Messari: How do you see the future of Ethereum "centered on Rollup"?

Original title: "Messari: How do you see the future of Ethereum "Rollup-centric"?" "

Original author: Ally Zach

Original compilation: Unitimes

Key points

· To alleviate current scalability issues, Ethereum is moving to a "Rollup-centric roadmap" that integrates the best on-chain and on-chain Combined with the next expansion plan.

· Ethereum’s on-chain scaling solution, darksharding, provides sufficient data for the vigorous development of L2 (second layer) scaling solutions such as Optimistic Rollups and ZK-Rollups space.

Both Optimistic Rollups and ZK-Rollups have their disadvantages: most Optimistic Rollups have a long withdrawal waiting period between layers; and ZK-Rollups Tends to be computationally intensive and does not provide seamless composability.

· For a Rollup-centric future to remain viable, Rollups solutions must prioritize lower execution costs, cross-layer interoperability, and user privacy.

Scalability is about increasing the speed and throughput of the network while minimizing (transaction) costs and not sacrificing the decentralization and security of the blockchain network Quantitative method. Ethereum currently cannot scale. Over the past two years, transaction costs on ethereum have soared as the number of users has grown, making using the network nearly unaffordable for everyday investors.

Ethereum has two core options for expansion: on-chain expansion and off-chain expansion. In conjunction with "The Merge", the Ethereum team is introducing a new sharding design called "danksharding" to introduce an on-chain scaling solution . These changes are expected to occur sometime in the coming months.

Off-chain scaling comes from an alternative protocol that sits on top of the existing blockchain and does not require changes to the current Ethereum L1 protocol. The L2 scaling solution takes security from the Ethereum mainnet by handling all transaction validation off-chain. Currently the most well-known L2 expansion solution is Rollups.

While preparing for the "merger", Ethereum is moving to a "Rollup-centric roadmap". It plans to combine the best of on-chain and off-chain scaling solutions.

01. A Brief Guide to Rollups

Rollups is the most prominent L2 scaling solution in the field plan. We can categorize Rollups based on their transaction validation and data storage methods. All Rollups aggregate large amounts of off-chain transaction data into batches and publish the results to the Ethereum mainnet when consensus is reached.

1) Optimistic Rollups

Optimistic Rollups networks, such as Arbitrum or Optimism, assume that all transactions It worked from the start. In order to ensure the safety of these transactions, the Optimistic Rollups network provides a challenge period (challenge period), network verifiers can pass a fraud proof< on the parent chain (such as Ethereum) /b> (fraud proof) to challenge the legitimacy of a transaction. Optimistic Rollups significantly increase throughput and reduce latency (transaction confirmation time) by only performing proofs when fraud is suspected. The challenge period is usually seven days.

Source: ethereum.org

During the challenge period, users can use their assets within the L2 ecosystem, but cannot withdraw assets back to the L1 chain. In response to the longer withdrawal waiting periods in Optimistic Rollups, some fast withdrawal schemes are emerging. For example, through a community-driven liquidity pool, Boba Network shortened the exit waiting period to a few minutes.

In addition, most Optimistic Rollups are  EVM (Ethereum Virtual Machine) compatible, which means Anything you can do on L1, you can do in these Optimistic Rollups networks, and do it faster and cheaper. EVM compatibility is the core reason why most Ethereum-based Rollups so far are Optimistic Rollups. Migrating smart contracts to these Optimistic Rollups schemes is a painless process for Ethereum developers. Additionally, Optimistic Rollups provide complete transparency as all transaction data is published to the Ethereum parent chain.

2) ZK-Rollups

Zero knowledge (ZK)-Rollups network, such as StarkNet , similar to Optimistic Rollups, also combines a large number of off-chain transactions and submits them back to the Ethereum mainnet in batches. However, instead of assuming that all transactions are valid until proven valid, ZK-Rollups uses validity proofs(validity prroofs) to verify transactions immediately. These validity proofs and compressed data will be submitted to Ethereum L1 as proxies for their corresponding original transaction packages for on-chain verification.

