LK Venture: Overview of RaaS, Ecosystem and Future Prospects, Is Rollup Summer Coming?
This article analyzes the overview, ecology, and future development of RaaS, hoping to gain insights from points to lines and from lines to surfaces.Author: Cynic Leo, LK Venture
TL;DR
There exists an impossible triangle in blockchain, where security, decentralization, and scalability cannot be achieved simultaneously. Bitcoin and Ethereum have chosen the first two, while lacking support for the latter, leading to network congestion and high transaction fees during periods of high transaction volume.
The Bitcoin ecosystem first proposed the concept of scaling, aiming to build a virtual second layer on top of Bitcoin for processing transactions, while the main chain is used for settlement. Ethereum has attempted to use State Channels, Sidechains, and Plasma for scaling, but the results have been unsatisfactory. On September 5, 2018, Barry Hat proposed the concept of Rollup on GitHub. Ultimately, Rollup technology gained community recognition, and the Ethereum Foundation referred to it as the only Layer 2 technology.
In the blink of five years, the Ethereum Rollup, which has garnered the highest market attention, has recently seen frequent new developments in RaaS (Rollup as a Service). Are we about to welcome a summer for Rollups soon? This article analyzes the overview, ecosystem, and future development of RaaS, hoping to glimpse a fragment from point to line, and from line to surface.
Overview of RaaS
The technical analysis of Rollup is quite complex, requiring high professional skills and development capabilities, and the high threshold for launching chains clearly contradicts the permissionless philosophy of blockchain.
Rollup-as-a-Service (RaaS) packages Rollup as a service, providing a more user-friendly and simplified Rollup deployment experience for enterprises, organizations, and individuals. Similar to Cosmos SDK and Polkadot Substrate.
Like Layer 1 chain launches, RaaS provides a universal SDK for Rollup, enabling autonomous Rollup development and deployment through simple configuration, while its customizable features maintain the sovereignty of the project. Some RaaS projects even offer a no-code one-click chain launch feature, allowing users without programming skills to deploy their own Rollup.
Rollup is highly modular, with Sequencers and Provers capable of independent iterative upgrades. In RaaS, some projects focus on the design and development of Sequencers and Provers, providing services for all Rollups.
RaaS can bring about the following changes:
Cheaper, more efficient, and equally secure application chains: Rollup moves expensive computation off-chain, making transactions cheaper and more efficient; using the underlying public chain as the DA layer, verified by smart contracts, it can achieve the same security as the underlying public chain.
A testing ground for innovative ideas: Rollup uses the same virtual machine environment as the underlying public chain but at a lower cost, serving as a battle test environment for the underlying chain, allowing community proposals to be sufficiently tested on Rollup before migrating to the underlying public chain.
Higher interoperability: Rollups using the same RaaS service, due to their identical technical architecture, can easily define a set of messaging rules, allowing direct message passing between Rollups without the need for bridging, thus achieving high interoperability.
RaaS Ecosystem
Broadly speaking, all projects contributing to the issuance of Rollup belong to the RaaS ecosystem. This article categorizes the RaaS ecosystem into four levels based on modular principles, from bottom to top: DA (Data Availability), SDK (Software Development Kit), Sequencer, and No-Code deployment.
Some projects provide services across multiple levels and will be discussed comprehensively upon their first mention, without repetition in the following text.
2.1 DA (Data Availability)
In theory, any public chain can serve as the DA layer to store Rollup transaction data; however, without a stable and correctly functioning DA layer, Rollup cannot verify the reliability of state transitions.
For Rollup, there are two choices. One is Smart Contract Rollup, which is the model chosen by most current Rollups, relying on the underlying public chain for settlement and data availability; the other is Sovereignty Rollup, which separates data availability from settlement, relying solely on the underlying public chain for data availability while handling the settlement part independently.
The former typically chooses EVM-compatible, Cosmos-compatible chains, or fully functional public chains like Solana; the latter has given rise to projects specializing in data availability, including Celestia, EigenLayer, and Avail.
