What Are ZK-Rollups and Optimistic Rollups?

The launch of Ethereum was doubtlessly a game-changer for the crypto industry. Ethereum unlocked new cryptocurrency possibilities and has been a driving force behind recent blockchain trends such as DeFi and NFTs.

However, Ethereum’s rise also raised concerns about how to improve scalability. Developers are often searching for ways to improve the network’s load. Interestingly, past attempts saw relative levels of success. But, rollups such as ZK-rollups and Optimistic rollups have hit the market and are grabbing attention.

Rollups are a type of Layer 2 solution with incredible potential. They operate by processing transactions within smart chains. So, they move transaction computation off-chain but store transaction data on Ethereum.

Smart contracts, whose main purpose is to bundle (or “roll up”) transaction data and send it off-chain for processing, enable all of this. Here’s how rollups work: Network participants, also known as sequencers or validators, handle transaction data and send batches of heavily compressed transaction data back to the main chain. Such batches include the basic information required to verify the validity of the transactions.

Explaining Rollups

In contrast to some existing Layer 2 solutions, rollups move computing off-chain while still submitting (very compressed) data to the Ethereum mainnet, allowing them to scale more effectively without occasionally affecting data availability. Off-chain data availability is another option offered by some rollups. This implies that no data is uploaded to Ethereum, resulting in large throughput increases but lower security.

The two types of rollups are:

  • Zero-Knowledge (ZK)
  • Optimistic

The verification process distinguishes ZK-rollups from Optimistic rollups. ZK rollups produce cryptographic proofs that can be used to confirm the authenticity of transactions. For each batch of transactions, validity proofs are created and relayed to the main chain for validation.

Optimistic rollups, on the other hand, make the assumption that all transactions are valid and send batches without doing any processing at all. This can result in huge scalability benefits. They do, however, provide a challenge period where anyone can contest the accuracy of the data in a batch. If someone discovers a scam transaction, the rollup conducts a fraud-proof and computes the proper transaction using the information on Layer 1.

Sequencers are expected to stake ETH to make sure they are motivated to process only valid transaction data. The system rewards sequencers that carry out their responsibilities with diligence. However, those who send fake transactions to the main Ethereum chain will have their stake reduced.

Platforms Using ZK or Optimistic Rollups

A number of projects are populating either ZK or Optimistic rollups.

Rollups with ZK

  • Loopring: A Layer 2 protocol that enables non-custodial, gas-free decentralized trade.
  • ZKSync: L2 scaling and privacy engine leveraging zero-knowledge proofing.
  • Immutable X: non-custodial, scalable L2 protocol for NFTs.

 Rollups that are Optimistic

  • Optimism: Scalable, EVM-equivalent architecture-based, low-cost L2 expansion of the current Ethereum software.
  • Boba Network: A Layer 2 scaling solution and hybrid computational platform that uses Optimistic rollups.
  • Arbitrum Bridge: Ethereum Layer 2 scaling chain.
Optimistic Rollups vs. ZK-Rollups

The table below provides a comparison of both rollups.

Features

Optimistic Rollup

ZK-Rollup

Readiness for DeFi It has similar execution models to EVM. There are a few EVM-compatible ZK-rollups. ZK-rollups lack wide-range EVM support
Validity proof For validity, fraud proofing is used. It includes Zero-Knowledge proofs for embedded validity proofing.
Transaction finality It has a one-week delay for transaction finality during the challenge periods. It has no delays in transaction finality. This is due to the validity-proofing feature of ZK-rollups.
Trust There is no need for a trusted setup. A trusted setup is important.
Security Users have incentives to ensure crypto-economy rollup security. uses cryptographic proofs to guarantee security.
Transaction Costs and Final Thoughts

Optimistic rollups represent an informed, positive perspective on the cost sector as you invest solely in the specific areas that are important for scalability. Since Optimistic rollups heavily rely on posting small volumes of data on Ethereum, the rollup pricing is much lower. Besides that, the EIP 4844 protocol support may make positive rollups more affordable for customers.

ZK-rollups, on the other hand, come with enormous costs as a justification for computational proof. The cost covers the creation of the evidence for the various amounts of transaction blocks.

It’s also essential to remember that advanced hardware is required for producing zero-knowledge proofs. ZK-rollups are clearly more costly than Optimistic rollups due to the substantial costs associated with on-chain verifications.

In conclusion, ZK-rollups seem to be a more secure option when compared to Optimistic rollups. This is because it uses cryptographic proofs.

However, Optimistic rollups have a better appeal for EVM-compatible projects. However, both solutions are game changers in terms of scalability.

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