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Optimistic rollups
It’s important to remember that while rollup technology can be quite technical, at its core, an Optimistic rollup chain is simply a smart contract on mainnet Ethereum with some number of block producers that watches for transactions, batches them together into one string of data (rollup), and then posts it back to Ethereum mainnet with a signature attesting to their validity.
An optimistic rollup moves the heavy computation and data storage that would be normally executed on L1 Ethereum off-chain to a new rollup network. Only a small portion of each batch of transactions is ultimately recorded on the mainnet, creating a much smaller computational impact on the L1. Since only one small data portion is registered on L1 and the majority of computation is handled off-chain, fees can be greatly reduced (compared to if the entirety of the transactions were executed on L1).
By default, Optimistic rollups “optimistically” assume submissions are valid. However, that’s not always the case. To combat this seemingly reckless optimism, checks and balances are put into place. There’s a period of time after withdrawals where can identify and dispute transactions they believe are incorrect or fraudulent. If the whistleblower can mathematically prove that fraud occurred by submitting the correct fraud proof, the rollup will revert the fraudulent transactions, penalize the fraud, and even reward the watcher.
The ability to post L2 transaction data to the L1 is critical because it enables everyone to reconstruct the current and historical state of the rollup chain. Many other scaling technologies do not have this ability and therefore are less powerful to a user who has been wronged.
The drawback to this system is the delay when users move funds between the rollup and Ethereum and for transactions to be considered final. Because “watchers” need time to detect fraud, users’ funds typically take a week to be withdrawn and available for further use. ORs can only be considered safe with a ~one week challenge window. These dispute windows are expected to come down over time and, in fact, some third-party solutions (HOP, Connext) already exist to remove this delay entirely. These are discussed in sections further below.
Unlike the sidechains discussed previously, the breakthrough for rollups is simply increased scalability without sacrificing user security. OR chains are secured by Ethereum L1. Users could be inconvenienced if a dispute or fraud situation arises, but their funds are always safe. Sidechains, like Polygon for example, are secured by a separate validator set that may be (definitely are) less secure than the Ethereum network. Additionally, the bridge that connects sidechains to Ethereum are typically highly centralized around just a few individuals. If less than 10 people are compromised, all funds could be vulnerable.
When discussing rollups and any L2, user also have to consider how long it takes for their transaction on the rollup to be submitted and considered final on the L1. This is known as time to finality. When it comes to rollups, ZKRs post very complex proofs that can range from 500k-5M gas, whereas ORs are ~50k gas, or 10-100x smaller. Therefore, OR can provide faster L1 finality when compared to ZKRUs (for the same cost).
One final advantage of OR vs ZKRU is the OVM: Optimistic Virtual Machine. OVM enables (almost) anything that is possible on Ethereum mainnet to be possible in the OR. Smart contracts, and therefore dApps, are easily transferable to the OR because the OVM supports writing code in Solidity.
In November 2021, Optimism PBC announced “EVM equivalence,” the complete compliance with the Ethereum’s technical specification. This means that everything that currently exists and works on the Ethereum stack can now easily be integrated with Optimism’s OR. This should drive tremendous network effects to Optimism as it's now trivial for current projects to launch on the OR. By reducing the friction, developers and users alike can now enjoy the benefits of OR.
OR have another advantage—this time over plasma and state channels. ORs have a simpler fraud-proofing procedure and one in which anyone can submit a dispute. All the data needed to submit a fraud proof is available on L1.
Arbitrum (by Off-chain Labs) and Optimistic Ethereum (by Optimism) are the two primary OR projects on Ethereum. However, both implementations are still in their very early stages with centralized companies (mostly) responsible for their success or failure. Both have plans to decentralize over time, but any timeline estimate is simply a guess.
Both Arbitrum and Optimism launched in 2021, albeit both with self-imposed limits and restrictions in case any bugs were encountered. Over time, more battle-tested and less constricted versions will be released, further reducing fees for users. Currently, neither Optimism nor Arbitrum One have implemented data compression, which, when fully released, could reduce fees by ~10x. A big step forward happened for Optimism who launched its latest upgrade OVM 2.0 and Arbitrum’s next upgrade ‘Arbitrum Nitro’ promises to increase speed and reduce costs.
It’s estimated that once mature, optimistic roll ups can offer anywhere from a 10–100x improvement in scalability and, at full scale, can possibly improve Ethereum transaction fees by ~50x.
