Scalability is one of the main issues Ethereum is now experiencing because of the increasing number of users that are flooding the network, causing congestion and expensive fees. Layer 2 scaling networks, such as Optimistic and Zero-knowledge Rollups, have emerged as a viable answer to these issues.
These two scaling methods have the ability to radically alter how blockchain networks function by vastly improving upon prior designs such as Proof-of-Work and Proof-of-Stake. We will be we examining both Optimistic Rollups and zk-Rollups to better understand their features, advantages, and disadvantages.
What Are Rollups?
As a collection of scaling methods, rollups aim to make blockchain networks faster and less congested. They allow several transactions or smart contracts to be grouped together, processed independently of the main blockchain, and then regularly reported back to the main blockchain.
Rollups are useful because they can speed up transactions and decrease gas expenses without compromising the composability or interoperability of smart contracts. They group transactions together and store them on a separate sidechain rather than recording each one on the main blockchain. This sidechain is like a small blockchain that isn’t as complicated as the main blockchain.
Optimistic Rollup
Optimistic rollups are a layer 2 protocol developed to improve Ethereum’s base layer performance. They do this by handling transactions off-chain, which drastically reduces the amount of computing done on the main Ethereum chain and so speeds up the processing time.
These protocols are considered “optimistic” since they do not disclose proofs of validity for batches of transactions put on-chain and instead rely on the consensus of users to verify the legitimacy of off-chain transactions. Optimistic rollups, therefore, take it that all layer 2 transactions are valid until disputed by a trustworthy node in the network.
Optimistic rollups include a fraud-proof technique to deal with faulty or fraudulent transactions. Also, the Ethereum mainnet allows users to file disputes by uploading proof of fraudulent activities. The best part is that this system allows you to contest and rectify erroneous transactions easily.
Pros of Optimistic Rollups
Some of the advantages of this rollup include:
- Flexibility for Smart Contracts
- User Privacy
- Scalability
- Lower Gas Fees
Flexibility for Smart Contracts
Optimistic rollups provide greater flexibility when it comes to enabling sophisticated smart contracts. The Ethereum Virtual Machine (EVM) allows deploying more apps and reusing existing Solidity code with little adjustments.
To put it another way, if your smart contract is already functional on the Ethereum mainnet, you can use it on an Optimistic Rollup without any major changes.
Scalability
Optimistic Rollups dramatically improve the underlying blockchain’s speed. They can handle more transactions off-chain, using the main blockchain only when necessary for dispute resolution.
Optimistic Rollups reduce mainnet congestion by shifting transaction execution and validation to Layer 2. The lack of competition for scarce mainnet resources means that transactions may be confirmed more quickly and at a lesser cost to users.
Lower Gas Fees
When the network is busy, gas fees on the mainnet can be expensive. Optimistic rollups lower these costs since most transactions are handled off-chain, and users only have to pay mainnet fees when they submit transactions or participate in dispute settlement.
Cons of Optimistic Rollups
Some of the cons include:
- Security Assumptions
- User Experience
- Complex Exit Mechanisms
Security Assumptions
Optimistic Rollups depend on the honesty of their users for their security. If a bad actor tries to perpetrate fraud during a transaction, the dispute procedure may be initiated, which may be time-consuming and dangerous.
User Experience
Since users have to wait for the dispute period to end in case of errors, the user experience can be more complex than zk-Rollups or accessing the Ethereum mainnet directly. Since anybody with access to the blockchain can easily see users’ addresses and transaction histories, these systems are also less secure.
Complex Exit Mechanisms
It can be hard to get out of an optimistic rollup. When you decide to leave a Layer 2 network, you will have to go through several steps and be ready for delays and extra costs.
zk-Rollups
zk-Rollups use cryptographic proofs, also known as zero-knowledge proofs, to group several transactions and send them as a single proof to the Ethereum mainnet. This way, you can check the proof without going through each transaction separately.
This method makes the main net’s computers less busy. Instead of sending each transaction individually, zk-rollup operators send a list of all the changes that apply to all transactions simultaneously.
But, unlike optimistic rollups, zk-rollups make validity proofs to show that their changes are correct. Using cryptography, the validity proof shows that the suggested changes to Ethereum’s blockchain result from running all the transactions in a batch.
