The Fate of Rollups Post Ethereum Merge.
Rollups are one of the best scaling solutions on the Ethereum blockchain.
Not only Ethereum but other blockchains can also be scaled using the rollup strategy.
They have all three properties of the scalability trilemma (security, decentralization, and scalability) and are generalizable.
Optimistic, Arbitrum, Starkware, ZKSync, Boba network, Loopring, etc., rollups provide scaling solutions using different approaches.
In this article, you are going to learn;
- Different types of Rollup
- Why most people wouldn’t be using them anyways
How to Scale a Blockchain.
There are two ways to scale a blockchain ecosystem.
- You can make blockchain have a higher transaction capacity. The problem with this type of scaling solution is that blockchains with bigger blocks become more difficult to verify, and the blockchain becomes more centralized. You and I don’t want a centralized blockchain.
- You can change how we use blockchain by conducting most of our transactions away from the main blockchain(layer 1) to a layer two protocol. The main blockchain has a smart contract that processes deposits and withdrawals to and fro layer 2. The smart contract also verifies proofs to ensure that activities on layer 2 follow its rules.
There are different approaches to scaling a blockchain using the second method. Each has different strengths and weaknesses. We have Rollups, State channels, and Sidechains.
In this article, I will talk about Rollups.
What is a Rollup?
A Rollup is a mini-blockchain that inherits the security properties of the main blockchain they’re built on.
Rollups aims to reduce transaction load on the main blockchain it is built on.
How is this possible?
This is done by moving transactions from the mainnet to layer 2. So instead of trading your tokens or providing liquidity on Uniswap on Ethereum mainnet, you conduct these transactions on a Layer 2. After you are done transacting on Layer 2, all your transactions are bundled up (rolled up) into a single transaction and posted on the mainnet.
This saves time and cost. Transactions on the main blockchain become faster because the number of transactions has reduced.
Ethereum serves as the main blockchain, and Optimistic, Arbitrum, ZkSync, and Starknet serve as rollup, also called layer 2.
There are two types of Rollups.
- Optimistic Rollup.
- ZK Rollup.
1. Optimistic Rollup: It assumes all transactions contained within a Rollup are valid. The downside to Optimistic Rollup is that you cannot withdraw your funds to the main blockchain until after a week. No transaction is final until a 1–2 week fraud-proof is passed. In a proof of work, it takes 2 weeks for a transaction to be finalized. Proof of stake takes 1 week for a transaction to be finalized. It gives anyone on the network enough time to dispute any fraudulent transaction before posting it to the mainnet.
Going back to the illustration I gave previously. If you use Optimistic Rollup to trade or provide liquidity on Uniswap, it will take you 1 week to withdraw your funds back to mainnet
Examples of Optimistic Rollups are Optimistic and Arbitrum.
2. ZK Rollup: ZK Rollup uses cryptography to determine if a transaction is valid or not. ZK Rollups need minimal information about a transaction to know whether to validate it. Users can withdraw their funds immediately after using a ZK Rollup. ZK Rollup takes up to 10 minutes to 7 hours to finalize transactions. This depends on the network activity at the point in time. Hopefully, in the future, it will be below a minute. They have a better advantage over Optimistic Rollup in terms of speed and security. Still, they are more complex: they use maths(cryptography) for fraud-proof instead of validators.
While we are bullish and anticipate the full launch of Rollups, I believe that most users and developers will embrace Sidechains like Polygon and BNB Chain.
I have two practical reasons to qualify this statement and which are;
1. Gas fees: On Polygon, a simple Uniswap trade costs less than $0.005. On BNB Chain, it costs $0.60. On Ethereum, it costs about $7. And on Optimism, it costs $1.14. Transaction fees on rollups are higher than sidechains because they have to post calldata to the main blockchain, and as such, they have to tether their fees to Ethereum fees.
The truth remains that John Doe, carrying out a transaction on these scaling solutions(BNB Chain and Polygon), is more concerned about transaction fees. So long as his transactions are cheap and fast, he cares less about these different technologies I mentioned in this article. Perhaps, if you are more concerned about security, rollups are your best bet.
2. None of the rollups is 100% EVM compatible. Maybe not yet. There are slight differences between the rollups virtual machines. Arbitrum uses AVM, and Optimism uses OVM. And ZK Rollup uses zkVM. Each of them subtly broke some contracts, making them not 100% EVM compatible.
Quincy Ememandu is a crypto researcher and content writer. He is passionate about teaching everyday people about crypto.