Optimistic vs. Zero-Knowledge Rollups: What’s the Difference?

Introduction

With the surge in demand for cryptocurrencies, some blockchains are facing challenges related to their capacity limits. When a blockchain's processing power is insufficient, network congestion and high transaction costs follow. To address these issues, the industry is actively researching and testing scalability solutions aimed at enhancing transaction throughput and speed. These solutions can be broadly categorized into two types: Layer 1 and Layer 2.

Layer 1 scalability solutions (such as sharding) directly modify the main blockchain (the underlying blockchain or Layer 1 blockchain). In contrast, Layer 2 scalability solutions operate on top of the Layer 1 blockchain, including state channels, sidechains, and blockchain rollups.

Blockchain rollups aim to enhance throughput and reduce transaction costs. They address many of the challenges faced by popular blockchains by bundling transactions and minimizing data size, thereby improving the efficiency of transaction processing and storage.

What Are Blockchain Rollups?

Rollups are a Layer 2 solution designed to bundle transaction data and transmit it away from the main chain (or Layer 1 blockchain). Transactions are executed off-chain, while assets remain within smart contracts on the chain. Once completed, the transaction data is sent back to the main blockchain.

Theoretically, any Layer 1 solution can implement rollups to improve transaction processing efficiency. By using rollups, a blockchain can increase the number of transactions processed and recorded within a specific timeframe.

Currently, rollups are primarily divided into two types: optimistic rollups and zero-knowledge (zk) rollups.

What Are Optimistic Rollups?

Optimistic rollups are a protocol that enhances transaction output by bundling multiple off-chain processed transactions into batches. Subsequently, data compression techniques are used to record the transaction data on the main chain, helping to reduce costs and improve speed. According to Ethereum, optimistic rollups can increase scalability by 10 to 100 times.

How Do Optimistic Rollups Verify Transactions?

To improve efficiency, optimistic rollups assume that all transactions are valid by default. You may wonder if this affects transaction security. In reality, optimistic rollups employ a fraud-proof mechanism that establishes a dispute resolution period known as the "challenge period." During this time, anyone monitoring the rollup process can submit challenges to verify whether transactions have been correctly processed using fraud proofs.

If an error is found in a batch, the rollup protocol will correct it by re-executing the problematic transactions and updating the blocks. Parties that approved erroneous transactions will also face corresponding penalties.

Limitations of Optimistic Rollups

Although optimistic rollups do not have a transaction verification process, they establish a challenge period, which is absent in zero-knowledge rollups. This can lead to increased completion times for transactions.

The finality of chains using optimistic rollups is lower than that of zero-knowledge rollups. Finality is a metric that measures how long users need to wait to reasonably confirm that a transaction will not be revoked or altered. Since the release of funds must wait until the challenge period ends, withdrawals using optimistic rollups may experience delays. In contrast, zero-knowledge rollups can become effective immediately after their smart contracts validate the proof of validity.

Some also argue that the efficiency of optimistic rollups is lower than that of zero-knowledge rollups. When using optimistic rollups, all transaction data must be published on-chain, while zero-knowledge rollups only need to publish the validity proof.

What Are Zero-Knowledge (zk) Rollups?

Zero-knowledge rollups are a protocol designed to bundle transactions and submit them in batches to the main chain. Once the transactions in a batch are executed, the operators of zero-knowledge rollups submit a summary of the required changes. Simultaneously, they generate a validity proof to ensure the accuracy of these changes. These proofs are significantly smaller than the actual transaction data, leading to faster verification speeds and lower costs.

On Ethereum, zero-knowledge rollups effectively lower user fees by writing transactions as call data into Ethereum through compression techniques.

How Do Zero-Knowledge Rollups Verify Transactions?

Zero-knowledge rollups use zero-knowledge proofs (ZKP) to validate transactions. The prover uses ZKP to demonstrate to the verifier that they possess certain information, thereby validating the transaction's validity.

The operational flow is as follows:

• The prover generates a mathematical proof that only they can create.

• The verifier uses this mathematical proof to validate the transaction's validity.

• The information can obtain a validity proof without disclosing specific details to the verifier.

Benefits of Zero-Knowledge Rollups

When implemented correctly, zero-knowledge rollups can provide users with a high level of security. The key lies in the zero-knowledge validity proofs, which ensure that the network can only operate in a valid state, preventing operators from stealing user funds or compromising the system.

Another benefit is that users do not need to monitor the network. All data is stored on-chain and requires validity proofs, meaning operators cannot cheat, and users need not worry about improper behavior on the network. Additionally, zero-knowledge rollups allow users to withdraw funds to the mainnet using data availability proofs, without relying on the operators. Similar to optimistic rollups, zero-knowledge rollups also implement off-chain execution mechanisms to enhance transaction execution speed.

What Are the Prospects for Zero-Knowledge and Optimistic Rollups?

The future of zero-knowledge and optimistic rollups remains uncertain. As more people use cryptocurrencies and blockchains, rollups may play a crucial role in enhancing blockchain efficiency. Blockchains may continue to explore various scalability solutions, including sharding, rollups, and Layer 0. We may also see new solutions developed and implemented that can either complement or replace the functionalities of rollups.

Conclusion

As demand for cryptocurrencies increases, blockchains face extreme challenges, leading to a variety of scalability solutions. In this article, we explored the key differences between optimistic rollups and zero-knowledge rollups. As rollups continue to evolve in practical applications, we look forward to the emergence of better versions that achieve scalability and drive widespread adoption.