Rollups Explained in Simple Terms

The growth of decentralized applications and the increasing number of users on the Ethereum network has brought with it an array of scalability issues, including high fees and slow transaction times. These problems have led to the development of scaling solutions such as rollups, which aim to improve the scalability and usability of Ethereum.

In this article, we will explain what rollups are, how they work, and the benefits they offer. We will also discuss the difference between two types of rollups, ZKRollups, and Optimistic Rollups, and provide examples for each.

What are Rollups?

Rollups are a layer-two scaling solution for Ethereum that aims to increase the throughput of the network by aggregating multiple transactions into a single transaction. Rollups take advantage of Ethereum’s smart contract functionality to create an off-chain layer that is secured by the Ethereum network.

Rollups work by bundling many transactions into a single transaction, which is then submitted to the Ethereum network. This bundling process reduces the number of transactions that need to be processed by the Ethereum network, which leads to a reduction in gas fees and an increase in throughput.

How do Rollups Work?

There are two types of rollups: ZKRollups and Optimistic Rollups.

ZKRollups

ZKRollups use zero-knowledge proofs to bundle transactions together into a single transaction. Zero-knowledge proofs are cryptographic protocols that allow a user to prove the validity of a statement without revealing any information about the statement itself. This means that the transactions can be bundled together without revealing the details of each transaction.

ZKRollups work by creating a smart contract on Ethereum that stores the state of the rollup. When a user wants to submit a transaction, they submit it to the rollup contract. The rollup contract then creates a zero-knowledge proof that proves the transaction’s validity and includes it in the next block.

Here’s an example of how ZKRollups work:

1. Alice wants to send 1 ETH to Bob.
2. Alice signs a transaction and sends it to the ZKRollup operator.
3. The ZKRollup operator bundles Alice’s transaction with other transactions and creates a zero-knowledge proof that shows that the transactions were executed correctly.
4. The ZKRollup operator sends the proof to the Ethereum mainnet.
5. The Ethereum mainnet verifies the proof and updates the state of the network accordingly.

Optimistic Rollups

Optimistic Rollups, on the other hand, work by assuming that all transactions are valid unless proven otherwise. Optimistic Rollups bundle transactions together into a single transaction, but unlike ZKRollups, they do not use zero-knowledge proofs to verify the transactions’ validity. Instead, Optimistic Rollups rely on fraud proofs to detect and revert invalid transactions.

Optimistic Rollups work by creating a smart contract on Ethereum that stores the state of the rollup. When a user wants to submit a transaction, they submit it to the rollup contract. The rollup contract assumes that the transaction is valid and includes it in the next block. If the transaction is found to be invalid, a fraud-proof can be submitted, and the transaction is reverted.

Here’s an example of how Optimistic Rollups work:

1. Alice wants to send 1 ETH to Bob.
2. Alice signs a transaction and sends it to the Optimistic Rollup operator.
3. The Optimistic Rollup operator bundles Alice’s transactions with other transactions and submits them to the Ethereum mainnet.
4. The Ethereum mainnet assumes that the transactions are valid and updates the state of the network accordingly.
5. If a malicious actor tries to submit invalid transactions, they will be caught and rolled back.

Benefits of Rollups

Rollups offer several benefits over traditional on-chain transactions. These benefits include:

• Lower fees: Rollups reduce gas fees by aggregating multiple transactions into a single transaction.
• Faster transaction times: Rollups increase the throughput of the network by reducing the number of transactions that need to be processed.
• Scalability: Rollups allow Ethereum to scale by increasing the network’s throughput.
• Privacy: ZKRollups offer privacy by using zero-knowledge proofs to bundle transactions without revealing transaction details.

Conclusion

Rollups are an innovative layer-two scaling solution that aims to increase the throughput and usability of the Ethereum network. There are two types of rollups, ZKRollups and Optimistic Rollups, each with its own advantages and disadvantages.

ZKRollups offer privacy by using zero-knowledge proofs to bundle transactions, while Optimistic Rollups assume that all transactions are valid unless proven otherwise. Both types of rollups reduce gas fees, increase throughput, and allow Ethereum to scale.

Rollups are an exciting development in the Ethereum ecosystem and offer a promising solution.