Today, we’ll look at ZK-Rollups and Optimistic Rollups, Ethereum Layer 2 protocols that help to boost speed and lower costs.
But first, let’s define rollups.
What Are Rollups?
Rollups are a Layer 2 system that scales slow and expensive blockchains like Ethereum.
In other words, rollups process transactions on another faster blockchain (Layer 2) and then port the transaction data back to the parent blockchain (Layer 1) at a fraction of the price.
Many transactions are recorded on the Layer 2 chain, then “rolled up” into a single transaction that is then fed back to the more expensive, slower blockchain.
That way, the cost of that one transaction is split across lots of users.
Also, their time is saved because they don’t have to wait and pay for each transaction to process independently on Ethereum.
Therefore, users can benefit from the speed and cheapness of the rollup while also benefiting from the security of the main blockchain.
Next, we’ll look at the two main types of rollups.
Types of Rollups – Optimistic and Zero-Knowledge (ZK)
Optimistic and Zero-Knowledge (ZK) are the two main types of rollups.
1. Optimistic Rollups
This type of rollup assumes that all the transactions contained within a rollup are valid.
Also, Optimistic rollups allow network users to contest fraudulent transactions for about a week.
This is a “challenge period” when anyone can submit evidence proving an invalid transaction. If no proof is submitted, the batch is considered valid and is added to the main blockchain.
On the other hand, if evidence is submitted, the dispute is resolved through a dispute resolution process, and the batch is either accepted or rejected based on the outcome of the process.
While the network doesn’t have to waste time confirming things, users must wait for close to a week to officially withdraw their funds from platforms that use Optimistic rollups.
Optimism and Arbirtrum are the most popular here.
2. ZK-Rollups (Zero-Knowledge Rollups)
Unlike the former, this type of rollup determines whether a transaction is valid or not.
ZK-rollups use a complex piece of cryptography called a Zero-Knowledge proof to determine that a transaction is valid.
However, they use only minimal information about that transaction to achieve privacy. Plus, ZK-rollups allow users to withdraw their funds without delay.
Additionally, ZK-rollups are pretty complex and usually support a specific service or use case e.g. swapping NFTs or coins transfer.
There are also zkEVMs i.e. Zero Knowledge Ethereum Virtual machines, which are ZK-rollups that function identically to Ethereum’s mainnet.
They support the building of Ethereum DApps that will be fast and cheap for end users. Interesting!
Popular examples are Polygon zkEVM, zkSync, ConsenSys zkEVM, and Immutable zkEVM.
Keep reading to see how to use rollups.
How to Use Rollups on Ethereum
It is easy – you bridge your funds to the Layer 2 network and complete transactions, and then you port your funds back to Ethereum.
Transactions include buying and selling cryptocurrencies or NFTs, moving funds between wallets, or interacting with DeFi protocols.
Here’s a brief guide on how it works.
a) Fund your crypto wallet, such as a MetaMask, with ether (ETH) or ERC-20 tokens.
b) Switch your wallet to the Layer 2 network e.g. Arbitrum.
c) Next, you “bridge” your tokens i.e. move them from Ethereum to Arbitrum. (You’ll be charged an Ethereum transaction fee, but it’s cheap.)
d) Once your funds are on the rollup, trade as usual.
e) After completing your transactions, bridge your funds back to Ethereum. (Go to the token bridge and withdraw your funds).
But which is better – Optimistic Rollups or ZK Rollups?
Find out below.
Optimistic Rollups and Zk Rollups: Which is Better?
- Delay In Transaction Validity
In optimistic rollups, transaction verification can take a week because of how fraud-proof works.
This means that during the challenge period, users’ funds take up to a week to be reversed if the transaction’s validity is questioned.
On the other hand, ZK rollups eliminate the need for a challenge period.
This enables users to withdraw their funds promptly and without any waiting period.
- Security And Privacy
Compared to Optimistic rollups, ZK rollups offer improved security and privacy by verifying transactions through validity proofs.
- Gas Fee
ZK rollups typically have higher gas fees.
They require more computational power than Optimistic rollups to generate validity proofs.
- Implementation
ZK rollups are generally more complex to implement than Optimistic rollups.
This is primarily due to the cryptographic techniques and computations in generating and verifying zero-knowledge proofs.
In addition, ZK rollups are limited to supporting specific use cases, such as swapping NFTs or transferring coins.
However, there is a new type of ZK rollup called zkEVMs.
zkEVMs are a new type of ZK rollup that is EVM-compatible. This means that they can be used to run Ethereum applications.
Here, you have the differences between the two types of rollups.
Let’s look at the risks associated with rollups.
Read that in the next section.
Risks of Rollups
Some risks associated with rollups include;
a) The smart contracts of rollups can contain bugs that will significantly undermine the process and even give room for theft. Gratefully, fail-safes and audits can help prevent exploits.
b) Optimistic and ZK-rollups are still in their infancy, so, the networks they operate are often somewhat centralized.
In other words, the developing team behind a rollup maintains partial control over the network. And as such, they can theoretically pause or switch it off wherever they like.
For example, it wasn’t until last week that Arbitrum extended governance to the community. Optimism made the move earlier in the year.
c) Usually, “sequencers” are needed to coordinate transactions on the layer 2 chain efficiently.
While a sequencer can’t spoof or alter transactions, it could technically censor or re-order them to extract some benefit for itself.
And that’s another risk with using rollups.
However, with more advances in rollup technology, some of these issues will be curbed.
Do you have any questions? Please drop them in the comments section below.
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