The rollup craze has arrived, and this article clarifies common misconceptions about rollups!

Written by: Polynya

Edited by: Nanfeng

Source: Unitimes

I am glad to see everyone's enthusiasm for Arbitrum One. I admit I was initially too pessimistic, but last weekend, the growth of Arbitrum One was exponential, with its TVL (Total Value Locked) increasing from $300 million to $2 billion in just 48 hours.

In just 12 days after its launch, Arbitrum One has largely propelled itself to become the second-largest smart contract platform in the industry, next to Ethereum.

This shows that people's understanding of Rollups has grown exponentially, but there are still too many misconceptions. In this article, I will address some of these puzzles and misunderstandings to the best of my knowledge. Additionally, please correct me if I am wrong.

I believe that many misconceptions about Rollups stem from people's adherence to old ideas, thinking that a single blockchain can do everything. Therefore, we start from this perspective, and I also want to thank the users in the r/ethfinance subreddit for providing these misunderstandings.

1. Rollups are a temporary stopgap solution; a certain blockchain has high scalability on L1, so Rollups are unnecessary.

Rollups are the present and future of the blockchain industry.

But first, we need a simple shift in perspective to understand why Rollups are necessary. So far, blockchains have had to accomplish all these tasks: transaction execution, consensus security, and data availability.

However, this has led to serious bottlenecks and inefficiencies for blockchains, primarily reflected in the blockchain trilemma *(i.e., a single blockchain system can only possess two of the three attributes: * scalability, * security, and * decentralization.)*

In contrast, Rollups are blockchains that focus on one thing and only focus on one thing: executing transactions as quickly as possible, while outsourcing the hard work of security and data availability to another L1 chain that is better at it (like Ethereum). This is simple division of labor or specialization in action.

Just as the division of labor led to exponential growth during the Industrial Revolution, Rollups will also lead the blockchain industry to exponential growth in scalability.

Nowadays, some L1 blockchains may make significant sacrifices in decentralization and security to achieve higher scalability; Ethereum and Bitcoin compromise on scalability to achieve higher security and decentralization. However, Rollups are a simple structure that can achieve high scalability, security, and decentralization simultaneously.

The key point is that, whether it is L1 chains or Rollup chains, there is no difference for users; they are just interacting with some execution layer (whether it is an L1 chain or a Rollup chain).

Solana and Avalanche are not competing with Ethereum; they are competing with Rollups like Arbitrum One and StarkNet, unless they pivot to a Rollup-centric roadmap like Ethereum and Tezos.

In short, whatever an L1 execution layer can do, Rollups can do it better.

2. A certain blockchain is faster than Rollups.

This is incorrect. To reiterate, whatever any L1 chain can do, in the long run, Rollups can do it better. I want to point out that the design space for Rollups is vast; some Rollups may choose conservative speed limits, especially Optimistic Rollups. But zkRollups do not have to do so; their transaction processing speeds can exceed the limits of L1 chains.

3. Lack of composability is terrible.

This is a common argument against Rollups, but it is actually almost unfounded. As mentioned earlier, whatever L1s can do, Rollups can do it better. I haven't seen anyone complain about the lack of composability between L1s, have you?

A single Rollup is fully composable, even if it requires cross-sharding or external data availability for settlement.

Just as L1s cannot compose with each other, Rollups also lack composability. But there are already many interoperability solutions like Hop Protocol, Connext, cBridge, and Biconomy, with more solutions in development. Additionally, there are stunning innovations like dAMM that allow liquidity to be shared among multiple zkRollups!

In short, Rollup composability is superior to L1s.

4. Fragmentation of liquidity is bad.

As mentioned above, Rollups may not share liquidity, but neither do L1s. However, unlike L1s, Rollups can share liquidity through innovative solutions like dAMM.

In short, the liquidity fragmentation issue among Rollups is less than that among L1s.

5. Rollups are centralized.

All transaction data of Rollups (in compressed form) and proofs are published on the L1 main chain, allowing users to exit the Rollup directly from the L1 main chain, even if the Rollup itself is attacked. Therefore, the security and decentralization of Rollups = the security and decentralization of L1.

In the early stages of Rollups, there will indeed be some vectors of centralization (such as the control of the network by the development team behind the Rollups in the early stages), but most Rollup projects are committed to gradually achieving decentralization.

The ultimate form of Rollups is: zkRollups with decentralized sequencers, decentralized provers, decentralized L1 smart contracts, and lightweight non-custodial exits. zkRollups have the same security and decentralization as the most secure and decentralized L1 chains, while having strong scalability.

6. Ordinary users will never be able to complete the CEX--Ethereum mainnet--Rollup journey because it is too expensive.

Top CEXs (centralized exchanges) like OKEx, Huobi, and Coinbase have already committed to supporting users to withdraw assets directly to Arbitrum One (or deposit from Arbitrum One to these CEXs) at very low fees. Bitfinex has already supported asset withdrawals to Hermez (an Ethereum zkRollup solution).

