The future of Ethereum is paved with an ambitious roadmap to tackle its well-known scalability issues. One of the proposed solutions, and one of the most promising, is Optimistic Rollups. This technology is not only meant to drastically enhance transaction throughput but also reduce the associated costs, creating an overall efficient and scalable Ethereum network. This article provides an easy-to-understand exploration of Optimistic Rollups and why they’re vital to Ethereum’s future.
A Brief Introduction to Blockchain Scaling Problems
Before delving into Optimistic Rollups, it’s crucial to understand the problem they’re designed to solve. The Ethereum blockchain, like many others, has a fundamental scaling problem. The network can only process a limited number of transactions per second (TPS), around 15 TPS.
This limitation arises from two main factors: block size and block time. Ethereum’s blocks can only contain a finite amount of data, and they’re produced roughly every 15 seconds. This means there’s a cap on the number of transactions that can be processed in a given timeframe.
When the network becomes congested, users must bid to have their transactions included in the next block, driving up transaction fees. This issue was highlighted by the high gas fees during the DeFi boom in 2020. As Ethereum grows, it becomes even more necessary to find solutions that allow it to scale, hence the introduction of concepts like Optimistic Rollups.
What are Optimistic Rollups?
Optimistic Rollups are Layer 2 scaling solutions that allow more transactions to be processed off the main Ethereum blockchain (Layer 1), and only the essential information is submitted to it.. The goal is to perform computation and storage off-chain, reducing the load on the Ethereum network, enhancing its scalability, and bringing down transaction costs.
ELI5 Version of Optimistic Rollups
Imagine you and your friends are playing a game of Monopoly. In the original rules, after each player’s turn, you have to wait for all the other players to finish their turn before you can play again. This is similar to Ethereum’s current situation, where every transaction needs to wait its turn to be processed on the blockchain. When there are a lot of players (or transactions), it can take a long time for your turn to come around.
Now, imagine a new rule is introduced to the game: each player can play multiple rounds on a separate mini board. After a few rounds, they only have to report the main results - like how much money they earned or properties they bought - back to the main board. This way, everyone can play faster, without waiting for everyone else to finish their turns. This is what Optimistic Rollups do. They allow lots of transactions to happen quickly (the mini board), and only the important outcomes are reported back to the main Ethereum chain (the main board).
But what if a player cheats on their mini board? Well, the new rule also allows any player to challenge the result if they think someone has cheated. If a player can prove that someone has cheated on their mini board, then the cheater’s results will be removed, and the person who spotted the cheat will get a reward. This is similar to the “fraud proof” mechanism in Optimistic Rollups.
So, Optimistic Rollups are like a new rule in the Monopoly game, which lets everyone play faster by using mini boards and only reporting the important results back to the main board, while also having a way to catch and correct any cheats.
How do Optimistic Rollups work?
Optimistic Rollups operate on the principle of"optimism.". Essentially, transactions are processed off-chain, and the results are rolled up into a single “proof” that’s submitted to the Ethereum network. The network assumes these rollups are correct unless proven otherwise—hence the term “optimistic.”
An Optimistic Rollup chain is run by a group of validators who relay the transactions. These transactions are executed off-chain in a virtual machine identical to the Ethereum Virtual Machine (EVM), meaning that it can execute the same smart contracts as the Ethereum network.
The rollup chain records all transaction data, while the Ethereum network only stores a compact summary. This summary is a cryptographic proof, a hash, that represents all the transactions in the rollup. As long as nobody submits a successful fraud proof to challenge it, the Ethereum network assumes this summary is valid.
Fraud Proofs
In the event that a malicious actor attempts to submit an invalid rollup, a mechanism is in place to counteract this: fraud proofs. Anyone monitoring the network can submit a fraud proof if they notice an incorrect rollup.
Submitting a fraud proof involves showing the Ethereum network the specific transaction that was incorrect in the rollup, leading to the whole block being rejected. The person who submitted the incorrect rollup will lose their stake, and the one who correctly identified the fraud will be rewarded.
Why are Optimistic Rollups Important?
Optimistic Rollups offer a path to a more scalable Ethereum. They dramatically increase transaction throughput and decrease transaction costs by offloading most of the computational work from the Ethereum network.
This technology is fully compatible with existing Ethereum tooling and smart contracts, making it easy for developers to start using. It’s also a more decentralized scaling solution than others, as it doesn’t require a separate consensus mechanism and maintains the security of the Layer 1 Ethereum network.
Conclusion
Optimistic Rollups are one of the many exciting innovations being explored in the blockchain space to solve the scalability issue. They offer increased throughput, lower fees, and a path to a more efficient Ethereum. By understanding and implementing these types of solutions, Ethereum may continue to secure its place as one of the leading platforms for decentralized applications.