An overview of the current state of the Rollup ecosystem

Rollups has come a long way since its inception in 2019. We have seen the formation of two major contender camps, as well as various other promising theoretical designs of Rollup that contain many hybrid evolutions. Halfway through 2022, let’s take a look at the current state of the Rollup ecosystem.

Optimistic Rollup

Since general-purpose Optimistic Rollups have been live on mainnet significantly longer than their zk-rollup counterparts, they gain the vast majority of rollup applications. The two leading Optimistic Rollup applications are Arbitrum and Optimism, and have been for some time.

Arbitrum ranks highest at $2.4 billion as measured by TVL. Despite running on mainnet for the better part of a year, the system is still in the training-test phase. Currently, Offchain Labs, the entity that developed Arbitrum, operates a single centralized sequencer. While interactive fraud proofs are real-time, a single sequencer is the only whitelisted entity that can submit disputes to generate fraud proofs. From the user’s point of view, they still have to have a lot of trust in the system, despite the expected gradual move toward decentralization.

Arbitrum’s next protocol upgrade, Nitro, is already running on the development network and will overhaul the existing architecture, replacing the custom Arbitrum virtual machine with a WASM-Geth combination. Arbitrum’s interactive fraud proofs will run on WASM, and the node software will have a Geth-equivalent codebase, with some Rollup-specific optimizations. All in all, Nitro will bring significant optimizations, higher performance, and better EVM compatibility.

Optimism is the second largest Optimistic Rollup and the third largest TVL of all Rollups at $469 million. The situation with Optimism PBC is similar to that of Arbitrum, with only one centralized sorter. However, Optimism PBC has found a way to provide positive benefits to the network by using the profits made from the Sequencer to retroactively fund public goods. A total of $1 million was donated to 58 public welfare projects in the first round. If there is any way to have a positive impact in the context of centralized ordering, then this is the way to go.

An overview of the current state of the Rollup ecosystem

Currently, Optimism lacks fraud proofs, but is expected to gradually decentralize and necessitate security upgrades – which are also standard. However, almost all Rollups have instant or delayed upgrade capabilities, so the security of Rollups ultimately depends on the upgrade multi-signature.

The upcoming Bedrock upgrade will transform Optimism’s architecture into an Arbitrium-like architecture. The current Optimism virtual machine will be replaced by a MIPS-Geth combination, where the node software is equivalent to a regular Ethereum Geth node – this is known as the Ethereum equivalence. Interactive Fraud Proof will also be available as an additional feature, which is an upgrade to the original non-interactive Fraud Proof. In general, Bedrock will be a major step forward for Optimism, adding many features and enhancements to the system.

Optimism, by the way, is also a big step toward experimenting with governance of the non-rich. Decisions will be made between two houses, the Token House and the Citizen House. The Token House will use universal token voting, while the Citizen House will use a one-citizen-one-vote system. In light of this, perhaps the most difficult hurdle in such a system is finding the best way to assign citizenship to users while minimizing the possibility of a sybil attack. If users can acquire multiple citizenships, they can effectively exert more influence over governance than ordinary citizens. Optimism notes that they will use non-transferable NFTs to represent citizenship, but the threat of individuals exchanging private keys to gain more votes remains.

Fuel is another prominent player in the Optimsitic Rollup space, taking a very different approach from Arbitrum and Optimism. Fuel Labs is building a custom VM for Fuel V2 using a rust-based programming language. While EVM-compatible Rollups are particularly useful for incorporating the Ethereum development ecosystem into Rollups, custom VMs are where the biggest performance gains can be gained because they don’t have to adhere to existing standards.

Probably my favorite part of Fuel V2 is parallel transaction processing, mainly because once enough data capacity comes along, the throughput bottleneck becomes execution. Once the throughput bottleneck shifts to execution, a Rollup that implements parallel processing will have an advantage over a Rollup without it. Notably, Fuel V1 was the first mainnet Optimistic Rollup to go live on Ethereum, and remains the only Rollup with permissionless sorters and fraud disputes and no multisig upgrade.

