AIP-368: ApeChain - A zk-Powered Polygon Layer-2 to Support ApeCoin Growth

AIP Drafts Core: Ecosystem Fund Allocation
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PROPOSAL NAME: ApeChain - A zk-Powered Polygon Layer-2 to Support ApeCoin Growth

PROPOSAL CATEGORY: Ecosystem Fund Allocation

TEAM DESCRIPTION:

Sandeep Nailwal, Co-Founder, Polygon Labs

ABSTRACT:

Polygon Labs proposes that ApeCoin DAO develop and maintain its own zero-knowledge powered Layer-2 (“zk-L2”) with the Polygon Chain Development Kit (“CDK”) to accelerate the growth and development of the ApeCoin ecosystem.

Such an endeavor would include (1) a dedicated ApeCoin zk-L2 chain (“ApeChain”) built and maintained by an implementation provider that builds Web3 infrastructure and tooling products (“Implementation Provider”) and (2) ecosystem collaboration with Polygon Labs to help stimulate the growth of ApeCoin-integrated projects (experiences, entertainment, games and consumer applications) and ApeChain-related public goods (middleware, marketplaces, and necessary infrastructure).

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BENEFIT TO APECOIN ECOSYSTEM:

The ApeCoin community has been aware that ApeCoin “will need to migrate to its own chain in order to properly scale” since these very words were tweeted by Yuga Labs nearly 18 months ago. Indeed, Yuga Labs went on to “encourage the [ApeCoin] DAO to start thinking in this direction.” While ApeCoin DAO voted on AIP-41 to keep ApeCoin within the Ethereum ecosystem, the question of an ApeCoin-specific chain is open and remains ripe for decision.

Here’s where this AIP comes in: to propose a dedicated ApeChain, using Polygon CDK, an open source toolset developers can use to launch their own zk-powered L2 on Ethereum with little friction and an emphasis on modularity, built and maintained by an Implementation Provider.

As detailed below under “Platforms and Technologies,” such ApeChain will provide ApeCoin DAO and its members potential sequencer fees and staking rewards for network validators while solving the aforementioned scaling issue. In other words, this chain will provide dedicated, ultra-premium and inexpensive blockspace for ApeCoin DAO-affiliated and/or -incubated experiences, entertainment, games and consumer applications that will ultimately bring not only more users into the ApeCoin ecosystem, but also additional activity and creation of all types of value (content, assets, data and the like).

Polygon CDK has seen great adoption already. Chains being developed using Polygon CDK include Immutable zkEVM, Gnosis Pay, Capx, Palm Network, Astar zkEVM and Canto among others. This is because Polygon CDK offers the highest degree of flexibility in scaling Ethereum while also remaining maximally decentralized and secure.

ApeCoin DAO’s stated mission is to “empower a decentralized community building at the forefront of web3.” Via $APE, ApeCoin DAO will build and support “a decentralized protocol layer for community-led initiatives that drive culture forward into the metaverse."

ApeChain will provide the ApeCoin DAO with an efficient, secure and decentralized execution environment upon which ApeCoin DAO projects can be built to help realize this mission. As a result, by virtue of ApeCoin DAO gaining composability and interoperability with the entire modular suite of Polygon solutions (including Polygon PoS, which will soon be upgraded to a zkEVM Validium, Polygon zkEVM, Polygon Miden and various customizable L2 permutations using the CDK, together “Polygon Architecture”), the ApeCoin ecosystem will be primed for tremendous growth.

With thousands of dApps and millions of daily transactions, the Polygon Architecture is by far the most robust and stable Ethereum L2 scaling solution. With ApeCoin already bridged onto Polygon PoS, it is already available to be used by all dApps across Polygon Architecture – including for gas and staking in relation to dApps built on the proposed ApeChain (see “Platforms and Technologies” below).