Source: Simon Brown 

Validity proofs are very complex and time-consuming, so ZK-Rollups have increased latency compared to Optimistic Rollups. Since generating cryptographic proofs (validity proofs) requires a lot of computation, transaction sequencers (sequencers) in the ZK-Rollups network require high-spec hardware, making it difficult for everyday users to participate in becoming its sequencers.

Furthermore, most ZK-Rollups are generally not EVM compatible due to their inherent complexity. Therefore, it is difficult for Ethereum developers to migrate smart contracts to ZK-Rollups schemes, which makes it more difficult to develop general applications for these ZK-Rollups schemes without completely changing the smart contract framework. ZKSync  and  zkEVM  have recently deployed an EVM-compatible ZK-Rollup solution on the Ethereum test network, laying a foundation for the future centered on ZK-Rollup brought the dawn.

02. Ethereum's "Rollup-centric" roadmap

In this year's At some point, Ethereum will undergo a change in consensus mechanism from PoW (Proof of Work) to PoS (Proof of Stake), which is called "merge" (The Merge). This change will reduce the energy emissions of the Ethereum network, improve network security, and reduce centralization risk from miners. Ethereum’s “Rollup-Centric Roadmap” will support any number of validators as long as they stake 32 ETH as an economic deposit.

Sharding is an on-chain horizontal scaling solution that increases the amount of activity a blockchain can efficiently handle. Essentially, the Ethereum blockchain will be split into smaller chains, so-called "shards," which will run in parallel and eventually connect to each other through the Beacon Chain. Together. Each shard chain will run through a subset of nodes that will check for data availability. This system ensures that anyone can use standard consumer-grade hardware to run network nodes while increasing the scalability of the network.

Instead of providing more space for transactions like traditional sharding, the latest  danksharding  Data blobs provide block space. The Ethereum protocol does not attempt to interpret this data, but only to verify that these data blobs are fully usable. For these data blobs to be considered fully available, no data must be lost, and the Rollup state must be able to be reconstructed using that data. This data space will be used to support L2 scaling solutions with high transaction throughput.

In short, the PoS consensus mechanism provides robust security and decentralization for L2 Rollups.

Danksharding forms a data layer that provides mass data availability, thus giving Rollups a low-cost venue to publish their data. Danksharding makes Ethereum’s Rollup-centric roadmap feasible. It turns Ethereum into a settlement and data availability layer, and hands scalability into the hands of L2 Rollups. Currently, by combining Rollup and the Ethereum architecture, the current Ethereum transaction throughput of only 15-45 TPS can be expanded to as high as 1000-4000 TPS. The introduction of the shard chain will further expand the data storage capacity for Rollups, increasing the throughput to over 100,000 TPS.

03. Rollup-centered future

The dazzling of Optimistic Rollups and ZK-Rollups The advantage is that they solve Ethereum's scalability problems without compromising security and decentralization. They allow for near-instant transactions at much lower fees while reducing network congestion on Ethereum mainnet.

However, both types of Rollups have significant disadvantages that call into question their long-term sustainability. Optimistic Rollups are subject to a week-long withdrawal wait period due to the fraud proof system. However, ZK-Rollups are too computationally intensive to be compatible with EVM at present. As mentioned earlier, the developers of both solutions are addressing these issues.

Ethereum’s ecosystem provides ample room for the Rollup ecosystem to thrive. The Ethereum roadmap encourages experimentation, allowing the best L2 solutions to thrive within the mature Ethereum ecosystem. In addition to their respective shortcomings, future Rollup deployments must address differences in transaction costs, fragmentation of Ethereum's sharding ecosystem, and privacy concerns.

