Layer 2 Solutions: Taking Scalability to New Heights

In this article we will explore the concept behind Layer 2 Solutions and the problems they are solving in blockchain.

Introduction

According to the CAP theorem (also known as Brewer's theorem) first proposed in 1998 by Eric Brewer before Seth Gilbert and Nancy Lynch propounded it in 2002, a distributed system cannot attain consistency, availability, and partition tolerance simultaneously. This same opinion holds sway among blockchain experts for blockchain protocols. The belief often referred to as blockchain trilemma suggests that blockchain cannot achieve three of its core principles: security, scalability, and decentralization simultaneously.

By implication, the blockchain trilemma said, a protocol can achieve decentralization and security while sacrificing scalability and vice versa. The blockchain trilemma provided an answer to why centralized networks can boast thousands of transactions per second and the blockchain networks like bitcoin and Ethereum can only afford a few tens of transactions per second. In that light, the trading system sacrifices decentralization while achieving high throughput, secure and scalable network. To scale up blockchain protocols, developers began looking to salvage the situation.

So far, to solve the trilemma belief, several approaches are taken. The proposed solutions to achieving scalability are Layer 2 and Layer 1 solutions respectively.

Layer-1 and Layer-2 Solutions

Although this article focuses on Layer 2 solutions, it will be necessary to lay a background that includes Layer 1 solutions. It will highlight several Layer 1 and Layer 2 solutions as well as references to top Layer 2 implementations you should know about.

Layer-1 Solutions

Often referred to as on-chain solutions, Layer-1 solutions are the scalability solutions that require redesigning the underlying protocols of the base protocol. Look at the Layer-1 solution as say, redesigning Ethereum or Bitcoin protocols to increase throughput and reduce fees. For instance, Visa, MasterCard, and other payment processors process an average transaction per second of 5000 while Bitcoin and Ethereum process 4 and 15, respectively. Going by the current design of these blockchain networks, as users of the networks grow, the TPS will keep reducing and transactions keep getting unnecessarily slow, hence, the need for a redesign. The Layer-1 solution entails redesigning the underlying protocols of the networks to allow for throughput, energy efficiency, and cheaper transaction fees. 

There are thus several methodologies employed to redesign the base protocols. Although some of them are still at their experimental stage, they include: 

Consensus-Based Protocol Redesign

This consists of redesigning the consensus protocol of the base protocol to scale transactions and efficiency. The leading blockchain networks like Bitcoin and Ethereum have leveraged PoW consensus that allows miners to solve cryptographic puzzles to validate and verify blocks thereby making it energy-demanding and tedious. Nonetheless, PoW systems are secured but often characterized by high transaction fees and low throughput when there is network congestion. To mitigate this risk and achieve a scalable network, PoS consensus becomes a good choice. Instead of miners solving cryptographic puzzles using enormous energy, users stake coins on the blockchain.

PoS consensus is set to cut down the high cost of transaction and throughput of the PoW networks. It is yet in its experimental stage, but some protocols are already developing on it. Among the top projects are Solana, Avalanche, and Ethereum. Ethereum termed its proposed PoS version Ethereum 2.0. From a frontier phase, Ethereum will be going full serenity next year by launching a Proof-of-Stake (PoS) consensus algorithm. Unlike the high cost of transaction and low TPS of Ethereum 1.0, Ethereum 2.0 is expected to dramatically and fundamentally increase the capacity of the Ethereum network while increasing decentralization and preserving network security.

Sharding

Also in an experimental stage, sharding is adapted from distributed databases as one of the Layer-1 scaling solutions. Employing a Sharding Layer-1 scaling solution means breaking the state of the base protocol into distinct datasets called "shards". Here, tasks are managed by shards, simultaneously processed in parallel and they collectively maintain the entire network.

Each node in a network represents a shard instead of maintaining a copy of the entire main chain to allow scalability. Each shard across the network provides proofs to the mainchain and interacts with one another to share addresses, balances, and general states using cross-shard communication protocols. Although in an experimental stage, awaiting its launch in 2022, Ethereum 2.0 is exploring the implementations of shards.

Layer-2 Solutions

Instead of implementing the changes of the parent protocols of the blockchain, Layer-2 solutions took scalability to a whole new height. Layer-2 solutions are those scalability solutions that entail adding a layer to the base protocol to increase throughput. They take transactions off the main chain, hence, are called off-chain solutions. 

The off-chain solution doesn't allow base protocol structural changes since the second layer is added as an extra layer. For that reason, Layer-2 scaling solutions have the potential to achieve high throughput without sacrificing network security.