Celestia
Celestia is a PoS chain built using Cosmos SDK, utilizing a modified Tendermint consensus algorithm and RS codes for block data encoding. By employing data availability sampling technology, Celestia further reduces the verification costs for light nodes, which only need to download part of the block data to verify data availability.
Additionally, for detecting whether blocks are correctly encoded, Celestia uses the Optimism mechanism, which optimistically assumes correct encoding; if no fraud proof is received after a certain period, it confirms that the block has been correctly encoded. The Optimism mechanism improves runtime efficiency but adds some latency.
Avail
Avail is a project supported by Polygon Labs, using the BABE+GRANDPA consensus algorithm and also employing data availability sampling technology. Unlike Celestia, Avail uses validity proofs to verify that blocks are correctly encoded, utilizing KZG proofs, which are more efficient than Merkle proofs.
EigenLayer
EigenLayer itself serves as a restaking solution, aiming to leverage the liquidity of Ethereum staking to provide economic security for projects. With EigenLayer, new protocols do not need to build their own distributed validation networks; they can simply utilize the security of ETH restaking through EigenLayer. EigenLayer excels in lightweight, permissionless, and decentralized scenarios, making it the best use case under the narrative of Ethereum scaling.
Since DA does not compute transactions but only encodes and commits transaction data, the requirements for nodes are lower. The use of PoS algorithms means that staking liquidity is a direct reflection of blockchain security and availability, which is precisely where EigenLayer can shine.
EigenLayer exists as a smart contract on Ethereum, using KZG validity proofs to verify correct block encoding; however, EigenLayer has not yet adopted data availability sampling technology, which may be related to Ethereum's next phase of upgrade plans.
2.2 Sequencer
The job of the Sequencer is to order the user transactions it receives, with subsequent execution and block production occurring in that order. In Ethereum's architecture, since sorting and execution are handled by the same entity, it leads to excessive power for validators, resulting in phenomena like MEV and censorship, greatly affecting user experience.
Separating sorting from execution is a reflection of the PBS (Propose Builder Separation) proposal's separation philosophy. However, the current Rollup architecture still widely relies on centralized Sequencers to determine transaction order, posing single points of failure and censorship risks, necessitating a decentralized solution.
Astria
Astria provides a shared Sequencer solution. User transactions from different Rollups are collected into the Astria Sequencer. For Rollup nodes, they can directly obtain data from Astria for lower-latency soft confirmations; they can also wait for Astria to submit data to the DA layer and then obtain it from the DA layer for the strongest finality confirmation.
Since the data submitted by Astria contains transactions from multiple Rollups, each Rollup needs to filter out invalid transactions (including those from other Rollups) based on the consensus mechanism before processing. Astria only provides data, leaving the choice of consensus to Rollup nodes, thus ensuring the sovereignty of Rollups.
OP Stack
The default configuration of OP Stack uses a single dedicated Sequencer to handle transaction sorting. A simple modification to this is to use a permissioned set of Sequencers, which can reduce the likelihood of malicious behavior by Sequencer nodes through a PoS mechanism.
After the introduction of the Superchain concept in OP Stack, shared Sequencers became a necessary choice. Shared Sequencers bring atomic cross-chain functionality, enhancing interoperability between Superchains.
Espresso
Espresso aims to leverage the liquidity of Ethereum stakers to achieve shared security through restaking. Espresso integrates Sequencers and DA, providing sorting results for Rollups via REST API, abstracting the details of DA, with the security of consensus verified by smart contracts located on L1, offering greater reliability.
Saga
Saga was initially positioned as a role similar to Cosmos Hub, providing shared security for application chains using Cosmos SDK with its own set of validators.
In the wave of Rollup popularity, Saga has partnered with Celestia, utilizing Celestia as DA while converting its own validators into Sequencers, exchanging information with upper-layer Rollups via Optimistic Rollup IBC to provide shared security.
SUAVE
Unlike other Sequencers, SUAVE is always aimed at the MEV market. Flashbots is the absolute leader in the MEV space, and SUAVE is a product proposed to capture cross-chain MEV, claiming "The Future of MEV is SUAVE." Through the shared Sequencer provided by SUAVE, atomic cross-chain transactions become possible, helping to enhance the efficiency of capital markets across different chains.