1) Cost

A scalable blockchain needs to be able to support more and more A large amount of transactions (transactions), and at the same time cannot compromise on transaction costs. As mentioned earlier, both Optimistic Rollups and ZK-Rollups solve this problem, but how do they compare?

ZK-Rollups may cost a lot. However, as the procedure improves, the number of transactions included in each transaction batch in the ZK-Rollup network will increase, which will reduce the marginal cost per transaction. In the long run, ZK-Rollup will overcome the shortcomings of the fixed cost initially incurred by its proof of validity.

In theory, Optimistic Rollups should have almost costless transactions. Unlike ZK-Rollups, Optimistic Rollups do not have heavy back-end computation or data compression (which would further increase transaction costs). Typically, Optimistic Rollups operators incur the cost of running fraud proofs. However, posting uncompressed data back to Ethereum increases transaction costs. Additionally, transaction costs on Optimistic Rollups are currently higher than expected as fraud proofs have not yet been fully deployed on these solutions.

On the Ethereum shard chain, the transaction cost of any Rollup scheme should be significantly lower than the current situation. In theory, if ZK-Rollups can continue to reduce the marginal cost per transaction, the cost difference between Optimistic Rollups and ZK-Rollups should be very small.

2) Fragmentation

Fragmentation exists throughout the crypto ecosystem. Most protocols operate in silos, and the industry as a whole is relatively fragmented. Moving assets between blockchains is complex and non-intuitive, especially for new users.

Many Rollups networks have thriving but isolated L2 ecosystems. Developers are rapidly building applications on Arbitrum and Optimism due to the ease with which components within the Ethereum protocol can be connected. However, once users have placed their assets into these systems, they often find it a challenge to re-transfer those funds to a different platform. "Cross-layer bridges" and "cross-chain bridges" like Hop and Connext help solve some of the interoperability problems of liquid assets. Users can seamlessly transfer assets from one platform to another relatively quickly and cost-effectively.

The cross-chain bridge will lock the asset in an L1 smart contract, and then send a certain version of the Token asset to another blockchain or Rollup on, and vice versa. Without EVM compatibility, users would need to relinquish control of their crypto assets, as the security of the cross-chain bridge no longer depends on the security of the underlying blockchain. In order to transfer assets from Ethereum to Rollups that do not have EVM compatibility (such as Loopring or StarkNet), users can send Token assets to the Rollup from a centralized trading platform, or pay Gas fees to send assets to the Rollup itself . In the case of the latter, those assets will live in that L2 Rollup.

For bridge assets from Ethereum to Rollup In other words, since the market downturn earlier this year, L2 bridges have declined in terms of total TVL (total value locked). Optimistic Rollups like Arbitrum, Optimism, and Boba are currently leading the way in terms of accumulated bridge TVL, despite long withdrawal wait periods. zkSync is a fairly new Rollup in the space, but it is one of the few ZK-Rollups with EVM compatibility.

Similarly, there are some issues around the interoperability of Rollups in the PoS-based Ethereum world. The "Interoperability Bridge" will be a vital infrastructure component in the Rollups-centric Ethereum ecosystem. They will work to prevent siled Rollup ecosystems, maintain composability, and ease fragmented liquidity. These bridges are necessary for cross-Rollup communication and asset migration.

Ethereum's Rollup-centric ecosystem encourages experimentation and development of the current blockchain architecture. Currently, EVM compatibility limits development within the Rollup framework, limiting the freedom to innovate in smart contracts. EVM compatibility may become an obsolete feature, replaced by future developments driven by composability.

In the short term, Optimistic Rollups is the leading scaling solution for the Ethereum ecosystem. They have an existing advantage in EVM compatibility, which gives their applications the composability they need. However, over time, the transition to ZK-Rollups will occur naturally due to several factors: lower, trustless withdrawal waiting period; higher throughput; superior data compression; A reduction in the marginal cost of transactions.

