Ethereum Layer 2 Rollup Wars

basic introduction

Layer 2 is designed as one of the key solutions to Ethereums scalability problem. By building an additional network layer on top of the Ethereum main chain, it allows more transactions to be processed while maintaining the security and decentralization of the main chain.

Rollup is a Layer 2 scaling solution that processes transactions off-chain and then packages transaction data into the main chain. Its security is guaranteed by Layer 1. It is currently the most mainstream Layer 2 scaling solution. Compared with other off-chain transaction solutions, such as state channels, side chains, Plasma, etc., Rollup has three characteristics:

1. Layer 2 is a relatively independent platform from Layer 1. All participating users are also independent Layer 2 accounts. Users can trade with other Layer 2 users on the Layer 2 platform, but the interaction between Layer 1 accounts and Layer 2 accounts needs to go through smart contracts deployed on Layer 1 and Layer 2 by the Layer 2 operator. The most common interaction is the transfer of tokens such as ETH.

2. All transaction information needs to be fully recorded on the main chain, i.e., Calldata or Blob data (EIP-4844). Even if the Layer 2 state is lost, anyone can restore the lost state from the information stored on the main chain, solving the data availability problem in previous off-chain transaction solutions.

3. Transaction execution and status changes are on the Layer 2 platform, but the status summary will be published to the Layer 1 chain, so the Layer 1 chain can be verified through some data validity verification method. After verification, the Layer 2 status will be locked on the Layer 1 main chain; according to the different data validity verification methods, Rollups can be further subdivided into Optimistic Rollups and ZK Rollups.

Rollup History

Sidechain is one of the earliest Layer 2 solutions. As the name implies, a sidechain is an independent blockchain that is pegged to the main chain (Layer 1) and has its own consensus model and block parameters. When we peg one blockchain to another, it means that we can move assets between the two blockchains. When you want to trade faster, you can transfer assets from the main chain to the sidechain and trade on the sidechain. After completion, transfer the assets back to the main chain.

Plasma is a Layer 2 expansion solution proposed in 2017 by Joseph Poon, one of the proposers of the Lightning Network, and Vitalik Buterin, the founder of Ethereum. It is an evolution of the side chain.

Plasma chain is an independent blockchain built outside of Ethereum, also known as a subchain, just like the branches of a tree, Ethereum is the trunk, also known as the root chain. Each subchain can deploy a custom smart contract on Ethereum, which can be used to handle different businesses. Another layer of subchains can be built on top of the Plasma chain to form a tree-like Plasma network. The working principle of Plasma is to split large computing tasks into small tasks and assign them to each subchain for processing. The processed results are summarized layer by layer and submitted to the upper layer, thereby achieving fast and low-cost processing of a large number of complex calculations.

Plasma requires submission of the Merkle root of transactions that occurred on the Plasma chain. When a user attempts to move their assets from the Plasma chain back to the root chain, the user can submit a Merkle branch of the latest transaction that sent the assets to Plasma. This starts a challenge period where anyone can try to prove that the users Merkle branch is fraudulent. If the Merkle branch is fraudulent, a fraud proof can be submitted. Since the root blockchain only tracks the Merkle root, it has to process much less data than transactions that occur on the main chain, improving the scalability of the root chain.

Plasma is an unregulated Ethereum sidechain technology. Unregulated means that even if the Plasma chain is attacked maliciously or the validators collude to do evil, the assets on the Plasma chain can be safely returned to the root chain. This is also the biggest difference between Plasma and sidechains that need to rely on their own security models to protect users assets. The representative solution of Plasma is Polygon 1.0 (Matic).

But Plasma has three fatal flaws:

1. The Plasma chain requires an operator to publish the Merkle root commitment to the root chain. The operator can perform a data availability attack, that is, refuse to publish certain transactions to the chain. In this case, the lack of transactions to build fraud proofs prevents users from withdrawing their assets;

2. When a user attempts to withdraw assets from the Plasma chain, they must submit an exit transaction request and then wait for a period of time, known as the challenge period. At any time during the challenge period, any user can challenge another users exit by providing proof that the exit is invalid;

3. Users must monitor and verify all transactions on the Plasma chain to detect malicious node behavior and exit in a timely manner. However, transaction verification is costly and this monitoring requirement adds a lot of overhead to participating in the Plasma chain.