It is well-documented that mainstream adoption of blockchain technology and Web3 is underway, and the Polygon Architecture is helping to bring blockchain to “Internet-scale.” This is across verticals and use cases, including gaming (Square Enix), loyalty rewards (Starbucks), phygital goods and co-creation (Nike), digital avatars (Reddit), self-expression and identity (L’Oreal) and the most adopted Web3-native use cases (from defi, like Uniswap and Aave, to the open metaverse, like Sandbox and Decentraland). As such, the Polygon Architecture is the most well-suited ecosystem for ApeCoin DAO to launch “community-led initiatives that drive culture forward into the metaverse” and Polygon Labs is the most well-suited entity to help ApeCoin DAO to stimulate the growth of ApeCoin-integrated projects and ApeChain-related public goods.

PLATFORMS AND TECHNOLOGIES:

Ethereum Alignment and Background in zk. Ethereum is the paragon of decentralized, permissionless technology. With L2 and rollups on its roadmap, Ethereum’s future relies on implementing the best technology to scale securely and in a frictionless way.

Core developers at Polygon Labs have spent years building zk technology that aligns with Ethereum as closely as possible. Breakthroughs, including the Plonky2 zk proving system, have meant that L2 chains deployed using Polygon CDK see reduced fees and finality times across use cases, all while inheriting the decentralization, security, and existing tooling and smart contracts that make Ethereum the best programmable blockchain.

Value Propositions.

  • Security. Any L2 chain deployed using Polygon CDK inherits the full security of Ethereum via zk validity proofs. Every transaction is proven on Ethereum L1 with a mathematically verifiable proof, a process which happens quickly and does not rely on economic incentives or any human action.
  • Low Fees. Not only does Polygon CDK offer an off-chain data availability solution for zk-powered L2s running in validium mode (recommended), but by joining a shared zk bridge, developers and users would experience fees that are magnitudes lower, as proof verification on L1 is amortized across all chains.
  • Shared Liquidity. One of the biggest reasons to become an Ethereum L2 is to gain access to deep liquidity. This will allow users and developers to seamlessly transact or move across chains. The deeper the pool of liquidity, the more opportunities for developers and users to harness and create value across all use cases.
  • Customizability and Interoperability. Polygon CDK allows for out-of-the-box L2 customization. ApeChain can be deployed with a decentralized sequencer that uses ApeChain validators, widely configurable data availability solutions, and customization for block finality and the time it takes to post zk proofs of the chain state to Ethereum. ApeChain would be natively interoperable with all other Polygon CDK chains. This means growing access to expanded Ethereum blockspace, all connected to a shared zk bridge that will allow for near-instant cross-chain activity and access to shared liquidity. The result will be a network of zk-L2s that are so seamlessly connected it feels like a single chain through a novel zk interoperability layer currently under development.
  • Near-Instant Withdrawals and Fast Finality. Polygon CDK’s zk proofs offer the fastest deterministic finality of any rollup design. Deterministic finality is how long it takes for a user to withdraw their funds on the L1. This is distinct from transaction finality, which is when a user sees that their balance has changed. With optimistic rollups, reaching deterministic finality requires waiting the seven-day challenge window. Other zk rollups live on Ethereum take at least 21 hours to reach deterministic finality. As it is today, Polygon CDK technology is orders of magnitudes faster; future optimizations to the prover are expected to reduce this even further. The ability to reach deterministic finality this quickly is a reflection of the technical advantages of ZK proofs, generally, and the soundness of Polygon proving technology, specifically.

