Rollup-Centric Scalability

Ethereum is pursuing a scalability strategy that is centered around Rollups. 

Rollup technology focuses on enabling the Ethereum network to process more transactions, while maintaining the security of the blockchain. The traditional Ethereum blockchain requires significant amount of time and cost to process and validate every transaction, which slows down the transaction speed and increases the gas fees. To tackle these issues, a Layer 2 solution is added to the blockchain, which handles transaction processing.

There are two main types of Rollups: Optimistic Rollups and Zero-Knowledge ZK Rollups. Notable projects employing the Optimistic technology include Optimism, Arbitrum, and BodaNetwork, while ZK Rollups are being utilized by Loopring, zkSync, Aztec, among others.

Detailed information about each of these Rollup methods will be covered in separate blog article. In simple terms, rollup is a concept where all transactions that were process on Ethereum are now handled on Layer 2. The difference between the two types of Rollups comes from the way it proves the transaction operated in Layer 2.  

Optimistic Rollups

– Optimism, Arbitrum, Boba Network

ZK Rollups

– Loopring, zkSync, Aztec

How Rollups Work

A brief overview of how rollups work is as follows: transactions such as token transfers or contract executions are performed on Layer 2 rollups, and the execution results and state information of Layer 2 are stored on Layer 1, which is the Ethereum network. To manage and validate the data on Layer 2, a Rollup Smart Contract is deployed on top of Ethereum. This is the general structure of rollups.

There are three main areas where Ethereum can store its state: Storage, Memory, and Calldata. Storage refers to the permanent storage space where account balances and other data are stored. Memory is a temporary storage space that is used only during the transaction execution and then disappears when the transaction ends. Calldata has characteristics that lie in the middle of storage and memory, and it is the most cost-effective of all. Therefore, it is usually calldata where general rollup stores Layer 2’s state information.

Rollup-Centric Ethereum Roadmap

In October 2020, Vitalik Buterin proposed a Rollup-Centric Ethereum Roadmap. It was a suggestion to steer the future direction of Ethereum’s scalability towards being Rollup-centric.

According to Rollup-centric Ethereum roadmap, the data storage of Ethereum should be scaled up in short term. To do that, infrastructure to actively utilize layer 2 needs to be added. For instance, if Ethereum Name Service(ENS) is supported on Layer 2, wallets within Laye 2 can directly connect and faciliate asset transfers between rollups. The Rollup-centric roadmap talks about the idea of accounts, balances, and such data existing in Layer 2, and Layer 1 providing only security.

Simply increasing the size of Calldata to expand data storages would enlarge the block size. However, as larger block size makes running nodes more difficult, there are limitations to this method of utilizing calldata within blocks.

Therefore, gas cost should be reduced with total calldata limit first. This standard called EIP-4488 greatly decreases the gas cost of transaction and caps total transaction calldata in a block. Then, the technique called Sharding can guarantee the scalability of data that can be stored in Layer 1. Through these two steps of ensuring data scalability, the roadmap is being pursued in a direction that allows nearly all transactions to be processed in Layer 2, with Layer 1 providing security as storage space.