Because of the shortcomings of Plasma, Plasma has fallen into a development bottleneck since 2019. At this time, John Adler, a Layer 2 scalability researcher at ConsenSys, proposed the Optimistic Rollup solution. Since it still uses fraud proofs, it mainly solves the data availability problem of Plasma.

On the other hand, Vitalik Buterin pioneered the introduction of zero-knowledge proof technology in 2018 to prove the validity of block status changes, which is also the prototype of ZK Rollup. Zero-knowledge proof was first proposed by S. Goldwasser, S. Micali and C. Rackoff in the early 1980s. It refers to the ability of the prover to convince the verifier that a certain assertion is correct without providing any useful information to the verifier. In other words, the prover proves to the verifier and makes him believe that he knows or has a certain message, but the proof process cannot leak any information about the proven message to the verifier.

zk-SNARK (Zero-Knowledge Succinct Non-interactive Arguments of Knowledge) is a widely used general zero-knowledge proof scheme. It converts any computing process into the form of several gate circuits, and uses a series of mathematical properties of polynomials to convert the gate circuits into polynomials, thereby generating non-interactive proofs. It can be applied in various complex business scenarios.

But one point that zk-SNARK cannot avoid is the centralized trusted setup, which means that in a trusted setup, multiple parties each generate a partial key to start the network and then destroy the key. If the confidential information of the key used to create the trusted setup is not destroyed, then this confidential information may be used to forge transactions through false verification.

The Plonk algorithm proposed by the Aztec research team in 2019 solved the universality problem of zk-SNARK. That is, the trusted setup is independent of the application. Only one trusted setup is required to satisfy all applications. Moreover, the trusted setup can be updated arbitrarily. As long as there is one trusted participant, the security of the trusted setup can be guaranteed. It can be said that the introduction of the Plonk algorithm has greatly accelerated the development of ZK Rollup.

Rollup Track

Looking at the Rollup track, the current competition is very fierce. Among the Layer 2 Rollups that have been launched on the mainnet, Optimistic Rollups still occupy most of the TVL. The main reason is that Optimistic Rollups is the first complete Rollup solution to be implemented. However, with the maturity of ZK Rollups technology, more and more people have begun to pay attention to and participate in the ZK Rollups ecosystem.

Optimistic Rollups

Optimistic Rollups rely on an optimistic assumption that most transactions are valid and allow challenges and rollbacks when fraud is discovered. The Layer 1 contract of Rollup does not directly verify the new state submitted by Layer 2, but prepares a challenge period for each new state submitted. Since Rollup submits all transaction information to the main chain and makes it public, anyone can verify the status update (especially when the status update involves their own wallet). If the new state is wrong, the validator can generate a fraud proof for the wrong state and submit it during the challenge period, thereby invalidating the wrong state update.

The representative solutions of Optimistic Rollups are Arbitrum and Optimism.

Arbitrum officially launched its mainnet in September 2021 and is currently the Layer 2 protocol with the highest TVL.

Currently, there are three main networks in the Arbitrum ecosystem, including Arbitrum One, Arbitrum Nova, and Arbitrum Orbit.

• Arbitrum One is the core Rollup chain of the current Arbitrum ecosystem. All its transaction data is stored on the mainnet Ethereum. Most of the L2 and on-chain ecological applications we usually mention run on this mainnet.

• Arbitrum Nova is a new network built on AnyTrust technology, designed for games, social applications, and high-throughput DApp use cases. The networks transaction data is stored off-chain and managed by the Data Committee DAC.

• Arbitrum Orbit is an open source toolkit for building Layer 3 networks, which supports developers to deploy and create their own chains. Developers can build their own Rollup and AnyTrust chains (Layer 3) based on the Orbit toolkit, and choose one of the chains, Arbitrum One or Arbitrum Nova, as the settlement layer to achieve expansion.

Optimism launched its mainnet in August 2021 and currently has the second largest TVL in Layer 2, second only to Arbitrum.

