Plasma vs Optimistic Rollups
As ETH congestion reaches record levels and the network desperately needs scaling solutions, Optimistic Rollups have been the talk of the town in the ETH community recently — and for good reason. As stated in ETHhub, this Layer 2 solution resembles Plasma’s construction, but trades off some scalability in favor of having the ability to run smart contracts. As the largest community staking pool for the OMG Network, we’re very excited to see their Plasma implementation’s impact on ETH’s network congestion. Let’s dive in and compare the two L2 solutions!
Before we do, it should be emphasized that both solutions are looking to solve the same problem, but are focusing on two separate segments/causes of this congestion — Plasma with token transactions, and Optimistic Rollups with smart contracts. Both are needed for a healthy ETH network, and we expect with 100% certainty (and look forward to!) an ecosystem of many diverse L2 scaling solutions for ETH all working side-by-side, each built to address congestion for a specific use-case. Much like how a microwave, a stovetop, a grill, a fryer, a pressure cooker, and an oven all can be used to cook food, you tend to gravitate toward the best tool for the meal you’re cooking. Some people might adamantly refuse to use a pressure cooker, saying a stove is all they need; though most people recognize the benefits of having these many options available to them — the same applies to L2 scaling solutions.
Plasma
As OMG supporters, most of us are familiar with this implementation. However, we absolutely must specify that Plasma comes in many flavors, each with their pros and cons. The OMG Network uses the MoreVP “flavor”, which is an extension of the MVP (Minimum Viable Plasma) design. This article from OMG Network outlines the differences between the two.
As per ETHhub, “[Plasma] MVP is a design for an extremely simple UTXO-based Plasma chain. The basic [Plasma] MVP specification enables high-throughput payment transactions, but does not support more complicated constructions like scripts or smart contracts. [Plasma] MVP relies on confirmation signatures… Users need to sign a signature before making a transaction, wait to see the transaction included in a valid block, and then sign another signature. These second signatures must also be included within a plasma block, reducing block space available for more transactions!”
It goes on to explain: “Confirmation signatures make for pretty bad user experience. More Viable Plasma, also known as MoreVP, is an extension to [Plasma] MVP that removes the need for confirmation signatures.” If you want to dive deeper into how it does this from a technical standpoint, check out this MoreVP research paper by Kelvin Fichter and Ben Jones.
Scalability
Plasma’s scalability comes by virtue of its design: on this L2 blockchain, transactions are processed in its L2 blocks — then, multiple of these transactions are batched into a single submission on the ETH chain, constituting the finality and security of all those payments with up to 65,000 UTXO L2 transactions per ETH transaction (over 5000 L2 transactions per second, assuming a 12 second ETH block time).
In theory, this pattern of a “parent chain” and “child chain” can be further extended into a “grandchild chain” and “great-grandchild chain” as many layers deep as desired, allowing infinite scalability on those L3/L4/L5+ blockchains as transactions get validated onto that level’s “parent” blockchain, down each level until they hit the ETH chain for finality.
Security
“Plasma” in and of itself refers to an architecture pattern, wherein some flavors of the implementation are sidechains while other flavors are child chains; this is much like how we use the term “truck” to include both pickup trucks vs 18-wheelers, similar in design and purpose but each made for different circumstances. More Viable Plasma gets its security by virtue of being a child chain — this is very different from a sidechain! OMG Network wrote up this fantastic article explaining the differences.
In summary, sidechains sacrifice some aspects of security in favor of more flexibility. As per OMG’s article: “A Sidechain is attached to Ethereum using a peg that enables one- or two-way transfer of assets. You can create multiple Sidechains to allow different cryptocurrencies to interact with each other. Each Sidechain is self-contained (bugs from one chain don’t affect the other) and relies on its own security mechanisms.”
This means that you have to transfer custody of your tokens on the parent chain to the sidechain — it is not a trustless environment.
The linked Hackernoon article explains: “Sidechains are responsible for their own security. If there isn’t enough mining power to secure a sidechain, it could be hacked. Since each sidechain is independent, if it is hacked or compromised, the damage will be contained within that chain and won’t affect the main chain. Conversely, should the main chain become compromised, the sidechain can still operate, but the peg will lose most of its value.”