EigenLayer
As mentioned earlier, EigenLayer's use case in the DA layer is also a strong suit for the decentralization of Sequencers.
Since Sequencers are only responsible for sorting and not execution, the requirements for nodes are low. The key to decentralization lies in reducing the likelihood of malicious behavior through penalty mechanisms. EigenLayer can provide a deep staking pool, utilizing Ethereum's decentralization to cultivate the decentralization of Rollup Sequencers.
2.3 SDK (Software Development Kit)
Similar to Cosmos SDK, the SDK provided by RaaS allows developers to reuse a large number of software modules and customize the required Rollup at the lowest cost, reducing development difficulty.
Rollkit (Optimism)
Rollkit was initially incubated by the Celestia community and has now become an independent project. Rollkit uses Celestia as the DA layer, providing an ABCI-compatible client interface upwards, serving all ABCI-compatible Rollups (Cosmos chains).
Currently, Rollkit uses a single centralized Sequencer, supporting integration with Cosmos SDK, Ethermint, and CosmWasm, allowing users to choose their desired execution environment. In the future, Rollkit will continue to develop to support more configuration services.
Dymension (Optimism)
Dymension divides its services into front-end and back-end, with the front-end supporting customizable RollApps, backed by Dymension RDK (modified Cosmos SDK), while the back-end Dymension Hub coordinates the entire system, handling DA and sorting.
Dymension uses the Optimism mechanism, where Dymension Hub optimistically accepts state updates from the Sequencer; if it receives valid fraud proofs, it rolls back the state changes. RollApps can achieve an average delay of 0.2 seconds and a maximum of 20,000 TPS.
Dymension adopts an elastic block production scheme, stopping block production when there are no transactions, significantly reducing the operational costs of the Sequencer.
Currently, Dymension's product is still under development, having already supported the EVM execution layer, but there is no clear choice for the DA layer.
Sovereign (ZK)
Sovereign SDK provides zk-Rollup as a Service, offering general modules for building blockchains and a zkVM that abstracts the underlying zero-knowledge proof details, allowing developers to write programs in Rust, which the SDK can compile into efficient zk-friendly forms.
As the project name suggests, Sovereign SDK emphasizes sovereignty, allowing Rollups to determine the legality of state transitions through custom consensus rules without needing validation from the DA layer.
Currently, Sovereign SDK has adapted to Celestia and Avail at the DA layer and supports Risc0's zkVM, enabling the deployment and demonstration of Rollups.
Stackr (Unknown)
Stackr proposes a more radical innovation, aiming to migrate the microservices architecture from traditional internet to blockchain, introducing the concept of micro-rollup.
The relationship between conventional rollup and micro-rollup is akin to that between virtual machines and containers. Using the Stackr SDK, developers only need to define the required data structures and state transition functions, leaving the rest to Stackr.
Stackr supports various execution environments, such as EVM, Solana VM, FuelVM, etc., allowing users to choose their preferred environment.
AltLayer (Optimism)
AltLayer, as a decentralized and elastic RaaS, provides a developer-oriented SDK and a No-Code Dashboard that requires no coding experience, enabling one-click chain launches.
AltLayer offers a unique elastic Rollup, referred to as Flash Layer. When application demand surges, a Rollup chain can be quickly deployed, and when demand normalizes, it settles on L1, discarding that Rollup, achieving horizontal scaling common in internet systems.
AltLayer aims to support multiple chains and execution environments, having already implemented support for EVM and WASM.
OP Stack (Optimism)
OP Stack is built to support the Optimism Superchain, a proposed network where L2 networks share security, communication layers, and a common development stack. After the Bedrock upgrade, Rollups created using OP Stack will be natively compatible with Superchain. Of course, the components of OP Stack can also be modified to achieve customized features, with base and opBNB being Rollups developed based on OP Stack.