Implementation Provider and Architecture Considerations. With technical support from Polygon Labs, ApeCoin DAO will have the ability to hand select an Implementation Provider to build and maintain ApeChain, which will be funded by the ApeCoin DAO treasury. The Implementation Provider, with as-needed technical support from Polygon Labs, shall architect ApeChain taking the following into account:

  • Gas and Validator Fees. Option to be paid and received in $APE. In a centralized sequencer setup, any such fees (including those generated by the sequencer) shall accrue entirely to ApeCoin DAO. If and when the network migrates to a decentralized sequencer any such fees shall instead be distributed to ApeChain validators.
  • Validium. To keep costs as low as possible while maintaining as much security and decentralization, data shall be stored off-chain on a reputable data availability layer who shall be responsible for maintenance and storage of transaction data.
  • Interoperability. To keep composability as high as possible and provide as much access to liquidity across the extended Polygon Architecture, ApeChain shall be integrated with the above-mentioned shared zk bridge, thus maintaining native interoperability with all other Polygon CDK chains.

Ecosystem Development and Support. This will be a collaborative endeavor between ApeCoin DAO and Polygon Labs for ecosystem development, including

  • advancing the overall purpose of ApeChain through ensuring wide-scale knowledge and promotion of ApeChain,
  • supported by the world class Polygon Labs BD team, advancing and supporting additional collaborations with games, consumer brands, entertainment IP, Web2 platforms, middleware, marketplaces, SaaS and necessary infrastructure, some of which may already be building or have built on Polygon Architecture,
  • promoting the development of ApeChain to Polygon Labs’ international audience of active Web3 users through social media or other channels, and
  • an assigned Partner Polygon Enablement Manager within Polygon Labs to liaise between ApeCoin DAO and Polygon Labs’ ecosystem.

STEPS TO IMPLEMENT & TIMELINE:

  1. Alignment (4 weeks): Discussion to determine contours of collaboration on technical matters and ecosystem development.

  2. Strategy (4 weeks): Determine best network development given ApeCoin DAO feedback around the above “Implementation Provider and Architecture Considerations,” including validator selection, gas and validator fees, and data availability. Other strategic considerations may include, but are not limited to block time, block size and front end business logic (if any).

  3. Scoping (4 weeks): Implementation Provider to work with ApeCoin DAO on determining path to integration, including interoperability, bridging etc.

  4. Integration (2 - 4 weeks): Implementation Provider’s build and deployment.

  5. Promotion (during scoping and integration, at launch and ongoing) : Polygon Labs to work with ApeCoin DAO to craft a considered and impactful plan.

  6. Results (Immediate): ApeCoin DAO’s very own sovereign L2 network, no “noisy neighbor” problems, no mainnet congestion, faster and cheaper transactions, fully EVM-equivalent, shared liquidity with the entire Polygon ecosystem of dApps and protocols.

  7. Growth (Ongoing): Polygon Labs’ business development team to work with ApeCoin DAO on developing a growth strategy with respect to strategizing around and deploying an ApeChain development fund.

OVERALL COST:

As laid out in the preceding sections of this AIP, we estimate that the costs for building, deploying and maintaining ApeChain for one year, will be a maximum of $200,000 USD.

CLOSING:

We believe ApeCoin DAO is standing at the precipice of a new and exciting era. By deploying ApeChain using Polygon CDK, ApeCoin DAO will continue to execute against its mission to scale into a “decentralized protocol layer for community-led initiatives that drive culture forward into the metaverse.”

We look forward to continuing this dialogue with the ApeCoin DAO community.

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Welcome to the forums Sandeep!

Great to have you chime in with such a powerful proposal. Lots of questions upcoming, but for now look forward to the discussions around this Layer2 idea.

Cheers

SSP🤙🏽

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Hey, Igor Mandrigin from Gateway.fm here!

To add more specificity to this proposal, we are an implementation partner (IP) and contributors for Polygon CDK.

We have launched a rollup-as-a-service platform, using Polygon CDK. It allows you to spin an L2 on Polygon CDK in literally 6 minutes and 4 clicks.

Of course, RPCs, bridges, provers, faucets are included. Long term support to make the whole thing work too.
Not only that, you get extra tools out of the box if you want, that were tested and run well with CDK, like block explorers (Blockscout, Chainlens or Dora), Oracles, AA with Safe, etc etc.

Also you have support for the dev tools out of the box.