3) Privacy

Blockchain is inherently public, through complete transparency to provide trust in the field. At any given time, anyone can go to Etherscan and see who is interacting with what contract and how much money is involved. While wallet addresses are an anonymous privacy solution, social media platforms provide an opening to link public identities to corresponding wallets.  

On the other hand, the current TradFi (traditional finance) system is completely private: people cannot see each other's finances. In an era where data privacy is a mainstream issue, it's easy to understand why retail investors, especially businesses, are reluctant to share their private information and link it to their financial records. The crypto space needs to be as private as the current Web2, otherwise, frankly, there will be no potential for long-term adoption.

So, how exactly can developers remove identifiable information from public transactions without compromising security?

The advantage of ZK-Rollups is their data compression capabilities. As mentioned earlier, ZK-Rollups verify all transaction data off-chain and publish the verified proof and compressed transaction data back to the Ethereum mainnet. Ethereum validators do not need to interpret the data in this transaction batch, but only check and ensure that the L2 scheme has verified the data.

Privacy-focused ZK-Rollups remove identifiable information from the transaction data they bundle and publish only appropriate information. For example, Aztec created a pseudonym system in its Rollup scheme to completely separate transaction data from the relevant transaction parties. Users can anonymously send or receive tokens and interact with decentralized applications through their upcoming Aztec Connect bridge.

However, this increased privacy feature comes at a price. This Rollup cannot handle transaction lists like before. Aztec introduced a second zero-knowledge proof (so now it's ZK-ZK-Rollup) to verify a list of ZK proofs, each proof verifying a private transaction. Polygon launched their enterprise-oriented privacy rollup, Polygon Nightfall, which runs an Optimistic Rollup on top of a ZK privacy rollup.

Prior privacy technologies such as Monero, Zcash, and Tornado Cash have seen mainstream adoption, or left users with the option to use privacy. When investors want to keep their transactions private, they must choose to use privacy. However, the party on the other end of the transaction may not do so, so one end of the transaction is public. Over time, dynamics in transaction data could be pieced together to reveal the identities of both parties, defeating the purpose of hiding identities from transactions in the first place. This vulnerability in apps that offer optional privacy defeats the purpose of establishing private transactions in the first place, and therefore, privacy should be the default setting in apps.

Enabling private transactions is simpler for ZK-Rollups because Optimistic Rollups publish all transaction data to their parent chain. However, there are options to enable Optimistic Rollups for private transactions. They could follow the example of Tornado Cash by severing the on-chain link between source and destination addresses. Current Optimistic Rollups can host privacy-oriented ZK-Rollups such as Aztec as L3 (third layer). Future deployments could also mix their solutions, such as Polygon Nightfall, and implement ZK-Rollup to verify private transactions.

04. Written at the end

The Optimistic Rollups solution is leading in the current market On ZK-Rollups. Being generally equivalent to the EVM, Optimistic Rollups have the composability their applications require, and are simpler due to the absence of complex off-chain computations. In the long run, if the technology of ZK-Rollups continues to improve, based on better product fit, they may win the L2 Rollup competition. As more EVM-compatible solutions emerge, ZK-Rollups should become more cost-effective, leverage unprecedented transaction privacy, and result in a more harmonious cross-chain and cross-layer bridging experience.

Ethereum is not the only L1 blockchain focused on a Rollup-centric roadmap. Tezos, NEAR, and Celestia have moved to some kind of rollup-oriented blockchain. Also, the current L1 competition may not disappear in the near future. These L2 ecosystems may not only have to compete with each other, but also L1 ecosystems (such as Solana) and even L2 sidechains (such as Polygon).

Ethereum’s transition to Rollup-centricity will take several years. Current Rollups will take time to implement in a proper way, leaving plenty of room for execution errors. While both Optimistic Rollups and ZK-Rollups have their own tradeoffs, the possibility of a cohesive Ethereum ecosystem bodes well for further cryptocurrency adoption in general.

**This article only represents the views of the original author and does not constitute any investment opinion or suggestion.   

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