city like New York or Berlin is so fast and independent, it's literally the fastest way through even if money isn't a limiting constraint to your transportation preferences. So I think it can not be overstated how important subways are for cities. They are literally their scaling mechanisms and if you have a sprawling town like Berlin, they're significantly contributing to all Berliners being able to enjoy the greatest parts of the city, without having to also pay their insane rents as an occasional train ticket suffices. **misha**: I really loved reading Simon’s article! And many thanks for that and participating. Reacting to Tim. Yes, I agree subways are very important for scaling cities. Being from Amsterdam I’m a bike person. Weather or no weather I will bike and won’t let myself be confined sitting and waiting in and for trains and secondly being confined to the routes the trains take. Traveling in Paris and Berlin (and New York) by subway I always had the idea the cities were so vast you couldn’t bike them. But when bike sharing services started popping up and those cities started building more bike lanes and accommodating for bikes I started riding bikes. Suddenly I found these cities were smaller than I thought since the trains mostly don’t take straight routes, but will try to connect as much important geographical stops as they can. Anyway I think the bike is the perfect way to scale a city. It is clean, cheap, versatile, unstoppable and it keeps its inhabitants healthy. Could you travel a scaled blockchain like riding bike? In 2006 I cycled around the city of Beijing, it took me about two weeks. Back then there were still a lot of bicycles, but the Chinese cities were quickly adopting cars. Now when I travel to Chinese cities it’s sad to see all the car congestion. I wish they kept more of the bikes. Maybe the automobile is the worst way to scale? But luckily the Chinese are building subways fast. What would be the car equivalent in blockchain scaling? And what if you combine both subways and bikes and take your bike on the subway? **@simondlr**: Thanks for the comments! Transport is its own unique metaphor. I see it as talking about bridges in a scaling context: how do you commute in a city? Trains feel like an attempt at decentralized bridges: established paths that cut through a geography. It's more hardcoded and you trust the operators (the city) to operate it safely and effectively. Cars and biking feel choose-your-own adventure. In a sense it could be by bridging through a swap on a centralized exchange or an AMM wrapper and then unwrapping to the other chain. Flexibility. One way biking works as a metaphor is the evolution of intermediary UI and protocols that automatically route your payment to the right chain. Eg, pay mainnet ETH and you get a Zora NFT. In other words, you can arrive at any app, anywhere, without having had to pre-determine the route. So,trains: express, mass bridging. Biking: pay-as-you-go flexible bridging. Cars: needing a specific wallet for every dapp because you need find parking each time. 😅 All fun metaphors to play with!