You can read more and try to create a devnet at Presto App!

All that, and you can keep your L2 on your premises, we can also work on the SLA needed and we have best in class technical support.

Palm blockchain is currently migrated their testnet using our tool and Gnosis Pay uses that under the hood.

We are more than happy to help you to setup devnets, public and private testnests and the mainnet.

We at Gateway have been running production infrastructure with 10s of thousands of requests per second over 2.5 years now with high SLA.

Feel free to reach out to me here or on TG, happy to chat more!

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Going Ape on ApeChain! Sounds good to me. I’ll leave it to the Devs to ask the technical questions.

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I’ve thoroughly reviewed your proposal to develop ApeChain using Polygon CDK, and I must say it’s an exciting and forward-thinking idea.

The scalability and low fees offered by ApeChain can truly accelerate the growth of the ApeCoin ecosystem, making it more accessible and attractive to users and developers alike. The emphasis on security through zk validity proofs is a strong selling point, ensuring trustless transactions.

Shared liquidity and customizability, as you’ve highlighted, are key advantages that could foster innovation within the ApeCoin ecosystem. The fast deterministic finality offered by Polygon CDK is another compelling feature that can enhance the user experience.

However, I’d also like to acknowledge the potential challenges, such as the estimated annual cost and the technical complexity involved. These are important considerations that need careful planning and management.

Overall, your proposal aligns well with ApeCoin DAO’s mission, and I look forward to seeing how this idea develops further. It has the potential to usher in an exciting era for ApeCoin, and I’m supportive of your vision

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Imo this is exactly what Apecoin and the DAO needs!

Now these are my questions:

General Questions

  1. How will the collaboration between ApeCoin DAO and Polygon Labs specifically take shape, and what will the responsibilities of each party be?
  2. What mechanisms will be implemented to ensure that the ApeCoin-specific chain, ApeChain, adheres to the original mission and values of the ApeCoin DAO?

Technical Questions
3. How does the ApeChain plan to handle potential security threats and ensure the safety and stability of its operations on the new Layer-2 (L2)?
4. What are the exact technical specifications that make Polygon CDK suitable for developing the ApeChain, particularly in terms of scaling and security?

Financial and Implementation Questions
5. How is the annual estimated cost of $200,000 derived, and what specific aspects does this budget cover?
6. Will there be a governing body or committee overseeing the implementation and ongoing management of ApeChain, and how will it be structured?

Community and Ecosystem Questions
7. What strategies will be deployed to encourage ApeCoin-integrated projects and the wider development of the ApeChain ecosystem?
8. How will the ApeCoin DAO ensure that the ApeChain remains decentralized and continues to empower its community members?

Partnership and Collaboration Questions
9. How were potential Implementation Partners evaluated, and what criteria were used to select the most suitable one for building and maintaining ApeChain?
10. In what ways will the partnership with Polygon Labs facilitate and foster ApeChain’s growth in the Web3 space and beyond?

Scalability and Future Growth Questions
11. What plans are in place to ensure that ApeChain can scale to meet the needs of a potentially growing ApeCoin ecosystem in the future?
12. How does ApeChain intend to facilitate interoperability with other chains and platforms outside of the Polygon architecture?

Regulatory and Compliance Questions
13. How will ApeChain ensure compliance with varying global regulations as it seeks to establish itself in different markets?
14. What measures will be adopted to ensure transparency and adherence to any legal and ethical standards within the blockchain and cryptocurrency space?

User Experience and Adoption Questions
15. How does the ApeChain propose to ensure an intuitive and user-friendly experience to encourage adoption among non-technical users?
16. What strategies will be implemented to ensure a smooth migration of ApeCoin and its related projects to ApeChain without disrupting existing operations?

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Thanks for submitting this proposal Sandeep, I think this is the very infrastructure for the DAO to consider in this market for future growth.

