Solution to scale, reduce transaction fees on Ethereum

Rollups technology helps to increase scalability as well as reduce transaction fees for transactions taking place on the Ethereum network.

What is Rollups Technology?

Rollups simply understand, this is one of many solutions to help scale for Ethereum (ETH). It does this by externally pooling thousands of transactions together, rolling them into a block before sending it to the mainnet for writing to the Ethereum blockchain. Thanks to this technology, the Ethereum network instead of having to process each of those thousands of transactions, now it only has to process a single transaction.

Ethereum is in the process of updating to Ethereum 2.0. In theory, if this update is successful, the Ethereum network itself should solve its current scalability problems and high gas fees. At that time, other expansion technologies similar to rollups will no longer “play”. However, Vitalik Buterin thinks that scaling solutions like rollups will still play an important role on the blockchain even after Ethereum 2.0 is implemented.

How does Rollups technology work?

As BeInCrypto shared above, the essence of rollups is to collect small transactions and transfer to the Ethereum mainnet with a single transaction. However, based on technology characteristics, it is also divided into two different types: optimistic rollups and zero-knowledge rollups. Still based on the method of scrolling data as above, but corresponding to each of these types, there are also some basic differences.

Optimistic Rollups

This form will ensure this rolled data is valid, there is no fraud in the blockchain by hiding transactions. To hide these transactions, optimistic rollups create a dispute-resolution mechanism. This mechanism allows anyone to debate the legitimacy of the transaction. If there are suspicious transactions, it will be sent separately directly to the Ethereum network for inspection and verification, thereby resolving disputes. Some solutions are built on this mechanism such as Optimism (OP), Arbitrum or Boba network.

Zero-knowledge rollups (also known as zk-rollups)

This form has a completely different operating structure than optimistic. It relies on a piece of code called a zero-knowledge proof, which allows information to be proven without disclosing it. In crypto, these are called zk-SNARKs, referring to an additional piece of cipher called “succinct non-interactive argument of knowledge”. This method bypasses the dispute resolution system inherent to optimistic rollups because the “SNARK” bit only allows valid transactions to be uploaded to the rollup. Some solutions follow this mechanism such as Loopring, Immutable X or ZKSync.

What is the future of Rollups?

In the short term, the competition between the two innovations of rollups, optimistic and zero-knowledge, is fierce. Some argue that zero-knowledge proofs are superior because they do not require a dispute-resolution mechanism.

In terms of the long-term future, the future of rollups depends on how they upgrade to the Ethereum mainnet. If Ethereum is overtaken by other competitors such as Solana (SOL) or Avalanche (AVAX) causing most of DeFi’s traffic to happen on blockchains other than Ethereum, the rollups themselves will be redundant and vice versa. . However, whichever of these two patterns is followed, rollups could continue to grow if Ethereum becomes stronger. In the future, developers can integrate upgrades to bring ease and reduce costs for users.

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