Rollups Meaning

Mar 22, 2024 | Updated Apr 9, 2024

Rollups are layer-2 scaling solutions that perform transaction execution separately from the main network. They help increase network speeds and lower transaction costs.

What Are Rollups?

Rollups are blockchain scaling solutions that handle transaction activities outside the main blockchain but publish the transaction data back on the main network. These L2s work by “rolling up” or bundling multiple transactions into a single data block. The rollup then sends the validated transactions – the “rolled up” pieces of data– back to a rollup smart contract on the layer-1 blockchain.

In simpler terms, instead of holding and processing multiple transactions, the mainnet only receives the data about them. By doing this, blockchain rollups alleviate the computational burden on the primary network, thereby improving transaction throughput and lowering transaction costs.

Types of blockchain rollups

The two primary types are– zero-knowledge rollups and optimistic rollups.

ZK-Rollups

For every batch of transactions, zk-rollups broadcast a summary of required state changes along with the transaction data to the mainnet. They use cryptographic zero-knowledge proofs (ZKPs) to submit “validity proofs” to confirm the correctness or accuracy of the changes. This means the main blockchain only stores these validity proofs instead of transaction data, which is comparably bulkier. However, most zk-rollups are designed to handle specific use cases or services, such as token exchange between wallets or NFT swaps.

Optimistic Rollups

Unlike zk-rollups, optimistic rollups assume that transaction data broadcast to the main chain is accurate and valid. However, they use a fraud-proving scheme in instances of invalid transactions to avoid sacrificing security for transaction throughput. In other words, they give users a certain amount of time to contest the accuracy of transactions. Unfortunately, it means that users cannot withdraw their cryptocurrency immediately.

Notably, zk-rollups rely on validity proofs, while optimistic rollups are fraud-proof-based. You can check out the full article on blockchain rollups on the Ledger Academy.