Ethereum has been shaping the crypto landscape for years now with the creation of ICOs, Decentralized Finance (DeFi) and NFTs. With such incredibly high demand, the scalability of the Ethereum blockchain has been a hot topic. Why? well, during events like the Cryptokitties congestion crisis in 2017, or the crypto bull market in early 2021 we saw extremely high gas fees due to the large network demand, making it next to impossible for average folks to afford to pay for transactions , leaving us unable to participate in liquidity pools and incentivizing projects like Cub Finance to develop solutions on other blockchains like Binance Smart Chain and Polygon (in the case of Polycub).
One of the main elements of Ethereum’s quest for scaling is the use of a layer-2 scaling solution called rollups, which execute transactions off-chain (outside of layer one), but posts only some of the transaction data on the Ethereum layer one (L1) blocks. This allows the rollup to harness the security of Ethereum’s consensus AND scale the network.
The way that this is achieved is that the rollup transactions are executed a separate chain that is even capable of running a rollup-specific version of the Ethereum Virtual Machine called OVM or “optimistic virtual machine”. The data is then compressed and rolled up to the main Ethereum chain in a single batch, which will contain the minimum information needed to verify whether the transactions are valid or not.
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There are two kinds of rollups that have two distinct verification mechanisms.
Optimistic rollups - Innocent until proven guilty
This type of rollups assumes all transactions are valid. They are subject, however, to a challenge period during which anyone can dispute the validity of the data in the batch. If a fraudulent transaction is detected, the rollup executes a fraud proof.
To prevent bad actors from submitting fraudulent transactions, sequencers are required to stake some ETH. If everything checks out, they will receive staking rewards, but if a fraudulent transaction is recognized, their stake will be slashed.
ZK rollups - guilty until proven innocent
These type of rollups use something called Zero-knowledge proofs
Every transaction batch that is committed to the main chain includes a cryptographic proof called ZK Snark, which can be verified by the L1 contract once the batch is submitted. If an invalid batch is submitted, it will be rejected right away.
The current battle for the L2 scaling solution crown is being disputed between these four guys:
If you'd like to check out some other useful information on the adoption of Layer 2 technologies, You might want to check out L2BEAT who aim to provide transparent and verifiable insights into emerging layer two (L2) technologies which, in line with the rollup-centric Ethereum scaling roadmap are aimed at scaling Ethereum.
Sources:
https://ethereum.org/en/developers/docs/scaling/optimistic-rollups/
https://limechain.tech/blog/optimistic-rollups-vs-zk-rollups/