In contrast, OMG’s MoreVP child chain is trustless and non-custodial — honest users can withdraw funds from the child chain back to Ethereum at any time, even if OMG goes offline or the network is compromised, thanks to the baked-in “mass exit” failsafes of its construction where all funds on the chain are triggered to immediately exit back to the ETH chain (thanks to a smart contract on ETH that constantly watches for this event). A single honest L2 node is all that is needed to initiate this failsafe, even if all other L2 nodes have become malicious.
Cost
Plasma carries a fixed gas cost for transactions submitted to ETH — a Plasma block containing 1 transaction will cost as much ETH gas as a Plasma block containing 60,000 UTXO* transactions. More details can be found in the OMG Network’s documentation. The more transactions that are included in each L2 block, the lower the gas cost per transaction.
*Quick reminder on how UTXO transactions work: you have a $10 bill, and you want to buy $3 of food at a deli. The deli cashier has a $5 bill and two $1 bills. You give the cashier your $10 bill (1), and in exchange he gives you his $5 bill (2) and a $1 bill (3) and another $1 bill (4). The numbers add up to you ultimately paying him $3, so he gives you your food. There were 4 UTXO transactions in that interaction.
Optimistic Rollups
Rollups are quite similar to Plasma and borrow many of its concepts, including its nature as a non-custodial, trustless child chain. Rollups are specifically designed for scalable L2 smart contract execution (unlike MoreVP, which only handles transactions), but at the cost of not having as high of throughput as MoreVP.
Optimistic Rollups refer to its usage of the Ethereum Optimistic Virtual Machine (OVM) which, in technical terms, is a containerization of the Ethereum Virtual Machine (EVM) with “optimistic decision” state prediction for what L1 state will look like based off data on L2.
To the average Joe, think of it this way: on the Optimistic Rollup L2 chain, you have a machine (OVM) that processes transactions and smart contracts. All day-to-day operations happen in that L2 machine. On the Ethereum L1 chain, you have an identical OVM machine housed inside it, but it’s not used except in emergencies. If someone thinks one of the L2 OVM operations is fraudulent, that person can re-run the operation on the OVM machine living on L1 to prove that. To be an Optimistic Rollup L2 node, you have to lock some money in an L1 smart contract (this makes you a “bonded aggregator”) — if you act badly and someone calls you out as detailed above, your bond gets slashed and the person who called you out gets rewarded with the amount slashed.
It’s kind of like a voting booth ballot-counting machine: if someone suspects a machine in a certain district is broken and mis-counting votes, you can take those ballots to the government office and run them through their machine to verify. If they reveal that that district’s ballot-counting machine is fraudulent, it gets punished/destroyed.
Rollups, like Plasma, come in different implementation flavors as well. ZK-Rollups are the main alternative Rollup design to Optimistic Rollups — you can read about their differences in this summary article, and this deep dive article by Matter Labs. To summarize for the average Joe: ZK-Rollups have higher throughput than Optimistic Rollups, but don’t support smart contracts yet (though it is theoretically possible, as per the Matter Labs article above). To compare the two Rollup flavors from a technical standpoint, ZK-Rollups have faster finality to cross layers if a user wants to exit their funds from L2 to L1, but generally have slower finality for L2-to-L2 transactions as ZK-proof generation (the code mechanism that allows for processing L2 blocks) takes a longer period.
Scalability
Optimistic Rollups are specifically designed to scale up smart contract execution for ETH. Additionally, it can also process basic value-transfer transactions just like L1 ETH, with higher throughput than L1 ETH but with lower throughput than Plasma (and specifically MoreVP). This incredible write-up by one of the OMG Network’s most technical community members, u/tousthilagavathy, compares ZK-Rollups transactions per second to MoreVP. In the end, MoreVP is better-suited for high transaction throughput than either Rollup flavor, though it obviously can’t execute smart contracts.
To quote OMGpool technical co-founder Simon Tarchichi, “This is part of the security/scalability challenge. Scaling a more complicated application that relies on the kinds of proofs found in either Rollup flavor is more difficult and costly, while simple (UTXO) transactions such as those used in MoreVP require less logic capabilities to be secured.”
