Optimistic Rollups vs ZK Rollups: The Most Exciting Layer 2 Scaling Projects for Ethereum

Ethereum is arguably the most influential blockchain task ever and has contributed the most to the development and evolution of the DLT area. Of course, we can only talk about influential blockchain tasks if we cite Bitcoin, which kicked off the entire process. However, among initial coin services, DeFi, and this year's NFT boom, Ethereum has been the driving force behind all significant blockchain and crypto tendencies for the past few years. Not to mention that most crypto tokens nowadays start their lifestyles on Ethereum. It's not an exaggeration to say that Ethereum has been shaping the blockchain and crypto landscape for years.

However, the achievement of the Ethereum blockchain has once again validated the desire for ways to improve blockchain scalability. This is especially authentic for a platform like Ethereum, whose application comes from its potential to run decentralized applications (dApps) powered through intelligent contracts.

In our previous piece on the situation, we presented a widespread overview of the most prominent styles of Layer 2 answers, including state channels, sidechains, plasma, and rollups. This piece focuses on rollups and examines some of the most promising Layer 2 solutions.

Rollups are available in two distinct flavours.

Rollups are one of the most promising classes of Layer 2 solutions. These answers pass transaction computations off-chain; however, they store transaction records on the Ethereum chain, meaning rollups are secured through Layer 1.

All this is accomplished through intelligent contracts whose primary feature is to package deal, or 'rollup', transaction data and circulate it off-chain for processing. Community participants deal with these statistics, generally called sequencers or validators. They then submit batches of highly compressed transaction statistics returned to the main chain. They contain the minimum amount of information needed to verify whether or not the transactions are legitimate.

Regarding the verification approach, it is necessary to distinguish between zero-knowledge (ZK) and constructive rollups. ZK rollups provide cryptographic proof of transaction validity. Each transaction batch has its own 'validity evidence' submitted to the primary chain.

Optimistic rollups

One of the biggest strengths of positive rollups is that they no longer perform computation by default, which could result in widespread scalability gains. Estimates endorse that optimistic rollups can provide up to 10-100x improvements in scalability. The disadvantage is the need for an assignment duration, meaning withdrawal intervals are significantly longer than ZK rollups.

Another massive benefit of optimistic rollups is that they can execute smart contracts, while ZK rollups are limited to easy transactions.

The constructive rollup area is shaping to be a battleground for two significant competitors: Optimism and Arbitrum. Competition among those two initiatives is already heating up, with both scoring early successes. The two answers are very similar, with the main distinction being how they generate fraud evidence. Additionally, their compatibility with Ethereum Virtual Machine (EVM) and Ethereum tooling differs.

A. Optimism

It is also the first optimistic rollup protocol to have a mainnet release in the blockchain space. However, a delay in the company's March launch allowed Arbitrum to enter the marketplace. Nevertheless, the assignment attracted interest and secured $25 million from Andreessen Horowitz.

In an everyday rollup style, Optimism uses a clever agreement to relay transaction statistics from the primary Ethereum chain to a Layer 2 community, in which a sequencer can package multiple transactions into a batch, after which that batch is returned to the main chain through a single transaction. Sequencers perform these duties with any luck, believing every transaction is valid. At some stage, the machine has a one-week length, at which point that assumption may be challenged. If any discrepancies are determined, the rollup generates fraud evidence. For this kind of evidence to be generated, the complete Layer 2 transaction is finished on Layer 1. The advantage of this method is that it allows for speedy evidence generation.

Optimism attempts to be as close as possible to the Ethereum environment. It uses modified GETH for its Layer 2 node and has a Solidity compiler. However, it does not guide EMV languages other than Solidity. 

B. Arbitrum

The Arbitrum challenge became set to be the primary challenger to Optimism, but following the latter's release postponement, Arbitrum scored an early lead in the optimistic rollup race. Arbitrum was released on the Ethereum mainnet on May 28.

As noted above, Arbitrum could be very much like Optimism, with the main distinction between the two projects being how they generate a fraud-proof system. While Optimism executes the whole layer of two transactions simultaneously, Arbitrum uses a multi-round approach to execute small chunks of the transaction until a discrepancy is detected. This method allows a higher transaction capacity. In most cases, generating fraud evidence takes a week and can take up to two weeks in a few instances, which is much longer than with Optimism's method.

On the compatibility front, Arbitrum supports all EMV languages, including YUL, Vyper, and Solidity. However, it uses a custom L2 node. Like Optimism, Arbitrum uses ETH for payments.

ZK rollups

While constructive rollups assume that everyone acts in good faith, ZK rollups aim to make sure that's the case without a doubt. As a result of the rollup movements, transactions are bundled into Layer 2, and valid evidence is generated for every package deal. Validity proofs are then submitted as proxy bundles to Layer 1. This method results in an excellent fact size discount and lowers the time and fuel costs for validating a block. You can further optimize it by using some neat tricks. 

