BUSINESS TECHNOLOGY MEDIA COMPANY
Companies
Sectors

How Ethereum rollups can solve the blockchain scalability problem


Johannesburg, 10 Aug 2021
Read time 4min 00sec

Rollups are the new thing in the Ethereum circle. Many people see rollups as the key to the blockchain scalability problem. Rollups execute transactions outside the primary Ethereum chain but post transaction data on that main chain or layer. We expect to see the impact of this new technology in the days to come. Find out more about what rollups are capable of doing in this write-up.

The background of the blockchain scalability problem

The blockchain scalability problem has to do with the limited ability of the network to compute a large number of transactions within a short period. For example, the Bitcoin network has a capped size and frequency. The Bitcoin blockchain has a unique block size limit of 1Mb and an average block formation time of 10 minutes.

These specifications slow down the speed of verifying transactions. Ethereum at its best can only perform 30 transactions per second. The network can get congested sometimes. Other crypto-currency blockchains also have this problem. There are many proposed solutions and ongoing research to tackle this problem.

One proposed solution is to move most of the transaction activities away from the blockchain. An alternative is to perform most of the activity on layer two. The function of this second layer is to verify withdrawals and deposits. The layer two protocol ensures that no transaction breaks the rules.

Another method is to increase the size of the blockchain network and give it a higher transaction capability. This approach tries to build more powerful nodes. However, one downside of this technique is that the blockchain becomes more centralised and it becomes harder to validate larger blocks of transactions. Software engineers are working on solving these problems in future editions of the blockchain network.

Visit Bitcoin Bank to get crypto-currency updates, relevant technical analysis and Bitcoin news.

Layer one and layer two scaling

Bitcoin, Ethereum and some other crypto-currency blockchains are classified as layer one networks. This is because they carry out every transaction on their primary network. Layer two protocol is an auxiliary framework set up on the main chain. Ethereum has been working on a layer two network that will be capable of performing 1 000 transactions in a second. The layer two solutions are split into:

  • Sidechains
  • Plasma
  • Validium
  • Rollups

Rollups

Rollups improve transaction processing speed and efficiency by moving computations off-chain and fixing some blocks of data on the chain. The basic principle of rollups is to replace computation with data as much as possible. Rollups have a high possibility of speeding up Ethereum transactions. The flow process of rollup solutions is:

  • Perform all transactions outside layer one.
  • Set up the proof of transaction on the first layer.
  • The smart contract validates the transaction on layer two.

Types of Ethereum rollups

Zero-knowledge rollups (ZK-rollups)

The algorithm creates a validity proof known as Succinct Non-interactive Argument of Knowledge (SNARK) and places it on layer one.

ZK-rollups keep the state of all transactions on layer two constant. To update any value on layer two, there is need for a validity proof. ZK-rollups require only the validity proof to verify all transactions. This means it becomes easier to validate a block since ZK-rollups don’t utilise much data.

It doesn’t take much time to migrate funds from layer two to layer one, since the validity proof on layer one has authorised the transactions. One downside of ZK-rollups is that validity proofs require some serious computations that are not good for applications with few on-chain activities. On the bright side, ZK-rollups reduce vulnerability to attacks since they are more decentralised.

Optimistic rollups

Optimistic rollups help to increase the speed of transactions. When combined with shard chains, they become even faster. They sit side by side with the core Ethereum chain on layer two. Optimistic rollups store transaction data securely on layer one.

Optimistic rollups bypass any computation by default. Ethereum computations take time. Optimistic rollups use another means to find out if a transaction is legal. They utilise fraud proofs to detect fraudulent transactions. However, this fraud check takes a lot of time.

Conclusion

Rollups have the potential to produce powerful results in the world of crypto-currency transactions. They are still in a preliminary stage of development. Rollups try as much as possible not to go off-chain. We should expect more from Ethereum rollups in the months or years to come.

See also