How many times have you heard that blockchains are too slow, too expensive and too inefficient to use? These are some of the biggest hurdles the industry faces when trying to turn the Metaverse cliché into a real life organism. Countless engineers and developers have focused their efforts on providing solutions to these scalability problems. Out of these efforts a technology called “rollups” has emerged as the most prominent solution. Dymension envisions a rollup centric digital world where each rollup is a verse, or a city of digital ownership, with various opportunities for value creation constructing a Multi-Verse.
Yet rollup adoption is not just a theory of a possible future, it has already started to take shape in many ways. In fact rollup season seems to be just around the corner and Dymension is paving its own unique way with a Rollup Development Kit (RDK), making it easy for all to build scalable ecosystems while leveraging Dymension’s role as a rollup settlement hub. Before elaborating on that, let’s dive a bit into what is rollup technology, why is it useful, and how is Dymension solving the problems inherent with certain rollups? This article will shed some light on scaling innovations and might answer some of the natural questions that arise when learning about rollups.
We generally measure the performance of a blockchain by its throughput (amount of transactions per second a given network can handle) and latency (the time it takes for a user to receive a receipt for their transaction). The scalability challenge faced by the blockchain space is to find ways to improve these performances without meaningfully compromising on censorship resistance, decentralization and the trust-less nature of the technology.
Blockchains suffer from performance issues due to the theoretical limitations of reaching consensus. Consensus is when each participating computer (node) is required to come to the same conclusion of what the current state of information is, without necessarily trusting each other. Instead of requiring each node to compute and confirm each transaction that happens on a blockchain, world-class cryptographers and engineers have devised various ways to solve these scaling issues with what are known as “rollups,” some say they are as sweet as our childhood fruit roll-ups.
In order to better understand rollups, here is a short breakdown of the different functionalities of a blockchain:
- Execution — transaction computation
- Settlement — maintenance of state root and dispute resolution
- Data Availability — making sure that data is available
Modular Blockchain Architecture is a type of blockchain design where different blockchain functions are decoupled from each other. Unlike ‘Monolithic’ blockchains which possess all blockchain functions within one protocol, modular chains specialize in one or more, but not all functions.
Rollups work in an execution environment which is considered “off-chain” because, well, everything is processed not on the blockchain. Instead of processing all transactions on the blockchain, a Sequencer (a computer) computes transactions and batches them in groups. In our architecture, Dymension compatible rollups (AKA RollApps) write the transaction data (in a compressed form) to a data availability layer, while publishing the new state on the settlement layer. This reduces the efforts of each validating node participating in the network. Now each computer doesn’t need to process every transaction. As such, by moving the computational efforts off-chain, nodes with less computational power can keep up with high amounts of information re-processing and participate in the consensus of the network.
At this point astute readers might wonder — if rollups are just a few computers (or even a single one) doesn’t this produce a centralized and trusted environment? How does the network make sure that the sequencer is honest? To understand how necessary blockchain qualities are preserved further exploration of rollup design and what type of rollup flavors are available is needed:
Rollups come in a variety of flavors. The two most prominent ones are:
- ZK rollups — In simpler terms, a zero-knowledge proof (ZK rollup) can prove something is true without having to reveal what exactly it is proving. ZK rollups improve scalability by allowing developers to move computations off-chain. Off-chain services are able to generate proofs that attest to the integrity of the off-chain computations. These proofs are then placed back on-chain (settlement layer) for any interested party to validate the computation. Validating the proof of a ZK-rollup requires the settlement layer to process transactions in the order of log n computational steps that occurred on the rollup assuming no trusted setup. This means that blockchain infrastructure can scale exponentially in a trust-less manner while maintaining computational integrity. There are a variety of flavors of zero-knowledge proofs (ZK-STARKS, ZK-SNARKS, PLONKS…) some of which require a trusted setup and others that do not, but come with their own drawbacks.
- Optimistic rollups — This design assumes an optimistic view towards the honesty of the sequencers, hence the term optimistic rollup. Meaning that it’s initially assumed the sequencer who is processing these transactions is acting honestly. However, in order to produce an environment where users of a network do not have to simply trust sequencers, a dispute period is installed. This period enables others to verify that the sequencer is reporting correct state updates. If anyone discovers a batch that is not correct, they can publish a “fraud proof” demonstrating the correct state transition. If indeed the sequencer provided incorrect information the state of the blockchain is reverted and the sequencer is “slashed” (they lose tokens they’ve bonded to participate in the network). Compared to ZK rollups which require O(log n) in a non-trusted setup, optimistic rollups require O(1) in computational steps. Meaning, optimistic rollups are more efficient than ZK rollups but come with additional network assumptions. While optimistic rollups have many advantages such as simplicity and efficiency, they have their own disadvantages such as a longer period of hard finality in order to allow enough time for participants to hand in fraud proofs.
Rollups remove significant portions of the computation load, increasing blockchain performance and scale by orders of magnitude and allow us to build better experiences which would meet the mainstream standard. With that said, there is no free lunch and rollups have their own set of challenges. For example, optimistic rollups introduce new crypto-economic game theoretic dilemmas, namely the Verifiers Dilemma. Difficult problems require novel solutions. Stay tuned as we go into more details about how to scale blockchains without falling prey to some of the pitfalls of rollups.
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