However, as promising as rollup technology is, it’s still a very new technology not without risk. Arbitrum One, a specific kind of Optimistic rollup discussed later, experienced downtime for around 45 minutes in September 2021 when a bug caused a large burst of transactions to overload the system. Optimism (O?), another Optimistic rollup chain, also experienced a temporary outage (~one hour) in November 2021 in which its L2 transactions were halted. No funds were at risk during either issue (the beauty of L2s!), but processing new transactions was not possible, making them useless until the matter was resolved.
One obvious note is that both Optimism and Arbitrum lack native tokens. It’s not public knowledge whether either intend to eventually launch tokens, but the general trend in the crypto industry would suggest so. Regardless, both have had to try and bootstrap their rollups without lucrative airdrops or incentive programs (yield farming). In an industry awash with 50%+ APY, five-figure airdrops, and 8-figure incentive programs/funds, rollups, thus far, have chosen to try and grow without a token, making adoption an uphill battle.
Pros/Cons of ORs Generally
- Increase in scalability of ~2,000 TPS, reducing transaction costs by >5x
- Superior compatibility with Ethereum mainnet, less friction for developers to deploy projects (e.g. EVM equivalence), can create and ship faster than ZKRU
- Flexibility in generalized computation (Turing-complete / EVM compatible)
- All data is available on-chain (no need to trust off-chain data providers)
- Computationally less expensive than ZKRU
- Fewer TPS when compared to ZK-rollups
- Relies on crypto-economic incentives and “watchers” rather than mathematically-certain security (fraud proof vs validity proof)
- Users (technically) need to wait 1+ week(s) for dispute period after a withdrawal from the rollup before being able to access funds
Additionally, ORs and their challenge period are susceptible to 51% attacks. In this scenario, the attacker would try to introduce “bad” transaction data into the rollup and then attempt to censor any attempts to challenge it during the challenge period. The attacker is ultimately trying to corrupt the state of the rollup (with fraudulent data for their own self interest) and stop anyone from challenging the submission.
This is why an adequately lengthy withdrawal/challenge period (one to two weeks) is needed. An attacker may be able to censor or sneak a transaction through if the window was short enough, but the longer the window, the harder it is to fool the rest of the chain.
OR tools:
- Block explorer - Optimistic Etherscan
- Native bridge - Optimism Gateway
- User guide
- Live applications
- Network RPC config - (search for Optimistic Ethereum)
- Block explorer -
- native Arbitrum bridge
- AMM aggregator -
- Arbitrum bridge tutorial
is another L2 Ethereum Optimistic Rollup scaling solution built by the OMG Foundation, which originally began as a fork of Optimism and the OVM (optimistic virtual machine). Boba offers fast withdrawals backed by community-owned liquidity pools (similar to other bridge solutions discussed below), reducing the challenge period from ~7 days to minutes, while incentivizing Liquidity Providers (LPs) with yield-farming opportunities.The team plans to completely rewrite the codebase for their upcoming v3 which is set to be rolled out on mainnet in the coming months. Boba is production-ready with a functioning bridge and a native dex called OolongSwap.
Resources:
- Block explorer
- Boba Network Gateway
- Developer portal
is an L2 scaling solution on Ethereum that is best described as a sharded Optimistic rollup that is EVM-compatible. It launched its mainnet, Andromeda, in November 2021. The METIS token is used to pay transaction fees on the rollup, stake to become a sequencer, and for incentives for fraud challenges.
The Metis Virtual Machine (MVM) contains various decentralized autonomous companies (DACs) with their own separate, application-specific computational and storage layers. Additionally, a network of sequencers are randomly selected from the DACs to rollup and submit transactions back to the L1. These parallel sequencers enable higher scalability compared to the single party approach by other ORs.
Despite the separate execution layers, liquidity between the shards can flow frictionlessly due to the MVM cross-layer communication protocol. The goal is to scale horizontally with distinct, application-specific execution layers that are while also preserving the security of Ethereum via fraud proof submission to mainnet.
Finally, Metis also implements a fraud detection system call the Ranger system. In essence, the Ranger system is a network of nodes that monitor sequencers for bad behavior. The Rangers constantly check the fraud proofs for validity. This active “watchdog” system results in a shorter challenge period as since some simultaneous effort to detect fraud has already occurred and not just assumed to be valid.
Parallel sequencers
Withdrawal period could (theoretically) take minutes (rather than days)
Plans to inherit Optimism’s EVM Equivalence
Important Links
Chain explorer