In its current form, Optimistic Rollups are far superior to zk-rollups. Two main considerations revolve around:

  • Full, unrestricted composability: zk-rollups have inherent difficulties in composing smart contracts on zk circuits. The only zk-rollup with general composability is StarkNet, which currently has permissioned smart contract deployments with an upper limit on the number of TVLs a bridge can support. All other zk-rollups are application specific, or only do token transfers.
  • EVM compatibility: zk circuits have inherent compatibility issues with certain types of cryptography that are standard in the EVM, making zkEVM an extremely challenging task. Optimistic Rollup has existed on mainnet with EVM compatibility for some time, and the upgrade is expected to further achieve equivalence.

Zk-rollup

For some time now, the Ethereum community has agreed that zk-rollups are the final state of scalable rollups. As such, there appear to be more zk-rollup projects under active development than Optimistic Rollup, many of which are scheduled to launch within the next two years.

Starknet is currently the only general purpose, composable zk-rollup that is live on mainnet. However, the system is still in early alpha mode with various limitations. The bridge between StarkNet and Ethereum is limited to a certain amount of TVL, which has gradually increased since launch. Smart contract deployments on StarkNet are also whitelisted. I think this is mainly to reduce the risk of smart contact errors, as there may not be enough (any?) auditors to audit all the Cairo contracts the developers want to deploy – it would make sense that StarkWare would temporarily take this role. Auditability is one of the common drawbacks of new custom languages, and the complexity of zk systems only exacerbates this. Ultimately, StarkNet is currently in the lead.

ZkSync, another major “zk-rollup” contender, has been building a generic zk-rollup with zkSync 2.0 for some time now. The recent testnet marked the first instance of zkEVM on a live testnet. However, with the addition of zkPorter, zkSync 2.0 is more than just a Rollup. This will be a Volition that enables users to choose between zkPorter and Ethereum to publish their transaction data. While Ethereum is upgrading data throughput to use danksharding, Volition is a nice middle ground that offers users a choice within the safety of transaction costs.

While most zk-rollups prioritize scalability, privacy is another important aspect that zk-rollups can enable. Aztec currently leads the privacy field with their private token transfer zk-rollup (zk.money) – they are the only privacy-focused Ethereum rollup I know of. Aztec will also launch its next iteration, Aztec connect, around next week, enabling users to access Ethereum DeFi privately. This is a big improvement over using something like Tornado Cash, where privacy can only be achieved by obfuscation rather than outright blocking of transactions – hopefully no one links your Tornado wallet or your privacy is gone .

Zk-rollups are already very complex, and adding privacy complicates matters even more. It is possible that zk-rollups will never reach the state of private composable smart contracts. Because of this, privacy may emerge through application-specific chains, whether through zk-rollup or validation on top of zk-rollup.

Various other zk-rollups also exist in production, including various projects for Scroll and Polygon. A big difference with zk-rollups is the use of a custom VM or zkEVM execution environment. Its advantages and disadvantages are similar to Optimistic Rollup. However, zk-rollups have more inherent complexity in implementing zkEVM. Thus, a very strong case can be made for the route using custom VMs and languages ​​such as StarkNet and Cairo.

Sovereign Rollup

The last two in the Rollup category are currently theoretical, although under active development. A sovereign rollup differs from a typical rollup in that it has a fork-choice rule that allows it to fork independently of its base layer. Instead, a regular Rollup delegates its fork selection to its settlement layer—it has to be the settlement layer because it needs to ensure the correctness of the rollup.

Sovereign rollups will be most prominent on data availability (DA) layers such as Celestia, where the DA layer cannot ensure the correctness of Rollup transactions. Because of this, rollups for things like Celestia are sovereign by default, as they must ensure their own transaction correctness through fraud/validity proofs and fork choice. This should not be mistaken for the consensus provided by Celestia to agree on transaction ordering.

For an optimistic sovereign rollup, the transaction is assumed to be correct, so the Rollup nodes only need to download block data from Celestia. Zk – Sovereign rollup ensures correctness through validity proofs, which will be distributed among the rollup nodes via a p2p network.

To me, the importance of sovereign Rollups is their ability to fork, which allows these Rollups to be truly independent of their base layer. Essentially, a sovereign rollup regains its social recourse mechanism.

Settlement Rollup

A settlement rollup is a sovereign rollup built for settlement. Importantly, the settlement layer is any blockchain with two-way trust-minimized bridges and rollups. The bridge enables the bidirectional transfer of tokens between the Rollup layer and the settlement layer. Trust minimization is a property of bridges where communication relies only on honest few assumptions proven by validating data availability and fraud/validity.