Layer-2 solutions consist of smart contracts built on top of the main blockchain. Those secondary layers are for scaling payments and off-chain computation. Layer-2 solutions can be achieved in various ways. For example;

Rollups

Rollups are one of the Layer-2 scaling solutions built on the Ethereum blockchain. Unlike the Layer-1 solutions, they are secondary layers that allow users to perform transactions off the main Ethereum chain (Layer-1). It is designed to post transactional data on Layer-1 thereafter, hence, inheriting the security of the base protocol. Rollups possess the following properties:

  1.  Executes transaction outside Layer-1.
  2. Proofs transactions on Layer-1, thereby improving the security of Layer-2.  
  3. Using the transactional data on Layer-1, rollup smart contract in Layer 2 enforces correct transaction execution on it. 
  4. Operators stake a bond on the Rollups smart contract which they get incentivized to verify and execute transactions correctly. 

Rollups can either be zero-knowledge or optimistic Rollups. They both differ in their security model:

Optimistic Rollups

Optimistic rollups is a Layer 2 solution designed to enable autonomous smart contracts using the Optimistic Virtual Machine. By default it doesn't perform any computation, hence, can offer up to 10-100x improvements in scalability depending on the transaction. It sits parallel to the main Ethereum chain on Layer-2. Transactions on Optimistic rollups are written on the main Ethereum chain in form of call data thereby further reducing the gas cost. 

As stated ab initio, Optimistic rollups do compute transactions outside of the main layer in the form of batches and submit only the root hash of the block to the main chain. Hence, the need for a mechanism (fraud proofs) to ensure transactions are legitimate That way, when someone notices a fraudulent transaction, the rollups initiate fraud proofs before running a transactional computation using available state data. By implication, Optimistic rollups take significantly longer to confirm transactions than zero knowledge rollups. 

There are currently multiple implementations of Optimistic rollups that you can integrate into your dApps. They include; Optimism, Off-chain Labs Arbitrum Rollup, Fuel Network, Cartesi, OMGX

Zero-Knowledge Rollups

This is a type of rollup on the ethereum blockchain. It bundles hundreds of transactions off-chain and generates a cryptographic proof known as Succinct Non-Interactive Argument of Knowledge (SNARK), often called validity proof.

The ZK-rollup smart contract maintains and updates the state of all transfers on Layer 2 with validity proof. Instead of the entire transactional data, the ZK Rollups needs only the validity proof, which goes on to simplify transactions on the network. Validating a block is quicker and cheaper in ZK Rollups because less data is included.

There are multiple implementations of ZK-rollups that you can integrate into your dApps. They include; Loopring, Starkware, Matter Labs zkSync, zkTube, Aztec 2.0, and so on. 

Channels

A State Channel is a Layer-2 scaling solution that facilitates two-way communication between the participants which will allow them to perform transactions off the main blockchain. Typically, for a recurring payment State Channel does not require a recurring validation by nodes of the Layer-1 network to improve overall transaction capacity and speed. The underlying blockchain is sealed off via a set of smart contracts or multi-signature seals off. Leveraging the smart contract pre-defined by participants, they can directly interact with each other without the need of the miners. Upon the completion of the transaction or batch of transactions on a state channel, the final “state” of the “channel” and all its inherent transitions are recorded to the underlying blockchain. Some projects including Liquid Network, Celer, Bitcoin Lightning, and Ethereum's Raiden Network are currently deploying state channels scaling solutions.

Sidechain

A Sidechain is a secondary blockchain linked to the main blockchain via a two-way peg. Like most layer 2 scaling solutions, it uses an independent consensus and contracts to optimize throughput. On the sidechain, the main chain takes up security roles, confirming batched transaction records and resolving disputes.  

They are somewhat similar to channels, however, it differs in how they process transactions and the security impacts. Transactions are recorded publicly on the ledger, unlike the private records of the channels. Sidechains enable tokens and other digital assets to move back and forth freely from the main chain. When the sidechain completes a transaction, a confirmation is relayed across the chains, followed by a waiting period for added security. Due to their allowance to move assets around freely on the new network, a user who wants to send the coins/assets back to the main chain can do that by simply reversing the process.

Plasma

Plasma is a secondary chain on the Ethereum blockchain, proposed by Joseph Poon and Vitalik Buterin in their paper Plasma: Scalable Autonomous Smart Contracts. It comprises Merkel trees and smart contracts which create unlimited smaller versions of the main chain (Ethereum), called child chains. Integrating these child chains enables fast and cheap transactions off the main Ethereum blockchain into child chains.

