Ethereum, the second largest blockchain network in the world, has been constantly grappling with scalability issues due to its popularity and increasing network congestion, and has had the concept of layer 2 chains in mind since 2014. As more users and decentralized applications (dApps) are released, transaction costs have skyrocketed and processing times have slowed significantly. To address these challenges, developers have considered various scaling solutions to optimize Layer 2, and Ethereum Rollup has emerged as one of the most promising approaches.
What is Ethereum Rollup?
Ethereum Rollup is a layer 2 scaling solution that processes multiple transactions from the main Ethereum blockchain (layer 1), bundles them into a single transaction, and sends this bundled transaction to the main chain. By moving a large portion of transaction processing off-chain, rollups can significantly increase throughput on the Ethereum network while reducing gas fees for users.
Rollups are designed to maintain the security and decentralization of Ethereum mainnet while increasing scalability. They accomplish this by leveraging the main chain for data storage and dispute resolution while executing transactions on a separate layer. This approach allows Rollup to benefit from Ethereum's security while minimizing the load on the main network.
There are two main types of Ethereum rollups: optimistic rollups and zero-knowledge rollups (ZK-rollups).
optimistic rollup
Optimistic rollups operate on the assumption that all transactions are valid until proven otherwise. They process transactions off-chain and send transaction data along with cryptographic proof to the main Ethereum chain. Anyone who suspects fraudulent transactions may file a dispute during the Dispute Period. If a transaction is found to be invalid, the rollup performs “fraud prevention” and reverses the invalid transaction.
Benefits of optimistic rollup:
- Low computational cost compared to ZK rollup
- Easier to implement and integrate with existing Ethereum infrastructure
- Compatible with Ethereum Virtual Machine (EVM), making dApp migration easy
Disadvantages of optimistic rollup:
- Withdrawal time increases depending on dispute period (up to 1-2 weeks)
- Potential vulnerability to fraudulent challenges
- Reliance on the availability of honest validators to dispute invalid transactions
Examples of Optimistic Rollup projects include Optimism and Arbitrum.
Zero Knowledge Rollup (ZK Rollup)
ZK rollup uses zero-knowledge proofs. It is a cryptographic technique that allows one party to prove the validity of a statement to the other party without revealing additional information. In the context of Ethereum Rollup, ZK Rollup processes transactions off-chain, generates cryptographic proofs known as SNARKs (Succinct Non-Interactive Argument of Knowledge), and sends them to the main Ethereum chain.
Advantages of ZK Rollup:
- Proof of validity can be verified immediately, speeding transaction finality.
- Higher throughput compared to optimistic rollup
- Privacy is improved as transaction details are not exposed on the main chain.
- Eliminates the need for a dispute period and reduces withdrawal times
Disadvantages of ZK Rollup:
- High computational cost to generate validation proofs
- More complex to implement and integrate with existing infrastructure
- The workload for compatibility with EVM is high and smart contracts often need to be rewritten for compatibility with ZK-Rollup.
Examples of ZK-Rollup projects include Loopring, Starkware, and zkSync.
Ethereum Rollup represents a promising approach to expanding the Ethereum network while maintaining security and decentralization. As the ecosystem matures and more projects implement rollup solutions, users can expect lower transaction costs, faster processing times, and a more accessible and easy-to-use experience on the Ethereum network.