As with any settlement layer, the purpose of settlement rollups is to provide an environment for “rollups” to verify proofs, resolve disputes, and bridge tokens. Technically, though, “Rollups” on top of settlement are hybrid in that they use off-chain DA through the data availability layer where the settlement rollup sits – making them a kind of validum or a kind of Optimistic validium.

Hybrid Rollup

Valid

Speaking of hybrids, validium is a hybrid zk-rollup where transaction data is published off-chain, which may require any environment other than the settlement layer for validating proofs of validity. StarkEx is the only valid instance. In particular, StarkEx is an application-specific verification that currently supports three applications; Immutable X, Sorare and DeversiFi. StarkEx also supports the zk-rollup mode used by DyDx, which is TVL’s second largest rollup.

StarkEx provides data availability for StarkEx verification using a Data Availability Council (DAC) consisting of a set of trusted parties. While delegating data availability to a permissioned committee reduces security, it enables StarkEx verification to provide cheaper transactions than zk-rollups. The cost reduction is possible because publishing data to Ethereum is expensive – it is also the main variable cost that causes Rollup transaction fees.

Using an external data availability layer can alleviate some of the security considerations of authentication with DAC. The main increase in security comes from the cryptoeconomic security provided by the blockchain, where nodes can be imprisoned and punished for dishonest activity. A Validium of this implementation is an interesting addition to the cost-safety trade-off in the “Rollup” context.

An overview of the current state of the Rollup ecosystem

Image via Celestia

Optimistic Validium

Like validation, an Optimistic validium is a hybrid Optimistic Rollup where transaction data is published off-chain. There’s no general consensus on what this particular hybrid should be called, so here’s what I’m going to say.

Metis is currently the only Optimistic validium that transitions from an Optimistic Rollup model to lower transaction fees at the expense of security. Optimistic validiums have weaker security guarantees against their validium counterparts because data availability is required to generate fraud proofs and successfully resolve disputes. Fraud proofs cannot prove fraud if there is a dispute and the data on the relevant state transition is not available. Therefore, if the off-chain data availability provider fails to provide the data, funds may be stolen from the Optimistic validium.

Volition

By combining zk-rollup and validium, Volition is a hybrid that allows users to choose on-chain or off-chain data availability. Choices are made at the individual transaction level, where off-chain data represents cheaper fees and lower security, while on-chain data results in higher fees and higher security. This provides users with the freedom of choice offered by a single system, rather than explicitly looking for a chain that fits the user’s cost-safety preferences.

Currently, zkSync 2.0 is the only publicly announced Volition in development. In zkSync 2.0, on-chain data is provided by Ethereum and off-chain data is provided by their own dedicated PoS chain zkPorter. There aren’t many details about zkPorter, I guess mostly because it’s still under active development and testing. StarkWare may implement a Volition option for StarkEx or StarkNet, although this is pure speculation.

Adamantium

Adamantium is a verification in which everyone personally provides their own data availability to the network. Individuals’ transaction data is stored by themselves (off-chain), and they must remain online to prove data availability for each block. If a user is offline or fails to prove, then their funds are automatically withdrawn on-chain to the settlement layer. While StarkWare came up with the adamantium design, there is no clear indication that StarkWare or any team is working on it. Ultimately, if it does get developed, it could become a niche option for users or entities that want more personal control over their security, which is why adamantium users are called “power users”.

Enshrined rollup

Last but not least, an Enshrined rollup is a rollup that is directly part of an existing blockchain. In short, it is an execution shard. As seen in the Ethereum 2.0 proposal and other sharded-like blockchains, the difference between Enshrined rollup and executing sharding is that executing shards are proposed as monoliths. The global validator set will be split into committees and assigned to specific shards to act as validator sets. The execution shard will act as another blockchain with its own execution, consensus and data availability, but it will checkpoint back to the “beacon chain” – similar to how sidechains checkpoint back to the chain of their choice. In theory, Ethereum enshrined rollups will only execute and use the beacon chain to verify data availability and fraud/validity proofs.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/an-overview-of-the-current-state-of-the-rollup-ecosystem/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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