One suggestion I have is the gas and validator fees, this is reads that there is an “option to be paid and received in $APE,” I know this is a part of the scoping for the proposal but i think it should be required to be in $APE by default for this proposal. That obviously drives the need to have a built-in bridge that allows people to use ETH or WETH and have the bridge always be routed through when $APE itself is not in the users wallet. I like the idea of the fees accruing to the the DAO, but I also think that $APE as a core economic unit makes this proposal a no brainer.

The other suggestion is some math on ROI, what would a ROI look like for sequencer fees for the DAO? I know this is a sliding scale so providing the ROI of this type of investment dependent on volume would help drive home the cost for the DAO as I am certain it easily offsets.

I think a goal of partners from the BD side to drive such volume to equate the ROI would be helpful as well.

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As an engineer, I see no tech issues with this proposal. My concerns, as a DAO member, are outlined below.

  1. Why do we need to be paying Polygon $200K per year for this, when we can go to any other chain (AVAX, Arbitrum, Optimism etc) and do it - cheaper?

  2. If Polygon wants us to use their ZK-L2, why don’t they offer it for free - via a grant? Just like they do - and have done - with others?

    For one thing, ApeCoin doesn’t need Polygon. From a transactions perspective, we get far more transactions that they do. Around the clock. Daily. So, asking us to pay them for this, just means that they don’t actually value our token and community as much as we do.

  3. If this AIP passes, and we end up with a $200K per year expense, who is going to run and manage it? Who is going to do the bizdev to bring people to the chain, use the token etc?

    We simply don’t have a team, let alone a third-party to do any of that.

  4. In addition to the over $3M+ that the DAO is currently spending, we’re now going to be adding an additional $200K on top of that - to what end?

Finally, what’s the impetus for us getting our own L2 right now? In this current climate? What does that get us? How does that benefit us? I don’t see any tangible immediate benefits in this AIP because at the end of the day, we would still need to get builders use it. We can’t get them to build on it now, let alone to use our token; so how does our own L2 chain solve this problem? Especially given all the issues with our voting system which is the first line of entry for any builders who come here.

That aside, the biggest issue that I have with this AIP is due to its reliance on a companion AIP idea that’s designed to fund it via a “Development Fund”.

And a companion AIP authored by Special Council members - one of whom has a financial interest in doing it - to me, is a terrible conflict of interest that simply cannot be ignored.

So, the reality is that if the 2nd AIP doesn’t pass, then this 1st AIP simply can’t get funded. And by tying the two AIPs together, it forces voters - who want our own L2 blockchain - to vote for both. That’s wrong.

This AIP needs to request its own funding and to stand on its own merits without reliance on being a Trojan horse of sorts. And by standing on its own, the DAO can vote on its merits.

And regardless of all of the above, if one day we decide that we need our own chain and via an L2 solution, then the DAO should put out an RFC (like we did when we replaced Cartan) so that other vendors can put forward a formal bid for us. That’s the proper way to do it. Then, we get to vet and vote on the merits of the best AIP that works for us. And then we get to fund it. The result of that is we get the same third-party to build and manage it for us - just like what WebSlingers does for us by way of admin, management etc.

Finally, and this one bugs me the most, the bizdev aspect of the companion AIP “Development Fund” is basically based on the AIP idea that I created last week and which contains a bizdev proposal which is not only created and controlled by the DAO, but is a lot more impactful, expansive - and controlled by the Ape Assembly of members voted by the community. You can read more about that below.

ps. MachiBigBrother mentioned ApeChain on several Spaces about two weeks ago. I have the recordings. He indicated that he had discussions with Polygon about this. I told him that we could build our own ApeChain if it came to that. And now, they [Polygon] just decided to create the AIP on their own - apparently without even letting him know. That concerns me greatly.

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Makes no sense to pay $200k a year for $APE’s own chain when $APE could just use polygon chain or a similar tech for free. Also being on a chain that’s already built will have more users. Every project I know that has done their own chain or subnet, it has worked very poorly. Take JEWEL for example

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Understood the response here, but re: not paying $200k when other layer 2 orgs have and might do it for free is a bit of a straw man here.

