Ethereum Rollups Explained For Beginners

The Blockchain trilemma (scalability, decentralization, and security) is a common talking point in blockchain debates. Many developers and experts want the blockchain to scale for hundreds of thousands of people per second to facilitate real-world adoption.

As a result, several scalability solutions have been proposed, each with a unique approach to achieving fast and cheap transactions.

What Are Ethereum Rollups?

Ethereum Rollups are important layer-2 solutions that help achieve scalability on the blockchain by reducing the data and computation done on the mainnet blockchain, hence facilitating faster transaction times and instant finality.

Ethereum Rollups achieve scalability by carrying out a transaction on a separate chain before sending back a complete transaction to the mainnet for confirmation. As a result, the bulk of data needed to be processed has been “rolled up” into a miniaturized version for the mainnet to finalize.

Since transactions are finalized on the mainnet, Rollups derive their security from the Layer-1 Blockchain.

Roll-ups are subdivided into two:

· Optimistic roll-ups, and

· Zero-knowledge roll-ups.

Optimistic roll-ups run parallelly with the Mainnet Blockchain to execute transactions in batches on the layer-2 blockchain before submitting a “rolled-up” transaction to the mainnet for finalization. As a result, they facilitate 10–100x scaling on blockchains.

Optimistic roll-ups don’t run any computation by default. Instead, they are “optimistic” that transactions are legitimate. However, the blockchain cannot work on trust; therefore, optimistic roll-ups provide a “fraud-proof” mechanism that allows transactions to be challenged. The optimistic roll-up will run computations to ensure legitimacy if any transaction is questioned.

Optimistic roll-ups utilize a bonding system (involving the commitment of some tokens). Therefore, anyone found to be sending an invalid transaction will lose their bond to the receiving party. This penalty motivates the network participants to act honestly.

Examples of layer-2 blockchains using optimistic roll-ups are optimism and arbitrum.

Zero-knowledge Rollups (ZK- roll-ups) are slightly similar to optimistic roll-ups by “rolling up” hundreds of transactions off the blockchain’s mainnet.

However, unlike optimistic roll-ups, ZK-rollups do not involve a dispute resolution mechanism. Instead, the rolled-up transactions are batched to generate a single cryptographic proof. This cryptographic proof can either be a STARK (scalable transparent argument of knowledge) or a SNARK (succinct non-interactive argument of knowledge).

The validity proofs (zk-SNARKs or zk-STARKs) are an intermediary between the roll-up and the mainnet. Hence, the validity proof checks a batch of transactions. If they are all valid, the proof is sent to the blockchain; the batch is rejected if a transaction is invalid.

With zk-rollups, only the validity proof is sent to the mainnet blockchain; therefore, the blockchain computes a significantly lower amount of data, leading to much faster performance.

Loopring is an excellent example of layer-2 Blockchains using zk-rollups.

Which is better? Zk-rollups or optimistic rollups?

Both systems have pros and cons, so one system may be more optimal than another, depending on several conditions.

Because zk-rollups don’t involve invalid transaction disputes, they achieve finality faster than optimistic roll-ups.

However, implementing a validity proof is complex and expensive and may not be worth it for a Blockchain without active on-chain activity.

How Are Optimistic Rollups Different From Plasma Chains?

Plasma chains use “fraud proofs” to settle disputes and flag malicious transactions like optimistic roll-ups. As a result, network participants can report dishonest nodes and withdraw from a compromised chain without the overall network being affected.

There are two significant differences between optimistic roll-ups and plasma chains.

1. Each child chain or descendant on a Plasma chain’s Merkle tree is responsible for their own security; it won’t affect the main chain if anyone is compromised. On the other end, optimistic roll-ups derive their security from the main chain.

2. Since plasma chains rely less on the blockchain than optimistic roll-ups, they are more scalable, the former beating the latter by 5,000 to 2,000 transactions per second (TPS). However, optimistic roll-ups are more secure.

How are zk-rollups different from validium chains?

Like zk-rollups, validium chains utilize a validity proofing technique to verify data. However, with validiums, where data is off-chain, the data managers of a validium chain are in charge of data. As a result, they can deny users access to data, which will prevent transactions from happening.

This risk of centralization can be mitigated by introducing a permissioned Data Availability Committee (DAC), which acknowledges receipt of the data by signing every update to the chain by majority members. For example, StarkEx, an active validium blockchain, has 8 DAC participants selected based on high reputation (like in Proof-of-Authority). This reduces the risk of validium operators manipulating data for fraudulent reasons.

Nevertheless, the utterly decentralized nature of zk-rollups makes them a better alternative than validium chains, which rely on reputation and centralization.

Want more information on Layer-2 solutions? Read our article, and see other techniques used to achieve scalability on the blockchain.

Rollups Conclusion

Roll-ups are one of the most effective scalability solutions since they prioritize security by ensuring that finality occurs on the main chain. However, they still aren’t as fast as many traditional systems. Hence, it is expected that developers and technologists will continue to do further research to find better scalability solutions that will help the blockchain scale for more users without sacrificing security.

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