The security and availability of OP Stack have been thoroughly tested by chains like OP Mainnet and base, but there are still issues such as a lack of fraud proofs and centralized Sequencers. OP Stack is exploring new avenues, such as adopting cheaper DA layers, using ZK Proofs, and shared Sequencers.
Arbitrum Orbit (Optimism)
On June 22, Offchain Labs released tools for issuing Arbitrum Orbit Chain. Orbit Chain is a Layer 3 on top of Arbitrum Layer 2, allowing users to choose one of three Layer 2s for settlement, including Arbitrum One, Arbitrum Nova, and Arbitrum Goerli. Users can choose to use either Rollup or Anytrust technology, with the distinction being that Anytrust uses DAC without submitting transaction data on-chain, which is cheaper but slightly less secure. The advantages of Orbit Chain lie in its simple chain launch process, interoperability with the Arbitrum ecosystem, instant updates from Nitro, and EVM+ compatibility provided by Stylus (supporting Rust, C, C++, running on WASM virtual machine). Users can customize and issue any Orbit Chain without geographical restrictions, but must settle on Arbitrum Layer 2, or contact Offchain Labs or Arbitrum DAO for authorization.
ZK Stack (ZK)
On June 26, zkSync published an article claiming that it would modify existing open-source code in the coming weeks to launch ZK Stack, allowing users to build their own ZK superchains with customization. Unlike Arbitrum's Orbit Chain, ZK Stack emphasizes sovereignty and interoperability, allowing users to fully customize based on their needs, with chains built using ZK Stack achieving bridge-free interoperability. ZK Stack can be used to build both Layer 2 and Layer 3, with no restrictions imposed by the official, and no requirement to settle on zkSync. From this perspective, the sovereignty provided by ZK Stack seems stronger.
Starknet Stack/Madara (ZK)
Madara was initially positioned as a Sequencer on Starknet, leveraging technical accumulation to successfully develop Starknet Stack based on the original product, helping to build application chain Rollups on Starknet. Using Ethereum as the DA layer and leveraging Starknet's shared provers, it settles on Starknet. From the perspective of availability, Madara has already helped teams achieve the issuance of application chain Rollups within 24 hours during the PragmaOracle hackathon, providing a video demonstration, which is more complete compared to zkSync team's ZK Stack.
2.4 No-Code Deployment
No-code deployment is a lower-threshold solution that provides non-developers with a one-click chain launch option, promising to further increase adoption.
Caldera (Optimism)
Caldera Chain is a fully customizable one-click chain launch solution. At the execution layer, it supports OP Stack and Arbitrum Orbit, while the settlement layer can choose from EVM-compatible chains like Polygon, BSC, and Evmos, with the DA layer supported by EigenLayer and Celestia.
In addition to the Rollup chain itself, Caldera also provides a series of supporting infrastructure, such as blockchain explorers, testnet faucets, oracles, and bridges supported by Hyperlane, further reducing chain launch costs.
Eclipse (Optimism+ZK)
Eclipse has high customization capabilities, supporting EVM and SolanaVM at the execution layer, integrating Celestia, Avail, and EigenLayer at the DA layer, and providing Optimistic settlement at the settlement layer, while developing support for ZK settlement with RISC0 zkVM.
Users can also choose the chain's accessibility (permissioned/unpermissioned), gas token, whether to charge gas fees, whether to allow MEV, specific opcodes, block size, etc., granting a high degree of flexibility.
Opside (ZK)
Opside's biggest feature is that it has built a decentralized ZKP market. Initially intended to describe Prover separately as a layer, this was abandoned due to the limited number of projects. Zero-knowledge proofs (ZKP) have high computational requirements, and in the context of the growing market share of zkRollups, the decentralization of ZKP is a major direction for future development.
Opside employs a permissionless PoW consensus mechanism to attract miners to generate ZKP, maintaining the security and availability of zkRollups without requiring chain issuers to consider proof generation issues. At the validator level, it uses a PoS mechanism to lower participation thresholds and promote decentralization among validators.
Opside offers customized services, allowing users to choose from zkSync, Starknet, Polygon zkEVM, etc., and also modify economic models to adjust gas fees.
