This article delves into the concept of blockchain rollups, providing insights into their significance for scaling Ethereum and addressing its congestion issues.
In the rapidly evolving landscape of blockchain technology, rollups have emerged as a promising solution to address the scalability challenges faced by Ethereum.
This article delves into blockchain rollups, highlighting key differences between optimistic and ZK rollups. We will also explore why rollups have garnered the reputation of being the holy grail in the pursuit of Layer 2 scaling.
Ethereum Scaling Problems
Ethereum has witnessed a recurrent discourse centered around the crucial issue of scalability. The scaling debate tends to surge to the forefront during periods marked by heightened network activity. Notable instances include the CryptoKitties craze of 2017, which saw the network experience unprecedented congestion due to the popularity of digital felines.
Similarly, the DeFi Summer of 2020 witnessed a flurry of decentralized finance projects gaining traction, placing substantial strain on Ethereum’s capacity, once again highlighting the pressing need for scalable solutions.
The crypto bull market that dawned in early 2021 also brought a wave of new participants into the ecosystem, resulting in increased transaction volumes as the influx of users contributed to soaring gas fees, grappling with the cost of executing transactions on the network.
The Quest for the Ultimate Scaling Solution
In response to these challenges, the Ethereum community embarked on a collective quest to identify the optimal scaling solution. Diverse teams and projects have risen to the occasion, striving to mitigate congestion and high gas fees.
Layer 2 solutions, particularly rollups, have emerged as a promising avenue to enhance Ethereum’s throughput. These solutions aim to alleviate the network’s congestion by processing a significant portion of transactions off the main chain while maintaining its security guarantees.
Analogy of Rollups
Picture a scenario of you wanting to write a letter to each of the five members of your family. This would involve crafting individual letters for each family member and incurring a separate shipping fee for each letter—a potentially expensive endeavor. However, to reduce shipping cost and reduce wastage of paper, you decide to consolidate these separate letters into a single envelope.
This analogy draws parallels with the concept of optimizing processes in various domains, including the world of technology and blockchain.
How Do Rollups Work?
A rollup is a form of scaling solution that functions by executing transactions off-chain, outside of Layer 1, while recording transaction data on Layer 1. This approach allows the rollup to expand the network’s capacity while still maintaining security through Ethereum’s consensus mechanism.
The process of moving computation off-chain enables the processing of a greater number of transactions in total. This is achieved by executing rollup transactions on a separate chain, which may even employ a rollup-specific version of the Ethereum Virtual Machine (EVM). Once the transactions are executed on the rollup, they are batched together and posted to the main Ethereum chain.
Types of Rollups
However promising this approach may seem, it begs a question: How can Ethereum ensure that the posted data is valid and has not been manipulated by malicious actors? The specific answer varies based on the rollup implementation, but in general, each rollup deploys smart contracts on Layer 1 responsible for processing deposits, withdrawals, and verifying proofs. These proofs play a central role in differentiating between various types of rollups.
1. ZK Rollups
ZK, standing for zero-knowledge, utilizes a cryptographic technique known as zero-knowledge proofs. Transactions are submitted to the Ethereum mainnet, accompanied by a cryptographic proof called a SNARK (Succinct Non-Interactive Argument of Knowledge). This proof demonstrates with cryptographic certainty that proposed changes to Ethereum’s state genuinely result from executing all the transactions within the batch. Notable projects such as Polygon, Loopring, StarkNet, and zkSync employ ZK rollups.
2. Optimistic Rollups
Optimistic rollups assume the validity of all rolled-up data from the outset. While this level of trust might seem counterintuitive in the realm of trustless systems, it is strategically employed to save time.
Fraudulent transactions are still prevented in optimistic rollups by allowing a specified time frame during which participants can contest transactions they deem invalid. Such transactions are then sent to the Ethereum mainnet for verification–this approach, however, carries a financial risk for those who incorrectly challenge valid transactions or falsely accuse fraudulent ones.
Leading Layer 2 solutions like Arbitrum and Optimism predominantly employ optimistic rollups.
Feature | ZK Rollups | Optimistic Rollups |
Validation | Use zero-knowledge proofs to prove the validity of transactions | Assume transactions are valid until proven otherwise |
Transaction finality | Transactions are finalized immediately | Transactions are finalized after a challenge period |
Complexity | More complex to implement | Less complex to implement |
Privacy | Offers greater privacy | Offers lower privacy |
ZK Rollup Projects
1. Polygon (MATIC)
Polygon, known for its affiliations with brands like Disney and Starbucks, emerged as a recognizable name in the blockchain space. Starting as an Ethereum sidechain, it ventured into zk-rollups through the acquisition of the Hermez Network. In 2022, Polygon unveiled its plans for a zkEVM, adding another layer to its technological endeavors.
2. StarkNet
While most zkEVM projects utilize ZK-SNARKs for cryptographic proofs, StarkNet has chosen to work with ZK-STARKs (Scalable, Transparent Arguments of Knowledge). While more secure, ZK-STARKs consume more gas and take longer to verify, presenting a trade-off. StarkNet launched on the Ethereum mainnet in November 2021, marking StarkWare’s significant contribution to STARK-based technology.
Optimistic Rollup Projects
1. Optimism (OP)
Optimism, the forerunner in the Layer 2 arena, employs single-round fraud proofs and relies on Layer 1 for executing Layer 2 transactions. Instant fraud-proof verification comes at the cost of additional gas fees due to the reliance on on-chain Layer 1 execution.
2. Arbitrum (ARB)
Arbitrum distinguishes itself by implementing multi-round fraud proofs, offering an alternative approach to transaction execution on Layer 1. This tweak addresses the issues seen in other optimistic rollup implementations.
Future of Rollups
The space of rollups is rapidly evolving, driven by the pursuit of faster transactions. Each rollup solution brings its strengths and weaknesses to the table, ultimately contributing to the ongoing development of the technology. As the sector advances, we eagerly await the innovative solutions that emerge.
Final Thoughts
As Ethereum continues to chart its path forward, Layer 2 technologies, including rollups, hold tremendous promise for the network’s future. These solutions are poised to alleviate the congestion issues and high gas fees that users currently grapple with. As the realm of blockchain innovation continues to expand, the implementation of Layer 2 solutions looks brighter than ever.