Users can deposit and withdraw plasma chain funds, enabled by fraud proofs. For such a transaction to go on, there has to be communication between the child chains and the root chain, secured by the fraud proofs. Users deposit by sending the asset on the smart contract, managed by the plasma chain. Then the plasma chain proceeds to assign a unique ID to the deposited assets while the operator generates a batch of plasma transactions received off-chain at intervals. On the other hand, the contract initiates a challenging period during which anyone can use the Merkle branches to invalidate withdrawals if they can. 

Conclusion

Like the CAP theorem in distributed systems, the blockchain trilemma suggests that blockchain cannot achieve scalability, security, and decentralization simultaneously. However, the Layer-2 scaling solutions have come to challenge the thought system. It allows the mainchain to take care of security while maintaining scalable networks in its additional layers.

Also Read Arbitrum: Scaling without Compromise

Arbitrum: Scaling without Compromise

A new technology of blockchain, serving and acting as an optimistic roll-up called Arbitrum, just surfaced in the cryptocurrency world. This system allows Ethereum holders, users, protocols, and participants to participate and settle all transactions on the Ethereum mainnet. This serves as linkup loops to the main Ethereum crypto body. 

Arbitrum, therefore, serves as a Layer 2 cryptocurrency platform. By implication, the security and protection of the Arbitrum interface and network come from Ethereum itself. 

Generally, this makes the transactions scalable, faster, and interoperable, enabling compatibility and bonding of the Ethereum based applications with the Ethereum Cryptocurrency market. 

What is Arbitrum

Arbitrum, based on development, has passed and served as a system that ensured efficiency in the management and marketing of Ethereum amongst other layer 2 solutions. It is achieving several goals through the combination of Virtual machine crypto-architecture, networking design, and incentives. 

It has 4 significant benefits. They include; 

Scalability 

During the regular operation of Arbitrum, decentralized apps (DApps) using Arbitrum only have to navigate the main startup catalog or a chain of startups when they make transactions outside of Arbitrum. This allows ease of expansion and upgrades based on the general demand of the server network, unlike other blockchains. 

Generally, this is an advantage of enabling easy transmission of information from the user network to the server's network. It further lengthens the time and duration of the transactions without issues of connection or 'interface error'. This might arise due to an increase in the level of traffic on the Ethereum mainnet within or beyond the proxy counts. 

Privacy

Only the validated participants can be granted an entry and exit on the DApps, and only such participants need to know what is in the DApps code and storage margin. 

This system of upgrade to Arbitrum has enabled a user-network secure network, and all that is being published within this cryptocurrency margin are recognition of the DApps state. The users enabled sector such that messaging, recordings, messages, and currencies have end-to-end encryption between the network and the user's interface. 

The DApps creator also has free will to allow the user to see the internal server information. This is based strictly on the user demand, and the Arbitrum network verifying information and disclosure is purely optional.

Trust Guarantee

Arbitrum is unlike many other cryptocurrency channels for trading, storage, and transaction of coins such as state channel, sidechain, blockchain, main wallet, or private chain solution. It guarantees an exact, precise, and accurate execution as long as the validator of a DApp, which is usually the user acts honestly. 

No system upgrade allows liquidation of funds or turndown in the rate of transactions and amount of transactions made using Arbitrum.

Interoperability With Ethereum 

Arbitrum is an interoperable and interchangeable system that allows the open-source Arbitrum compiler to generate Arbitrum-ready code. You can also transfer Ether or any other Ethereum based token back and forth within the Ethereum and Arbitrum network. 

Interoperation scaling is enabled as the Ethereum system now runs as a significant interface in the Ethereum network system. This gives an overall boost to the Ethereum mainnet. Consequently, it reduces the cost of operation and gas fee that comes with the rush in the Ethereum mainnet by network users. 

Arbitrum Deployment on Ethereum 

Arbitrum platform is technically designed and centralized, making it better and more reliable than most blockchains. Proof of work platform by leveraging on general accessibility to the public and a lower costs of user-network leverage, this innovation of Arbitrum supports standard EVM contract deployment allowing standard Solidity smart contracts to be deployed on Arbitrum Chains using existing developer tools; an entire interface network of cryptocurrencies and tokens could be deployed but this deployment tool is set on the Arbitrum roll-up only and not the Ethereum.

