This reduces the number of transactions that need to be processed by the Ethereum network, allowing for faster and cheaper transactions. The second kind of rollup is a Zero-Knowledge rollup, also known as a ZK-rollup. These protocols use a complex piece of cryptography called a Zero-Knowledge proof to determine that a transaction is valid using only minimal information about that transaction. Compared with an Optimistic rollup, which requires funds to stay on the network until the dispute resolution period has closed, ZK-rollups allow users to withdraw their funds with less of a delay. They also bundle up transactions, verify the transactions off-chain, create validity proofs, and submit them to the Ethereum mainnet. However, they are more recent and improved versions of ZK-SNARKs, mainly because of their improved scalability and transparency.
Soon after, the Lightning Network was created, built as an off-blockchain solution for scaling Bitcoin’s throughput from just a handful of transactions per second to thousands. Once the batch of transactions has been processed, the funds can be withdrawn. Processing typically happens faster with a ZK roll-up than with an Optimistic roll-up. An overview of Ethereum rollups and how they facilitate faster and cheaper transactions on the Ethereum network. There will be an Ethereum transaction fee you’ll need to pay to bridge your funds to a rollup.
This eliminates the need for a dispute-resolution system, as is used in optimistic rollups. To serve the need for scalability in Ethereum and other blockchains, layer2 scaling solutions have emerged. Rollups are one of the scaling solutions that help improve the transaction processing on the layer1 mainnet. Rollups try to bring the best of both of these worlds by creating a general-purpose solution while still having the security of Ethereum. Rollups settle the transactions outside of the main Ethereum network but post the transaction data back to the Ethereum network and still derive its security from the Ethereum protocol. Each rollup has its specific contracts deployed on the main Ethereum network.
Rollups perform transaction execution outside layer 1 and then the data is posted to layer 1 where consensus is reached. As transaction data is included in layer 1 blocks, this allows rollups to be secured by native Ethereum security. Applied ZKP – Applied ZKP is a project funded by the Ethereum Foundation to develop an EVM-compatible ZK-rollup and a mechanism for generating validity proofs for Ethereum blocks. However, advances in zero-knowledge technology are igniting renewed interest in wrapping EVM computation in zero-knowledge proofs. These efforts are geared towards creating a zero-knowledge EVM implementation that can efficiently verify the correctness of program execution.
“Optimistic” roll-ups include fraud proofs that can remember state root history and batch hashes. “Zero knowledge” roll-ups include cryptographic proofs that validate the results of processing each batch. ZK-rollups can bundle thousands of transactions in a single batch and execute them on its layer2 protocol. They produce a ‘validity proof’ to confirm the correctness of the processed transactions. Currently, validity proofs are generated on a block-by-block basis and submitted to the L1 contract for verification.
The most notable project to deploy on StarkNet was dYdX, an on-chain DEX for trading perpetual swap contracts. With this approach, zk-STARKs claim to offer greater scalability in terms of improving speed and reducing the computational size of transaction data. PoE is optimized for decentralization, allowing anyone to take part as either a Sequencer or Aggregator. Sequencers accept transactions and include them in the next batch, while Aggregators are responsible for generating the ZK proofs that are submitted to the Ethereum mainnet. Polygon Hermez is the result of Polygon’s acquisition of Hermez, a zk-rollup scaling solution for Etheruem in 2021. Hermez’s approach is to adopt a new consensus algorithm called proof of efficiency .
Zero-Knowledge or ZK Rollups speed up the reviewing process by implementing validity proof protocol. And Optimistic Rollups writes the transaction on the Ethereum chain as “calldata”. So, instead of storing a whole transaction and processing it, we can store data that includes a bunch of transactions. Processing transactions off-chain and only submitting the resulting data to the mainnet can help the network process more transactions. There are two benefits to this – off-chain processing reduces the burden on the mainnet and one single data can hold multiple transactions.
Miden is an EVM compatible STARK rollup, which means it is compatible with solidity programs and can therefore be easily adopted by Ethreum developers who wish to scale their dApps using the STARK approach. All transactions on these L2 must ultimately be validated on the Ethereum mainnet, which makes them more secure and censorship resistant than they would be if only stored on the L2. The Polygon network is home to various products and services, including zk-rollups like Polygon Zero and Polygon Hermez. Essentially, a fully functional zkEVM will bring the complete Ethereum experience, including DeFi and NFTs, to the scalable and secure environment of a zk-rollup network. In this quick guide, we’ll be simplifying the complex jargon around zk-rollup solutions and making sure that you don’t have zero knowledge about zero-knowledge. To better understand rollups we need to dive briefly into Ethereum and Layer 2 solutions.
However, it’s essential to understand that outsourcing computational data doesn’t affect the governing system of Ethereum. To answer what a rollup is, we need first to understand the fundamental problem of Ethereum. This implies the same as ZK-SNARKS but they use a different computation approach and eliminates the need for trusted setups. Sign up for free online courses covering the most important core topics in the crypto universe and earn your on-chain certificate – demonstrating your new knowledge of major Web3 topics. Not all solutions require utilizing the Ethereum consensus algorithm directly, and alternatives can offer benefits that would otherwise be difficult to obtain.