Broadly, use-case specific designs such as Plasma will perform better in the narrow application it was designed for (value transfer), while generalized designs such as Rollups can perform many different types of functions well, but not as well as a tool made specifically for the job — much like a chef’s knife vs a Swiss Army Knife.
Security
Optimistic Rollups are actually quite resilient, requiring only one honest L2 node in the network as per Karl Floersch’s recent EDCON talk, similar to MoreVP (Plasma). Optimistic Rollups need only one honest L2 node to reveal bad L2 actors, by virtue of it making the honesty proof on the L1 OVM as detailed above to reveal that all other L2 nodes are malicious, resulting in their slashing.
Where OMG’s MoreVP reacts to an L2 takeover attack by “mass exiting” funds back to L1, Optimistic Rollups hope to avoid that situation altogether through its design. With Optimistic Rollups, all funds housed within the L2 blockchain rely on at least 1 honest L2 node to keep the network secure, and that honest L2 node is incentivized to report bad behavior thanks to the rewards paid out for identifying bad actors. This is a very strong design well-suited to the context of ETH 2.0, while OMG Network’s L2 security design is well-suited to their PoA operational model.*
*For those of you unfamiliar with OMG’s launch plan, their L2 MoreVP (Plasma) network will at first have only one block-producing node, called an Operator (this model is called Proof or Authority, or PoA). What’s to keep this Operator honest? There will also be many, many other security nodes called Watchers, which work together to monitor the Operator’s performance. If the Operator is dishonest or stops working, the Watchers can trigger a mass exit to withdraw all L2 funds back to L1. As Operators and Watchers work, they get rewarded — according to the latest information, staking pools like OMGpool.org will be Watcher nodes. Currently, the tech behind Watchers are only observational, such as a block explorer; but once staking is released, Watchers will be able to be rewarded as mentioned above (this design is called “incentivized Watchers”), ensuring the decentralized security of the network. The OMG Network will introduce more Operator nodes in the future to increase the resiliency of the network — this incremental rollout strategy minimizes risk as high-profile volume providers such as Bitfinex and Tether join the network.
Cost
ZK-Rollups will cost roughly 572 gas per transaction plus an estimated 300,000 amortized gas cost per proof (the mechanism that ensures validity of the transaction).
Optimistic Rollups will cost roughly 4000* gas per transaction, as per Matter Labs’ quote of researcher John Adler. Do note that this figure is from October 2019 and improvements may have been made since then — we were unable to find updated sources in our search.
*UPDATE (8/22/20): Vitalik Buterin pointed out that Optimistic Rollups “can easily use aggregate BLS signatures which brings [gas costs] down to comparable (I would say even less because fixed costs are lower!) gas usage to ZK rollups. But they would have to do the work to actually integrate BLS aggregation though.” Thanks for the feedback!
TL;DR
While there are many proposals to scale ETH, this article’s focus on Plasma vs Optimistic Rollups aims to educate the OMG Network community on this hotly-debated topic. We look forward to a mature ETH scalability ecosystem with widespread use of the different tools available in the space. In summary:
- MoreVP (Plasma) has the highest transaction throughput, but cannot execute smart contracts
- Optimistic Rollups are ideal for scaling smart contracts on ETH
- Both solutions have theoretically well-designed security protocols suitable to their unique situations. We look forward optimistically to seeing their resiliency tested on live mainnets!
We anticipate a world where high-volume transactions (such as Tether) are conducted on MoreVP for its efficiency and cost, while smart contracts and low-volume transactions are scaled up by Rollups. Together, they can alleviate a tremendous amount of strain on ETH, allowing the network to meet increasingly more demanding decentralized use-cases.
If you find any incorrect information in this article, please post a comment with your recommended corrections! While we’re huge supporters of OMG, our goal is to educate, not shill. We accept any corrections humbly and gratefully (especially as there is limited content about Rollups out on the internet currently)! Huge shoutouts to community members u/tousthilagavathy, u/jager_master, and u/efulton985, as well as Andy from OMG Network on their fact-checking contributions!
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