What are Layer-2 rollup networks? Everything You Need To Know

Scalability has always been a concern for blockchains, even major network like Ethereum that want to scale and compete with TradFi. What the best blockchain can do is by implementing Layer-2 rollup networks. In this article, we will deep dive to understand what is a rollup network, why rollups are crucial for Layer-1 blockchain’s adoption and why Vitalik Buterin was on point when he vehemently acknowledged that with sharding we are looking at 50,000 to 100,000 TPS, but roll ups give us an edge to make that 300,000 to 500,0000 TPS and that’s when the real dream of bringing 10% GDP comes to fruition. On that note, let’s explore rollups and break down the entire rollup meaning for better comprehension.

What is a Rollup?

Rollups are new-age layer-2 scaling solutions that bundle multiple transactions and process them off-chain on Layer-2/ Layer-3 networks , away from layer-1. Once processed, transaction data is published on Layer-1. As a result, rollup Layer2 networks perform the role of load balancing on the L1, thereby improving overall scalability and speed for better performance. Layer-2 rollup networks can be general and application-specific rollups. Dapps have the freedom to customize their rollup chain to suit specific ecosystem needs.

Why Do We Need Rollups?

Let’s take an example of a freeway to help you better understand the concept of rollup Layer2 network. You might be fond of traveling using your vehicle, but do you like traffic jams? Apparently, you would nod in negative by saying no we don’t. That’s why we have the freeways built to help relieve those traffic from destination point A to B. Rollups do the same for the blockchains by freeing up the load of the network. Instead of computing thousands of transactions on the L1, through the help of L2s or rollup networks, these L1 chains need to process just 1 transaction against thousands.

As a result, it dramatically relieves the traffic of the main-chain and makes it much more efficient and compatible to support a wide range of use cases for a more concentrated adoption. Also, based on specific requirements, projects can launch smart contract or sovereign rollups. Want to read about them in a detailed way? Refer to our article linked below:

A Comprehensive Guide for Smart Contract and Sovereign Rollups

How Layer2 rollups Work?

Rollups eliminate congestion on Layer-1 by processing and verifying transactions off-chain on Layer-2/layer-3 networks. These L2 and L3s rollups rely on the underlying L1 for security. Transaction data and proof of validation are also posted on L1 to ensure all the transactions remain censorship-resistant and they are easily verifiable. Also, users on rollup networks have the choice to pay gas fees in their native token or L1’s currency.

Below is a simplistic overview of how exactly rollup (smart contract) work:

Users on the rollup chain conduct transactions, which are then processed on the chain itself. Now, ‘Sequencer’ confirms all the transactions, creates L2 blocks, and post transactions data and proof on L1.
Sequencer bundles multiple transactions that are submitted on L1 chain.
After transactions are batched, the rollup L2/L3 post the transaction data to the smart contract on L1.
In the case of zkRollups, proofs are also submitted on L1 along with transaction data.

What all types of rollups are there?

There are mainly two types of rollup Layer2 network– Optimistic rollups and zkRollups that are used by web3 projects. Let’s learn about them:

Optimistic Rollups

Optimistic rollups operate based on the presumption that all the transactions that are processed are correct and they have a challenger period for the same. In case if any of the transactions are incorrect, fraud-proof is submitted, and the state of the blockchain is adjusted accordingly. To validate the fraud proofs, a challenger contest is opened, and concerned parties will stake their tokens to provide proof for a disputed transaction. If one of the parties is at fault, the other party that has raised the dispute will receive the staked tokens of the party at fault. In this way, the state of the blockchains are validated. Generally, a challenger period is opened by those parties who are very sure of fraud because if they are spamming the network by raising bogus disputes, they will be losing the funds. In this way, the Optimistic Rollups maintain the efficiency of the network.

Examples of Optimistic Rollups: Optimism, Arbitrium, Boba Network

ZK Rollups

Zk- Rollups also process transactions off-chain on L2/L3s. Further, it utilizes mathematical computations and provides cryptographic proofs that are submitted on Layer-1 to ensure validity and censorship-resistance of transactions. These proofs are alone sufficient to ensure the authenticity of the transaction with no need for submitting transaction data on Layer-1. As a result, Zk rollups allow near instantaneous withdrawal of funds by using snark-proofs, which are anonymous and private, which protects the identity of the transaction and validates the data. Zk rollups are ideal for projects that require massive scalability, near-instant settlement of transactions, privacy, and battle-tested security, like for web3 gaming projects, payment solutions where frequent and bulk transactions happen on a daily basis.