A visual explanation of ZK-rollups
Each time a rollup needs to send a transaction to Ethereum, it would need to pay the Ethereum network fee. In case of invalid transactions, optimistic rollups have introduced a dispute mechanism where malicious parties are penalized for submitting wrong transactions to Ethereum. If someone wants to submit fraud proof they would also need to place a bond as insurance that they are not spamming the network or not submitting spam transactions. The calldata keyword often identifies the smart contract method being called by a transaction and holds inputs to the method in the form of an arbitrary sequence of bytes. This helps reduce costs for users since a large part of rollup fees go toward storing transaction data on-chain.
The contents of this article are not to be construed as legal, business, investment, or tax advice. You should consult with your advisors for all legal, business, investment, and tax implications and advice. Please use your best judgment and practice due diligence before interacting with smart contracts. The verifier smart contract authenticates these transactions in a block with zero-knowledge proof. These scaling techniques range from rollups to sidechains and state channels. Judging by the total-value-locked in these Layer 2 networks, rollups are by far the most popular scaling technology.
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On the rollup, users sign transactions and submit them to the sequencer who’s responsible for ordering and executing transactions. The sequencer verifies transactions, compresses the data into a block, and submits the batch to Ethereum as a single transaction. Zk-rollups have a number of advantages in terms of security and speed than optimistic rollups, but they are also more complex and require more advanced cryptographic techniques. Products such as Loopring and Immutable X leverage zk-rollups but are limited to one use case. In a zk-rollup, each off-chain transaction is validated using a zero-knowledge proof, which proves that the transaction is valid without revealing any sensitive information about the transaction.
However, verifying single block proofs limits the throughput that ZK-rollups can achieve since only one block can be finalized when the operator submits a proof. But the rollup contract won’t automatically accept the proposed state commitment until the operator proves the new Merkle root resulted from correct updates to the rollup’s state. The ZK-rollup operator does this by producing a validity proof, a succinct cryptographic commitment verifying the correctness of batched transactions. Optimistic rollups, as the name suggests at first, assume that the transaction data submitted to the Ethereum network is correct and valid. Whenever there is an invalid transaction, there is a dispute resolution.
Some networks, such as Optimism, charge you ETH for transaction fees, but they’re a lot cheaper than on Ethereum itself. Many rollups also continue to rely on centralized “sequencers” to efficiently coordinate transactions on the layer 2 chain. A sequencer can’t spoof or alter transactions, but it could technically censor or re-order them to extract some benefit for itself.
Both projects have different approaches to treating smart contract code. Without going too deep into detail, Arbitrum uses its own Arbitrum Virtual Machine while Optimism uses Ethereum-like EVM. As of today, we can see that the market has spoken for Arbitrum. Since rollups rely on L1, they don’t need a token to stay secure and to incentivize miners. Some projects, however, have decided to introduce a token to their rollup.
Zk-Rollups are a type of layer 2 scaling solution that uses a complex piece of cryptography called a zero-knowledge proof to ensure the validity of off-chain transactions. In a zk-rollup, transactions are processed off-chain and then bundled together into a single transaction that is submitted to the main blockchain network. Zero-knowledge rollups (ZK-rollups) bundle (or ‘roll up’) transactions into batches that are executed off-chain. Off-chain computation reduces the amount of data that has to be posted to the blockchain. ZK-rollup operators submit a summary of the changes required to represent all the transactions in a batch rather than sending each transaction individually. They also produce validity proofs to prove the correctness of their changes.
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This is because it optimistically assumes that all the transactions contained within a rollup are valid. Optimistic rollups give everyone on the network a certain amount of time, usually a week, to contest fraudulent transactions. The benefit of the Optimistic rollup is that it’s quick; by assuming things are correct, the network doesn’t have to waste time confirming things. The drawback is that it usually takes about a week to officially withdraw your funds from popular networks like Optimism or Arbirtrum. In ZK-SNARKS, verifiers and provers, go through all the transactions in a specific rollup and verify the transactions off-chain. Verifiers repeatedly challenge provers to confirm the validity of transactions.
It means, no interaction is required with the people who verify the work or transactions. Key takeaways— Due to tremendous growth in network usage and applications, Ethereum suffers from high traffic and network congestion. Alternatively, rollups could continue to rise should Ethereum become more powerful. They could integrate with the upcoming upgrades to make Ethereum easier and cheaper to use for the masses. Conceptually we first categorize scaling as either on-chain scaling or off-chain scaling.
For one thing, a rollup’s smart contracts can contain bugs – not unlike any other program built on Ethereum. While fail-safes and audits should help prevent exploits, relying on an external program to handle transactions will always carry some added risk. These Ethereum layer 2 protocols help process transactions separately from the main network to help increase speed and lower costs.