Optimism achieves EVM equivalence. Solidity smart contracts on Ethereum can run on Optimisms Layer 2 without building additional functions. Developers can seamlessly switch to Optimism to develop applications.

OP Stack is an open source modular toolkit launched by Optimism, covering the data availability layer, execution layer, settlement layer, governance layer, etc. Developers can use the OP Stack toolkit to assemble a customized Layer 2 network according to their own needs. For this reason, OP Stack introduced the concept of super chain to Optimism. Super chain refers to a group of Layer 2 blockchains (also known as OP chains) built on OP Stack. At present, there are dozens of Layer networks built on OP Stack, including heavyweight projects such as Base, opBNB, Magi, and Worldcoin.

ZK Rollups

ZK Rollups uses zero-knowledge proof technology to ensure that transactions processed off-chain are valid and correct, providing higher security and efficiency. After the state changes, the Layer 2 platform of Rollup must provide a zero-knowledge proof of the correctness of the state change and submit it to the main chain along with the state change. The contract on the main chain will verify the proof to determine the correctness of the state update. Compared with the Optimistic Rollup solution, ZK Rollup does not need to set a long challenge period to finalize the Layer 2 transaction, nor does it need to rely on the assumption that incorrect state updates will be discovered during the challenge period.

Representative solutions are zkSync, StarkNet, Polygon zkEVM and Scroll.

ZK Rollups is the first zkEVM project to go live on mainnet, based on zero-knowledge proofs, allowing transactions to be verified without revealing the underlying data. One of the main features of zkSync is the use of optimistic transfers, which allows users to send and receive transactions without waiting for them to be confirmed on the Ethereum blockchain. This significantly reduces transaction times and allows for higher transaction throughput. In addition to using zero-knowledge proofs and optimistic transfers, zkSync also utilizes several other technologies to improve scalability and security. These technologies include signature aggregation, which allows multiple signatures to be compressed into a single signature, and multi-chain support, which helps zkSync interact with other blockchain networks.

StarkNet uses the scaling solution of zkSTARK, a zero-knowledge proof system that allows users to prove the correctness of a computation without revealing the underlying data. This allows for greater privacy and security on the network and the ability to perform complex computations without the need to trust a third party. StarkNet also leverages sharding, a technology that allows a blockchain to be split into multiple smaller chains, or shards, that can be processed in parallel. This allows for greater throughput and faster transaction times, as each shard can be processed independently of the other shards.

Polygon 2.0 launches its ZK Rollups technology, called Polygon zkEVM. This technology solves the scalability problem of the Ethereum blockchain by using zero-knowledge proofs, making transactions on the Ethereum network faster and cheaper, and this implementation is compatible at the bytecode level rather than the language level.

Scroll is an EVM-compatible ZK Rollup that supports the same programming language and smart contracts as Ethereum, allowing developers to easily migrate their existing applications to the Rollup network without making any modifications to their code.

Summarize

Due to its own performance issues, blockchain is unable to meet current needs. Optimistic and zero-knowledge-based expansion solutions are expected to solve the performance bottleneck of blockchain and improve transaction speed and throughput without sacrificing decentralization and security. Rollups improve the throughput of blockchain by transferring calculations off-chain, that is, packaging a large number of transactions into a Rollup block and generating a validity proof for the block off-chain. The smart contract on Layer 1 only needs to verify the proof to directly apply the new state, which can achieve lower Gas and higher on-chain security.

In the short term, Optimistic Rollups are likely to win in general EVM calculations, while ZK Rollups may win in simple payments, transactions, and other specific application scenarios. The main reason is that although Zk Rollups are faster and more efficient than Optimistic Rollups, they do not provide an easy way for existing smart contracts to migrate to Layer 2.

However, thanks to the development of emerging technology applications such as blockchain and privacy computing in recent years, zero-knowledge proof technology has become an important technology for building trust. In the medium and long term, with the improvement of ZK-SNARK technology, ZK Rollups will win in all scenarios and become the final answer to Ethereums expansion plan.

This article is sourced from the internet: Ethereum Layer 2 Rollup Wars

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