Future Development of RaaS
More ZK
Compared to Optimistic Rollups, zkRollups upgrade security from economic guarantees to cryptographic guarantees, offering higher security; there is no longer a need to wait for long challenge periods, resulting in lower confirmation delays; and they achieve higher data compression, making DA cheaper.
Although Optimism solutions have captured a significant market share due to their high technological maturity and early advantages in product launches, ZK, as a revolutionary technology, will play a more important role in the future. Vitalik placed ZK technology on par with blockchain technology in his speech in Montenegro, reflecting the importance of ZK.
As technology continues to improve, more zk-Rollup as a Service projects will enter the public eye, providing users with more choices.
More Non-Ethereum
To this day, the Ethereum ecosystem still holds an absolute dominant position in the entire blockchain industry. Despite continuous iterations and innovations from other communities, they have yet to shake Ethereum's throne.
In RaaS, it seems that some changes are occurring. Due to the low capacity and high prices of data storage on Ethereum, people can choose cheaper DA layers like Celestia, Avail, or Polygon; Ethereum is non-modular, making modifications very complex, while highly modular Cosmos SDK can be chosen; the execution efficiency of EVM is low, and people can opt for more efficient Solana VM, Move VM, or CairoVM.
One flower alone does not make spring; a hundred flowers in bloom fill the garden with spring. Various solutions outside the Ethereum ecosystem will bloom with new vitality in RaaS.
More Modularity
The role of modularity can be divided into two points: first, each module can iterate quickly and independently, improving development efficiency; second, modularity can greatly reduce the complexity of customization.
In the current market environment, it is nearly impossible to independently develop a one-stop solution; the overall speed of innovation will never catch up with the rapid iteration of small modules. The extreme demand for customization will lead to further refinement of module divisions; if one does not modularize, they will ultimately be split by other projects, as OP Stack and Arbitrum Orbit have been separated from the execution layer by Caldera.
More Customization
As scaling technologies mature, transaction costs decrease, and infrastructure improves, people are beginning to realize, "Fool, the key is in the application." Each application has its specific operating rules and patterns, and a single solution cannot adapt to the complex application ecosystem, so we need more customization.
From block size to data structure, from transaction fees to transaction delays, from access mechanisms to security assumptions, from contract engines to token empowerment, the degree of customization for Rollups will gradually upgrade in the future, providing more flexible solutions for applications.
More Interoperability
As mentioned earlier, the Ethereum ecosystem occupies a dominant position in the blockchain ecosystem, which is largely related to the massive liquidity it locks in. In the crypto market, since each chain exists independently, liquidity cannot exist simultaneously on two chains. The increase in the number of Rollups will lead to further fragmentation of liquidity, making liquidity a serious issue.
Stronger interoperability can reduce cross-chain friction, allowing liquidity to flow more smoothly between different chains, even being referred to as shared liquidity. In line with the philosophy advocated by Cosmos, projects like OP Stack, Arbitrum Orbit, ZK Stack, and Starknet Stack are attempting to build a vast application chain ecosystem. Rollups built using the same technology stack can achieve native interoperability due to their identical technical architecture, eliminating the need to build cross-chain bridges.
More Restaking
Currently, many services in RaaS adopt a PoS model, using economic penalties to increase the cost of malicious behavior and enhance security. However, economic security requires a deep pool of staked assets as a guarantee, leading to low capital utilization and increasing the startup costs for service providers.
Restaking could be a good solution, leveraging the vast liquidity pool of Ethereum consensus staking to provide shared security for other services while increasing income for stakers and improving capital utilization. Currently, EigenLayer and Espresso are working on related efforts, and it is foreseeable that more services will rely on restaking to ensure economic security.
In summary, the biggest beneficiaries of RaaS development are application chains. Can the application chain concept proposed by Cosmos and Polkadot in earlier years sprout new life and achieve an explosion in the RaaS ecosystem? We shall wait and see.
Perhaps only innovation at the application layer can drive a massive explosion in the RaaS ecosystem. After all, no matter how good the road is, it needs vehicles to run on it to be considered good infrastructure.