Examples of ZK-Rollups: Loopring, Immutable X and Zk-Sync

Also read- How to scale your dApp with the power of zkRollups?

Let’s explore rollup use cases and benefits:

As an ideal solution for enhancing scalability, reducing transaction cost, and maintaining high security, blockchain rollups use cases have been actively utilized across a range of industry sectors, including:

Decentralized finance (DeFi)– Rollups allow DeFi projects to maximize their performance and achieve benefits such as very high throughput, greater security, anti-censhorship features, MEV (Maximal Extractable Value) protection, and more.
Supply Chain– Supply chain companies can use Layer-2 rollups to leverage a customizable workflow, maintain network-level permissions, ensure 100% protection of sensitive data, and more.

Web3 gaming– Gaming-focused projects often demand massive scalability, ease of customizing gas fee mechanisms, and allowing players to do more on the ecosystem. With a rollup chain, games can fulfill all these requirements while maintaining reliable security.

NFTs projects- With rollups, NFT projects get the ease of scaling, better communication through cross-platform compatibility, and enhanced security & liquidity.

Real estate industries– Real estate projects can have full control on their ecosystem, they can maintain transparency of their sensitive information, interoperability across various projects, and a lot more.

Enterprise applications- Rollups are ideal for enterprise-grade applications as they allow for full customization, higher security, and management of accessibility permissions to ensure privacy and integrity.

Read detailed explanation on rollup use cases here- The benefits of using Rollups Infrastructure across different sectors: Key aspects to consider.

Optimistic rollups vs zk rollups: Highlighting the difference

Read more about Optimistic Vs. ZK Rollups from our comprehensive article linked here— Optimistic Vs. ZK Rollups: Which one makes more sense for your dApp?

How to Launch a rollup Layer2 network?

There are two main ways of launching L2/L3 rollup chains— building with rollup SDKs or using rollups-as-a-service (RaaS). For Optimistic Rollups, OP Stack and Arbitrum Orbit is the preferred SDK. Whereas, if you want to build Zkrollups, then choose between Polygon CDK, ZkStack, and Rollkit Stack.

Learn more on Various Rollup Frameworks for launching Optimistic and ZK Rollups

Launching rollups with SDKs requires technical expertise and complete familiarity with Dev tools. For example, you need to write smart contract, host nodes, configure all the rollup components, test, and deploy. Raas or rollups-as-a-service solutions replace all these steps with simple steps like onboarding, configurations, test, and deployment– all through a user-friendly, no-code interface.

How can Zeeve help?

Zeeve offers comprehensive RaaS stack and an enterprise-grade infrastructure to launch, manage, and scale a custom rollup Layer2 network. Zeeve’s stack is optimized for low-code deployment, in-depth monitoring, analytics, and real-time alerts. With Zeeve, you can either launch a rollup from scratch or migrate your existing blockchain network to a rollup-based ecosystem for minimal turnaround time and without any risk of data loss. Using Zeeve’s Polygon CDK Sandbox, you can launch your zkRollup chain with just a few clicks. Sandbox for zkSync Hyperchains and Arbitrum Orbit are coming soon.

Zeeve’s RaaS platform allows you to choose from a range of rollup frameworks like ZkStack, Polygon CDK, Op Stack, and Arbitrum Orbit. Further, Zeeve’s RaaS stack allows you to make your rollup network modular with a range of integration services such as Avail, Near DA, and Celestia for data availability, Biconomy and Halliday for Account Abstraction (AA), Chainlink for decentralized oracles, Espresso and Radius for Decentralized Sequencer, Subgraph for data indexers, and LayerZero and Router Protocol for interoperability layer.

On top of that, Zeeve offers all the essential components for launching rollup Layer2 network, such as white-labeled explorers, data indexers, cross-chain bridges, scalable nodes, and wallets. With all these, the Zeeve allows web3 enterprises to save significant deployment and rollup management costs. Plus, you will be able to monitor your rollup chain via a unified dashboard designed for 24/7 monitoring, and instant alerts– complete with enterprise-grade security, 99.9% uptime guarantee with enterprise SLA.

Need more information about Zeeve’s Rollups-as-a-service(RaaS) stack or for choosing the right scaling Layer-2 solution? Get in touch with us, and Zeeve experts can help you identify what is optimum for your application. Go to production faster, save on deployment and recurring management costs.