Meanwhile, Ethereum is not the only path to Rollups. For example, cBridge allows users to directly enter Arbitrum One through Optimism, Polygon PoS, Binance Smart Chain, xFai, Avalanche, or Fantom without going through the Ethereum network. Therefore, there are already many options to enter Rollups, and more will come in the future.

In short, the user experience of Rollups is equivalent to any L1.

7. The withdrawal wait time for Rollups is too long.

For Optimistic Rollups, this is indeed the case: if using the default cross-chain "bridge," it takes about 7 days to withdraw assets from Optimistic Rollups to L1. However, as mentioned earlier, there are now multiple available options for you to make quick withdrawals. Additionally, zkRollups do not have this withdrawal wait limitation.

8. After Eth2.0 is implemented, Rollups will be eliminated.

First of all, the term "Eth 2.0" has been deprecated. The next major upgrade for Ethereum is the Merge, which will merge the consensus layer (Beacon Chain, previously known as "Eth2") with the execution layer (the current Ethereum chain, previously known as "Eth1"). After the merge, we will once again have only one Ethereum chain!

The next major upgrade for Ethereum after the merge is data sharding of the consensus layer. Data sharding will actually focus on accelerating Rollups. Therefore, in the foreseeable future, the scalability of Ethereum L1 will be limited, while Rollups will bring the highest scalability to Ethereum!

In short, the current roadmap for Ethereum is "Rollup-centric," aimed at accelerating and enhancing Rollups.

9. Rollups are still too expensive.

This is indeed the case in the short term. Optimistic Rollups like Arbitrum One and Optimistic Ethereum are reducing transaction fees by 90%-95%, which is a significant improvement compared to the Ethereum mainnet, but it is still too expensive.

With some optimizations, such as signature aggregation, better batching, and calldata compression, transaction fees can be reduced by 99%. In fact, zkRollups have already reduced transaction fees by 99% to $0.10-$1, even when L1 transaction fees are high.

But Rollups are not just about that! When Ethereum releases data sharding, the costs of Rollups will drop sharply, their capacity will increase by an order of magnitude immediately, and long-term scalability will increase by several orders of magnitude.

We can get a glimpse of this from Validiums (like Immutable X); on Immutable X, the cost of minting an NFT is less than 1 cent! In fact, the subsidies from Immutable X make the cost of minting NFTs so low that it currently costs $0 to mint an NFT using your Ethereum wallet!

You can try it out automatically at SwiftMint (swiftmint.io/). It is important to note that Validiums are not as secure as Rollups, but they are more secure than sidechains and some other L1s. Additionally, Volitions further enhance security by allowing users to choose between Rollup and Validium.

In short, in the long term, Rollups + data sharding will provide the greatest scalability and the lowest fees.

10. The finality of Rollup transactions is too slow.

Rollup sequencers can almost immediately provide users with "soft confirmations," with the average time for transactions on Arbitrum or Optimism through Uniswap being about 0.3 seconds.

For most people, the time required for this soft confirmation is acceptable. However, in fact, the finality of Rollup transactions on L1 is often delayed, especially for zkRollups.

StarkNet has proposed a great solution, which is checkpoints that can achieve effective finality on the Rollup side very quickly, at which point the finality of the transaction will be achieved by L1 as quickly as possible.

With improvements in zk (zero-knowledge) technology, Ethereum achieving finality for a single slot, and interleaving data sharding, we will see the finality time for transactions decrease by several seconds. Nevertheless, in some cases, settling directly on L1 makes sense.

11. Rollups are an Ethereum thing and are constrained by the EVM (Ethereum Virtual Machine).

Rollups are absolutely not just an Ethereum thing. In fact, Tezos has already pivoted to a Rollup-centric roadmap. Tezos founder Arthur Breitman made a great point that the combination of Rollups and data sharding is the ultimate scalability solution.

Moreover, Rollups have a vast design space to experiment with VMs (virtual machines), fee models, collaboration mechanisms, governance, and more. In fact, the innovation space for Rollups is much larger than for L1s because they always have a fallback on the most secure L1.

Want a quantum-resistant VM? You can use StarkNet; prefer LLVM and Rust? You can use zkSync 2.0; want your Rollup chain optimized for a specific application? Of course, Immutable X for NFTs is a great example; want a private chain without MEV (miner extractable value)? You can use Aztec.

In short, Rollups have a vast design space; anything L1 can do, Rollups can do, and more.

12. If you can deploy Rollups elsewhere, what makes Ethereum special?

Rollups will be deployed on the most secure, decentralized, and highest data availability L1.

It is clear that Ethereum's security and decentralization are several orders of magnitude higher than any other smart contract platform. In fact, Bitcoin is the only blockchain that can compare, but clearly, Bitcoin lacks the capability to host Rollups.

Ethereum currently does not have the highest data availability, but with data sharding, Ethereum will have the highest data availability. Data sharding disrupts the trilemma— the more decentralized your network is, the more data shards you can deploy, and the more scalable your Rollups will be.

