Layer 2 scaling solutions remain a notable tool in the quest by crypto developers to solve the blockchain trilemma.
Originally coined by Ethereum co-founder Vitalik Buterin, the trilemma describes the challenges of working to build scalable, decentralized, and secure infrastructure.
Blockchains have long been forced to make trade-offs in one of these areas. However, many developers and architects believe it’s possible to build a project that hits all three targets without compromise.
Layer 2 scaling solutions like rollups have emerged as a critical tool to improve the speed and efficiency of an underline blockchain.
Why Have Rollups Gained Prominence As A Scaling Solution?
Layer 2 solutions run on top of sophisticated blockchains to optimize specific features and help direct transactions away from a mainnet to mitigate congestion.
Rollups carry out transaction processing off-chain after bundling (rolling up) data and then feed information to the blockchain. The idea is to reduce transaction costs by splitting them across many users.
Developers relying on rollups have two options. The first variety is known as an ‘Optimistic rollup.’ This solution assumes transactions within the rollup are valid and gives network participants a certain amount of time to dispute transactions.
John Adler wrote the first minimum viable modeling structure that described what is now known as optimistic rollups in June 2019.
According to him, their permissionless nature through merged consensus, emphasis on non-interactive fraud proofs, and sustainable scaling model by using blockchains as a data availability later make optimistic rollups a promising tool.
ZK-Rollups (Zero-Knowledge) is the other type of rollup. These tools rely on zero-knowledge proofs to determine transaction validity with only minimal information. They function similarly to Optimistic rollups while relying on the proof instead of assuming transactions are valid.
First appearing in a 1985 research paper, zero-knowledge proofs are a way to prove the validity of a certain statement while not revealing the statement. They ensure sensitive information remains confidential by relying on algorithms that use some data and return a ‘true’ or ‘false’ output.
After rolling up a bundle of transactions, the ensuing single transactions take the form of a succinct, non-interactive argument of knowledge (SNARK), or a succinct, transparent argument of knowledge (STARK). Both of these concepts are the same as a crypto transaction hash, meaning data can be represented without revealing the information itself.
As a result, ZK-SNARKs can be instantly verified when they are sent to a blockchain mainnet. Funds can be withdrawn as soon as the rollup is mined.
The speed of ZK-Rollups in moving funds to and from the mainnet has led Vitalik Buterin to predict the solution will triumph over Optimistic rollups as a more effective scaling solution. In August 2022, Buterin explained, “In more than 10 years from now or even more, I expect the Rollups to basically be all ZK.”
However, the Ethereum co-founder did admit the technology behind Optimistic rollups was more mature due to the challenges of building with existing ZK technology.