SOLVING ETHEREUM SCALABILITY ISSUES: AN INTRODUCTION TO ROLLUPS
Ethereum is the largest smart contract blockchain. It’s greatest utility is the ability to power decentralized applications (dApps) which serve as the bedrock for DeFi protocols. Millions and millions of processes and transactions are performed on these dApps, which causes the Ethereum blockchain to manifest various problems ranging from high gas fees to slow transaction time and vulnerable contracts. A number of scaling systems e.g. rollups, sidechains have been developed and put in place to help solve these problems. Rollups seems like the most eye-catching solution but what exactly are these rollups.
What are Rollups?
Rollups are a type of Layer2 solutions to the ever prevailing need for Ethereum scalability. These solutions move transactions off-chain to a secondary layer (Layer2) that is faster and cheaper but the data from the transaction will be stored on the original blockchain (Layer1). Simply put, the transaction happens offchain but the data is secured onchain.
How do they work?
Transactions made on the rollups gets bundled up i.e. compressed into a single transaction. This bundled up transaction is sent back to the Layer1 blockchain where it undergoes validation checks. This method is quite cheaper compared to when everything is done onchain.
TYPES OF ROLLUPS
The classification of rollups vastly depends on the method of verification required to validate the transactions. In that respect, there are two types of ways to achieve this:
1. Zero Knowledge rollups — uses cryptographic proofs generated by the blockchain to prove validity of transactions.
2, Optimistic rollups — assume all transactions to be valid until they are checked on the Layer1 blockchain during a challenge period. During this period, anyone can dispute the legitimacy of the data contained in the batch.
How Does These Rollups Work?
ZK
Zero Knowledge Rollups generate cryptographic proofs to confirm the validity of the transactions. The proof shows that the transactions made are valid, without revealing the content of the transactions. As the name implies, the Layer1 blockchain has zero knowledge of the contents of the proof but it is expected to validate the transactions because it comes with a proof. By doing so, there is significant reduction in data size which in turn lowers the gas fees and makes the transaction faster.
The major drawback of ZK points to the generation of the validity proof which is both time consuming and complex.
ZK rollups are preferred by exchanges and other protocols that process simple and fast payments. ZkSync and Starknet are the two protocols operating on ZK rollup.
OPTIMISTIC
Optimistic rollups assume that all transactions are valid until the checks and balances following the challenge period proves it otherwise. In a sense, this rollups acts on the good faith of the user. Unlike ZK rollups, Optimistic rollups do not perform computations to generate proofs. On one hand, it makes the transaction significantly scalable but one the other hand, the withdrawal period is long because it relies on the challenge period to prove the validity of the transaction.
Challenge periods can take as long as 7 days before confirmation is reached and this is a major drawback of the system.
Optimism and Arbitrium are two protocols that are championing the use of Optimistic rollups.
Here is a little analogy to help you understand.
CONCLUSION
It is easy to get drawn into the argument of which of the rollups is better than the other but the main takeaway from their modus operandi is that both make transactions on the Ethereum blockchain cheaper, secure and faster. Further developments and iterations are being done to improve the performance of each rollup. So, what are you waiting for? Try performing some transactions using rollups and make you own assessments.
NOTE: Some of these protocols do not have a native token yet, so performing some transactions on them might make you eligible for an airdrop.
None of the information in this post should be mistaken for financial advice as the post was made for educational purposes only.
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