A rollup is a platform that is designed to solve Ethereum’s scalability problem.
The platform takes transactions off the main Ethereum blockchain, which is extremely congested, and processes them independently. Because the transactions occur off the main network, users do not face the lengthy delays and soaring gas fees.
Rollups take their name because unlike the main Ethereum blockchain, which processes each transaction individually, they ‘roll up’ transactions and process them simultaneously. This significantly reduces the computing time and brings further convenience to the user.
Why are rollups important?
The Ethereum blockchain, as we’ve said earlier in the RhinoLearn series, is full to bursting right now.
The network hosts its own native token (Ether) and thousands of decentralised applications. This is creating relentless demand.
Ethereum wasn’t built to handle this much interest. It has limited computing power and its method of validating transactions is relatively slow.
This means that users can face lengthy waiting times when they wish to make trades or other interactions on the Ethereum network (like playing games or investing their assets).
Additionally, the congestion means that gas fees – essentially, the cost of each transaction – can rise significantly, making them unaffordable for smaller traders (if you’re not sure what gas fees are, you can find out more about them by reading our explainer blog here (LINK).
How rollups solve the problem
Rollups are one of several types of solution built on ‘layer 2’. In other words, they sit on top of the main Ethereum blockchain (layer 1) and are connected but independent.
In common with other types of layer 2 solution, such as side chains, Plasma chains and state channels, rollups strive to reduce the traffic on the main network by hiving off some of its transactions (if you want more information about layer 2, check out our explainer here (LINK)).
They do this by a simple two-step process:
- First, they roll up a bunch of transactions and process them in bulk.
- Then they return to the layer 1 blockchain and post a single record of all the transactions. This saves space on the main network.
Because rollups are built on top of the main Ethereum blockchain, they inherit its robust security features.
However, they are also equipped to validate transactions extremely quickly – as we’re about to explain.
The two key types of rollup: Optimistic rollups vs Zero-knowledge rollups
Both Optimistic and Zero-knowledge rollups are designed to verify transactions at lightning speed, but they do so in markedly different ways.
How do Optimistic rollups work?
An Optimistic rollup, as the name might suggest, assumes that all transactions are valid by default. It doesn’t do any calculation as standard; it simply acts as a kind of notary, recording each transaction and posting the data on layer 1.
However, all transactions can be challenged by the community during a designated time period. So if you think one of your transactions, or that of another person, looks a bit off, you can request verification.
Once the rollup receives this verification request, it runs the computation and confirms/rejects the transaction.
How to Zero-Knowledge rollups work?
Unlike Optimistic rollups, Zero-Knowledge rollups do the math on every single transaction. But they don’t do all the math.
To determine whether a ‘prover’ (the party that wants to prove the validity of their transaction) is telling the truth, the ‘verifier’ asks them a series of questions. The prover will only have the answers if they’ve done the correct calculations.
It’s important to note here that the verifier doesn’t ask for the information itself. They simply want confirmation that the prover possesses it.
This is an extremely tricky topic to get your head round (trust us, we’ve been there!) so here’s a helpful analogy.
Let’s say you’re a maze with only one way out. There’s a locked door in one of the chambers, which can only be opened with a secret code. When you complete the maze, someone challenges you to prove you know the code.
However, you don’t have to give them the code. There’s only one way through the maze, and it includes the locked door; simply by passing through the door, you’ve shown that you have the code.
Ok, that’s a really simple way of explaining it but we hope you get the picture!
So, in summary:
- Rollups are designed to solve Ethereum’s scalability problem.
- They are one of several different types of layer 2 solution, all of which are striving towards this same objective.
- They work by taking transactions off the main blockchain, processing them in bulk and passing a single record back to layer 1.
- They are equipped with fast validation techniques to maximise the speed benefits for users.
- As well as settling transactions far more quickly than the main Ethereum blockchain, rollups also offer freedom from hefty gas fees.
Enjoyed this edition of RhinoLearn and want some more knowledge? We recommend you check out explainer on the differences between layer 1 and layer 2 (LINK), or our piece about the differences between Ethereum and bitcoin (LINK) – this will explain Ethereum’s challenges in more detail.