This is how Rollups deployed on Ethereum will scale to millions of TPS in the coming years, with an expected 15 million TPS by 2030. The only area where Ethereum can improve is the execution layer, making it more friendly for validating zk-SN(T)ARKs. I believe this will be achieved; once the merge is complete, data sharding and statelessness will arrive.

By then, it will be clear that Ethereum will be defined as the best place to deploy Rollups. But this does not mean there are no other competitors. If Ethereum's data sharding becomes saturated, we may see data availability chains like Celestia and Avail fill that gap.

For other L1s that pivot to a Rollup-centric approach, like Tezos, if there is an oversupply of demand for Ethereum-based Rollups, they may also benefit. Of course, there are unexpected competitors, but in reality, the only true competitor is whether Bitcoin will somehow add the capability to validate zk-SNARKs and implement data sharding.

Of course, this does not matter for Rollups. Rollups will simply leverage the best security, decentralization, network effects, and data availability that L1s provide to them.

In short, Ethereum is uniquely positioned to provide the highest security, decentralization, and data availability, making it the best place to deploy Rollups.

13. Rollups are stealing traffic from Ethereum.

The current Ethereum execution layer (i.e., PoW Ethereum chain) is completely saturated, and the full block situation has existed for several years. Therefore, all activity on Rollups is a net increase. Some may think that sharding will expand Ethereum's capacity, but Rollups + data sharding will be able to increase the overall capacity of the Ethereum ecosystem by several orders of magnitude more than previous pure sharding solutions.

14. Rollups are too complex; no one can understand them.

I want to point out that when I wrote this article, Arbitrum One has proven to be the fastest-growing smart contract platform in history. In fact, as mentioned earlier, the user experience of using Rollups is the same as using L1. Users do not need to care about the underlying architecture of Rollups; for users, a Rollup is just another smart contract platform.

Do YouTube users care what programming language it was written in? What operating system the servers run on? What internet connection the servers use, etc.? Of course not. In fact, I expect that as smart contract wallets and centralized frontends improve, the situation will significantly improve.

15. When Rollups grow large enough, they will abandon the main chain and create their own blockchains.

Technically, this is possible. However, what makes Rollups special is that they rely on the most secure and decentralized L1 main chain. This is the most important point because currently, only Bitcoin and Ethereum are the most secure and decentralized.

Arbitrum One has already shown us that there is a higher demand for Rollup chains supported by Ethereum's security compared to other more centralized consensus mechanisms. Additionally, as mentioned earlier, if competitors provide better security and data availability than Ethereum, then Rollups will be incentivized to migrate to them.

16. There are no native tokens for Rollups, so people will not invest in their ecosystems.

This is not entirely correct. While many Rollup projects are in their early stages and have not issued native tokens, I expect that most Rollups will eventually release tokens. Many Rollup projects already have native tokens and are using them in innovative ways, such as Immutable X. This is another advantage of Rollups over L1s, as Rollups can have unique and clever token and fee models.

17. The computational cost of zkRollups' zero-knowledge proofs is too expensive.

This is indeed the case, but by spreading this cost over many transactions, the computational cost of zero-knowledge proofs can become negligible compared to the Gas cost paid for transaction calldata. Of course, we are still in the early stages of zero-knowledge technology, and we will see the costs and time of computing zero-knowledge proofs decrease linearly over time.

Software optimizations, GPUs/FPGA/ASICs, Moore's Law, and the increase in adoption brought by increased transaction volume mean that zkRollups will only get better, and this has been proven to be sustainable.

18. Can NFTs transfer between L1 and Rollups, or between Rollups?

This is an important question I overlooked. As mentioned above, while there are multiple "bridges" for transferring ETH and ERC-20 tokens, NFTs are more complex because there cannot be liquidity bridges specifically for NFTs.

Currently, you can transfer NFTs between L1s and Rollups, but the solutions are certainly in their early stages. For example, in zkSync 1.x, you can mint NFTs on it, and when you want to withdraw them to L1, the NFT will be burned on zkSync 1.x and minted as an ERC-721 on L1. However, the transfer of NFTs between Rollups is an unsolved problem.

Fortunately, people are actively researching this issue, such as Vitalik's recent proposal for a cross-Rollup "wrapped NFTs" solution[1], making it easier for NFTs to transfer between Rollups. Jordi Baylina from Polygon Hermez further expanded on this[2], but there are indeed many insightful comments in that post.

19. You are talking about the future; execution risks still exist.

Indeed. Rollups are an emerging technology that will take years to mature and realize their potential. Things can go wrong. But I have outlined what the current shortcomings of Rollups are and how they will be addressed in the future.

For more discussions on misconceptions about Rollups, please visit:

https://www.reddit.com/r/ethereum/comments/pmvbbh/addressingcommonrollup_misconceptions/

Links mentioned in the text:

[1]:https://ethresear.ch/t/cross-rollup-nft-wrapper-and-migration-ideas/10507

[2]:https://ethresear.ch/t/cross-rollup-nft-wrapper-and-migration-ideas/10507/28 This article represents the author's views and does not constitute any investment advice or recommendations.