For instance, money owed may be represented as indexes rather than addresses, significantly reducing transaction size.

On the other hand, ZK rollups do not require a project duration, as the validity proof has already confirmed the legitimacy of transaction facts. That's why ZK rollups permit speedy withdrawals. So, while ZK rollups are usually unsuitable for general-purpose applications, they're great for exchanges and apps requiring manageable bills.

Some promising initiatives are presently populating the ZK rollup nook of the Ethereum environment. Here are a number of the most promising ones:

A. Hermez

We start with Hermez because of a significant development that made headlines this month. Hermez and Polygon will merge in a $250 million deal announced on August 13. The merger approach means that Polygon, arguably the most popular Ethereum scaling project (although technically not Layer 2, as it's a sidechain), now has ZK rollup capabilities. We'll cover Polygon in detail in a future article.

So, what is Hermez? Well, a ZK rollup generates cryptographic proofs called SNARKs (succinct, non-interactive arguments of expertise). Iden3, the team behind Circom and SnarkJS, developed it. Iden3 says Hermez can scale Ethereum to 2,000 transactions per second. 

Recently, Hermez launched an atomic transaction that permits cheap token swaps in the community. The Hermez group also announced they're working on a zero-knowledge Ethereum Virtual Machine (ZKEMV) to attain complete opcode compatibility. This means that Hermez, or Polygon Hermez, could help with clever contracts.

B. ZKSync

Next, we've got any other SNARK-based total rollup. They describe ZKSync as a scalable and private Ethereum engine, allowing low-gasoline transfers of Ether and ERC-20 tokens. ZKSync's motto—"depend upon math, now not on validators"—appears aptly chosen, as presently, there is only one validator processing batches and producing validity proofs.

ZKSync also helps with token swaps and NFT (non-fungible tokens) minting. Earlier this year, the platform launched its ZKEVM, which permits it to execute smart contracts. ZkSync helps with most opcodes in Ethereum.

A considerable part of the imaginative and prescient ZKSync 2.0 is an off-chain statistics availability solution dubbed ZK Porter. The solution is meant to supplement the rollup element of ZKSync 2.0, which means that rollup contracts and accounts can interact with ZKPorter bills and vice versa. Off-chain information availability in ZK Porter can be secured by those referred to as guardians, who stake ZK Sync tokens and sign blocks to verify data availability in ZK Porter accounts. With their stakes on the road, guardians are influenced to ensure no record availability failures. Moreover, Matter Labs declares that ZK Sync's proof of stake is substantially more stable than PoS in opportunity scaling solutions like sidechains because guardians cannot steal finances.

C. Loopring

Hermez is working towards helping ZKSync support intelligent contracts. The second ZKrollupp solution, Loopring, focuses exclusively on decentralized exchanges (DEXs) and payment packages. Anyone can operate high-throughput transactions at low gas prices with a Loopring DEX or automated market maker (AMM). By taking advantage of Loopring's ZK rollup, Loopring claims that the rollup increases the number by half of 2. The fee associated with the transaction is a hundred times lower than the same metric on Ethereum. Exchange operators must submit a substantial stake in the protocol's native LRC token.

Loopring takes its name from one of the protocol's most exciting features, order rings. An order ring is a round-trading system incorporating sixteen individual orders. So, whereas a buy order typically needs to be matched by an opposing promote order, and vice versa, orders in an order ring no longer require direct fits to be performed. There are several benefits to using this gadget, including higher liquidity and charge discovery.

D. StarkEX

Arguably, the most thrilling element of StarkEx, a Layer 2 scaling and price protocol advanced with the aid of StarkWare, is that it uses STARKs (succinct, transparent arguments of expertise). That method was pioneered through StarkWare, which is still the force behind the STARK-primarily-based era. The critical innovation allowing this is the Turing-whole programming language Cairo. Developed by the StarkWare team, Cairo enables an era of STARK proofs for standard computation. The StarkEx protocol is written in Cairo.

Nevertheless, Starkey has helped strengthen several exciting projects, including the DeversiFi DEX, hunched NFT, and Immutable X buying and selling platforms.

Conclusion

The ongoing development and competition between Optimistic Rollups and ZK Rollups mark a significant advancement in Ethereum's scalability solutions. Optimistic rollups, led by projects like Optimism and Arbitrum, offer the potential for substantial scalability gains, especially for smart contract execution. Conversely, ZK Rollups Scaling Solutions, exemplified by projects like Hermez, ZKSync, Loopring, and StarkEx, prioritize security and efficiency, making them ideal for specific applications like decentralized exchanges and payments. With both approaches pushing the boundaries of Ethereum's capabilities, the future of Layer 2 scaling solutions looks promising, promising a more scalable and versatile Ethereum ecosystem for users and developers alike.