Author of this article:Benjamin Simonsecondary title
From high school mathematics
Lets start with a metaphor.
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What does this Kafkaesque story have to do with Rollup?
In an analogy, the piece of paper is an Ethereum block, and the math problem is a smart contract transaction. Ethereum is very crowded right now. There are too many transactions that need to be included in each block. To make matters worse, most of these transactions are computationally intensive, such as flash loans or transactions routed through aggregators. We have said goodbye to the simple transfers and payments of the old, pre-DeFi era.
Thats the crux of the matter. Just as the math teacher in the metaphor asked us to cram every line of painstaking long division onto a piece of paper, Ethereum must process and record every line of calculation for every transaction.
Until Rollup.
Rollups move computation off-chain while only storing minimal transaction data on-chain. In this basic sense, they are the scratch paper of Ethereum. Rollup handles all the messy data processing, allowing exponential smart contract transactions to be batched (“rolled up”) within a single Ethereum block.
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What is Rollup?
Rollup is essentially a separate blockchain, with some modifications. Like Ethereum, the Rollup protocol has a virtual machine that executes smart contract code. Rollups virtual machine runs independently of Ethereums own virtual machine (EVM), but it is governed by Ethereum smart contracts. This connection allows Rollup and Ethereum to communicate. Rollup executes transactions and processes data, and Ethereum receives and stores the results [2].
On a technical level, the key difference between Rollup chains and other more traditional blockchains is the way new blocks are produced.
Typically, a blockchain is maintained by a distributed network of parties (miners or validators, depending on the type of chain). These parties jointly produce blocks through consensus. In simple terms, parties vote on what to do with a set of transactions — or in other words, how to build the next block. Blocks with majority support are the ones that are permanently written on-chain.
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Wait... Rollup is centralized?
The centralized nature of Rollups block production is part of the reason Rollup is able to process transactions so efficiently. But it also raises an obvious and worrisome question: How does Rollup ensure that block production is correct without majority consensus — what happens if a block producer happens to be malicious?
This centralization confuses crypto users accustomed to consensus-based blockchains. In fact, if the story ended here, we might (wrongly) conclude that Rollups are just “databases replicated by a single party,” as Avalanche co-founder Kevin Seqniqi recently tweeted.
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The Importance of Data Availability
Think back to the unfortunate math homework we started with. Scratch paper for calculations is our lifesaver as it allows us to write down the problem and its solution on the master paper. Comparing Rollups to scratch paper, we say they move smart contract computation off-chain while storing only minimal transaction data on-chain.
In fact, the last part — the storage of transaction data on-chain — is critical to how Rollup works. In Rollup, only computation and data processing are off-chain. Every transaction processed by Rollup still has its input data (formally called call data) stored on Ethereum.
What is the importance of keeping transaction data on-chain? In the math homework analogy, the last sheet of paper we hand to our teacher includes a long division problem and its solution. This allows our teachers to check our work after the fact, even if we didnt include individual computational steps. Likewise, the continuous availability of on-chain data means that the Ethereum base layer can repeat any calculations on Rollup.
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Limitedness is a strength
Thus, the key quality of Rollups is their finiteness. Rollups only push transactions to the base layer; they cannot be enforced because Ethereum can override any Rollup transaction if necessary. Because they are subject to this review process, Rollup transactions are said to lack true finality.
Given the restricted nature of Rollup, we can return to the unresolved centralization charges. Rollups individual block producers may attempt to process transactions maliciously. But if so, Ethereum will simply reject the batch after the review process is complete, and the block producer will be penalized [7].
Now, exactly how the vetting process works depends on whether the Rollup is Optimistic or Zero Knowledge. But for both, the review process is exponentially more efficient than Ethereum, without Rollups, processing transactions on its own.
Summarize
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In a nutshell: Rollups move computation off-chain to free up more on-chain space. On-chain data availability is critical as it allows Ethereum to double-check the integrity of Rollup transactions. In turn, this review process serves as a check on Rollup block production, eliminating the need for a consensus mechanism.
Rollups finally let Ethereum get its cake and eat it: they free up exponentially more on-chain capacity without undermining the decentralized security of the network. At least in my opinion, this is as elegant a scaling solution as we could hope for.
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6. In fact, block producers in ZK Rollups cryptographically prohibit transactions from being processed fraudulently, since zero-knowledge proofs of transactions are themselves invalid.