I think it is fair for us to pay for an initial and maintenance fee versus a one-time grant that doesn’t get consistent attention for iterations and instead checks a box as a single initiative. I personally think that given the possible upside the $200k price tag is nominal.

Quick question though is that if you could see ROI on the revenue this could generate the DAO and the ability to offset the $200k, with trxn volume only helping the revenue scale, would it help you swallow the $200k cost a bit more as it would be offset?

As for the BD qualms here and the second AIP, i do agree there needs to be some rework there.

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My question is if ApeCoin need L2, why not just bridge the token to it?
Like using ApeCoin on Polygon zkEVM

The different is just $APE as Gas fee, then can cause deflation, but it doens’t help a little.

Any L2 + Chainlink CCIP solve most of the use cases, isn’t it?

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Have you guys tried to start a conversation with Yuga Labs?

Gathering feedback from Yuga itself would be a great starting point imo.

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i really appreciate the activity and the kick off of the topic “migrate to L2/newchain”. i fully agree and understand the need of low gas fees and fast TX. but can we pls take a step back and draw out the critical milestones and requirements for this L2/newchain move and then see more than 1 option, before jumping to throwing money at polygon. so many ppl raised good points, so someone first needs to collect all the feedback (unfortunatly done also in many chat groups and on X instead of here) to build a real base for a good decision. imo we are not ready to decide on 1 option before. so i wont support this AIP, but the general idea i do.

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very good response and many valid points! @all pls consider

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very good and valid points!

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Great to be here ser!!

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The issue is not just about money - we can certainly afford it. It’s a lot more than that.

And when you talk about ROI, you need tangible results to calculate that. In our case, what precisely would that be - for a DAO that doesn’t even generate revenue? So, what’s the [tangible] ROI for having an L2 chain at a cost of $200K per year?

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For a business model you just need a forecast for ROI, which is likely going to be wrong but the data of how trxns and demand can lead to ROI is important and can frame the cost a lot better.

The ROI in this case would be:
Number use cases built on chain * trxn volume = revenue from validation.

Having them outline the need for use cases and projects to build on the chain gets you to the inherent business dev to be in this proposal that you probably are hoping for.

Just ask them to work harder for you in the proposal and prove their model and I think we can get somewhere more positive and helpful.

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Thanks for bringing ApeChain to the discussion and welcome to ApeCoinDAO!

A couple of questions here:

  1. In the AIP title, is “A zk-Powered Polygon Layer-2” an Ethereum L2 or Polygon L2? Will the ApeChain depend on the current Polygon zkEVM?

  2. Will the CDK-based ApeChain be technically equivalent to the current live Polygon zkEVM?

  3. I went to the explorer linked above and grabbed a random TX (see attached image). Will the gas fee there ($0.12) be paid possibly in $APE?

    polygonzkevmtx
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  4. What will a typical TX gas fee look like on ApeChain if it’s on https://l2fees.info/?

    l2fee
    l2fee552×958 92.9 KB

  5. Could you comment on the timing of launching the ApeChain and how Ethereum’s upcoming Danksharding may help reduce gas fees?

  6. Low Fees vs. Zero Fees: Will there be an option to toggle/adjust fees as we go?

jackie

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Everyone should read Bradley’s short and succinct take.

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For completeness, this is Yuga’s CGO thoughts on it.

yuga-cgo-x
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My opinion on that take is that if Yuga felt so strongly about this, they could have built it long before now, amid a litany of failed games. Using the DAO treasury to do it is basically regarding it as a glorious piggy bank for the people - and investors - who created it. Why use your own funds when you can just use the DAO treasury? And so, if this has Yuga + Animoca support - and they vote, then it’s likely to pass. If that happens, it should be a wakeup call for the DAO because this is NOT how we should do things - ever.

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