Since zk-Rollups rely on cryptographic proofs to ensure that transactions are valid, they provide greater protection. There is no need to rely on a trusted third party for the verification process once the zk-Rollup has been uploaded to the mainnet.
zk-Rollups are ideal for scenarios requiring stringent data protection and little network delay. They are widely implemented for token exchanges, decentralized identities, and other applications requiring complete transparency and security. Now, let’s take a look at some of the pros and cons of using zk-rollups:
Pros of zk-rollups
These include:
Privacy Beyond Scaling
Although zk-Rollups’ privacy benefits are well-known, the fact that they potentially provide even more anonymity than Ethereum’s mainnet is less often highlighted. Applications like decentralized finance (DeFi) and supply chain solutions may benefit greatly since user privacy is essential in these systems.
Reduced Data Storage
zk-Rollups reduce the amount of space needed for data on the Ethereum mainnet. This might increase the mainnet’s scalability in the long run since it minimizes the total data load by grouping several transactions into a single proof.
Front-Running Prevention
zk-Rollups with zero-knowledge proofs can help stop front-running, a practice in which traders use information about upcoming transactions to their benefit. By combining many transactions into one proof, you can reduce the likelihood of a front-running attack.
Cons
Some of the key disadvantages include:
Challenges with Interoperability
Layer 1 Ethereum and other zk-Rollup networks don’t always operate well together, and interoperability between them may be tricky. It is also difficult to guarantee compatibility and communication across various Layer 2 approaches.
Complexity for Developers
ZK-Rollups provide a layer of complexity to smart contract development that isn’t present in more standard Ethereum mainnet smart contracts. It may be difficult for developers to write code interacting with ZK-Rollup systems, create and validate zero-knowledge proofs, and grasp cryptographic concepts.
Longer Proving Times
The computational cost of producing zero-knowledge proofs is that zero-knowledge protocols often take more time to complete transactions than Optimistic Rollups. In turn, this might slow down application response times and degrade the overall quality of the experience for end users.
Similarities and Differences of Optimistic Rollups and zk-Rollups
Optimistic Rollups and zk-Rollups aim to increase the scalability and decrease the transaction costs of blockchains like Ethereum. Both are examples of Layer 2 scaling solutions for blockchain networks.
Even though they both aim to improve blockchain performance, their methods and fundamental differences set them apart. Here are some of the key similarities and differences between them:
Similarities
Layer 2 Scaling
Optimistic Rollups and zk-Rollups are examples of Layer 2 scaling solutions, meaning they run on an existing blockchain (often Ethereum) to relieve some of the stress associated with processing and managing transactions on the main chain. Because of this, productivity may increase while costs stay the same.
Security
By using the blockchain for dispute resolution or cryptographic proofs, both approaches hope to preserve the security guarantees of the underlying ledger.
Differences
Security Models
To function, OPtimistic Rollups depend on the honesty of most transactions and the ability of an “optimizer” (often a decentralized network of validators) to identify and fix dishonest conduct.
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However, zk-Rollups are based on zero-knowledge proofs, which mathematically prove the correctness of transactions without disclosing any information about them. Even while this makes them safer, it may need a lot of processing power.
Transaction Finality
In Optimistic Rollups, transactions are not complete right away; they can be reversed if fraud is found. As a result, users may need to wait for confirmations on the primary chain before putting complete faith in the legitimacy of their transactions.
Under zk-Rollups, cryptographic proofs offer instant verification, making all pending transactions final at once. This is a major benefit for applications requiring instant and trustworthy transaction confirmation.
Data Availability
Optimistic Rollups make it simple for users to independently verify transactions since all relevant data is accessible on the secondary layer. The actual transaction data is not stored in the main chain, simply a summary of all the transactions.
However, the zk-Rollups protocol depends on cryptographic proofs rather than a central database to ensure the integrity of all transactions. This indicates that the security of a system using zk-Rollups is highly dependent on the availability of its data.
Conclusion
Simply said, Rollups are like the superheroes of the blockchain world because they make the technology more effective and user-friendly. zk-rollups improve security and privacy but have limited scalability, whereas optimistic rollups are simpler to build and give more scalability.
Ultimately, the decision depends on the desired outcomes of the network, and a hybrid strategy may be the most effective way to reap the advantages of both rollups.