Arbitrum uses roll-ups (a setup tool) to record batches of transactions on the Ethereum mainstream. The chain and execution of these transactions are on a scalable sidechain, while leverage is placed on the Ethereum network for security and result.

The major reason for Ethereum deployment on Arbitrum is to achieve better throughput and make transactions on the ethereum blockchain cost-efficient. 

This led to the advanced improvement of Ethereum by the community to make it more scalable and deployed on other scaling-solution channels like Arbitrum.

Arbitrum enhancement in Crypto-market

In recent times, cryptocurrencies have gained popularity in the world's exchange market. Unlike the stock exchange market, the crypto market is almost entirely online, and coins, tokens, and artifacts are being traded by various merchants worldwide. However, Arbitrum has solved significant problems in some of this retrospect. Insecurity and lack of fast servers have posed disturbance in the trading and merchanting of cryptocurrency for years till today. This is one of the many problems the Arbitrum helps in the general overview and boost of the system. 

Arbitrum is faster gaining popularity as it now scales 80% of all hurdles posed on using the Ethereum mainnet. This has not only given Ethereum the boost in its exchange as a cryptocurrency but has also helped to increase the general value of the Ethereum coin. 

Infrastructure 

So, many discussions have been done on the centralization and tactical approach of the Arbitrum network in helping to scale Ethereum during an increase in the demand for Ethereum on the main site leading to various cases such as an increase in gas fee and a slower network; however certain infrastructure has been put in place to allow transactions on the Arbitrum Scaling Solution, this infrastructure is basically by the creation of Arbitrum Virtual Machines (VMs). 

The Arbitrum Virtual Machines are first-class actors that perform specific functions logged into the Ethereum network, this form a send-receive network which helps to send and receive funds and messages as well as perform calculations and store data offline according to the code program on the network, generally this is a mechanism that helps reduce gas fee either during an increase in traffic on the Ethereum site or a crashing of the site. 

This infrastructure has made the Arbitrum VMs more scalable and private than the conventional way of implementing smart contracts on other scaling solutions such as Polygon and Optimism. 

Arbitrum manages the VMs off-grid the mainnet with minimal activity online to ensure correct execution. When someone creates an Arbitrum VM, they select a set of operatives responsible for executing the VM. The set of operatives are called Managers. They are responsible for the execution of the VM. Arbitrum thereby guarantees the correct and exact execution [even if other selected managers are corrupt]; because of the low on-chain work, Arbitrum VM is made more private. 

Comparison between Arbitrum and Other Layer 2 Solutions 

Arbitrum has posed many advantages to cryptocurrencies, many of these advantages are listed below; 

To Wrap It Up

Arbitrum has, over some time, gained publicity as a network operative system of Ethereum, leveraging over several system setups that have placed it above many layer 2 solutions and serving as an alternative route during network effect on the Ethereum mainnet.

Arbitrum is not just a solution to the problems posed by the Ethereum mainnet. It is a scaling option that has diverted and enhanced the usage and navigation of Ethereum, geometrically boosting the system by almost 100% and enabling many onsite users of the Ethereum.

Cryptocurrency traders and merchants are advised to engage in the Arbitrum network as more than an alternative but a new phase of Ethereum. 

Also read Casper: The Future-Proof Blockchain

Ethereum Plasma: The Ultimate Enlightenment Guide

Ethereum is looking to build a network to carry out calculations beyond the blockchain, hence developing Ethereum plasma technology. The reason to carry out the calculations beyond the blockchain is to ensure the chain scales billions of calculations in a second. Another goal is to achieve this with the least possible amount of chain updates. 

With Ethereum Plasma technology, nodes are not required to confirm all data as the next smart contract concludes. According to the Ethereum blockchain developers, the use of their Plasma technology allows transactions between trusted nodes. You can use the Plasma technology without referring to the main block, and you can execute it in a variety of projects. Cryptocurrency exchanges, blockchain systems, and decentralized social networks can use Plasma technology to improve pace and protection parameters. 

Ethereum plasma technology is a second-layer scaling solution for growth. It is likely to become the second fully deployed scaling solution on the Ethereum mainnet, only behind state channels. Plasma is a framework that gives developers the opportunity to create child blockchains that use the Ethereum mainnet as a layer of trust. The Plasma technology enables child chains to be designed to meet specific use cases; especially those not currently feasible on the Ethereum blockchain. All decentralized applications that require users to pay huge transaction fees are best suited for Ethereum Plasma. 

What are the key features of Ethereum Plasma?

The Ethereum Plasma is made up of the following elements:

How Does Plasma Technology Our Work?

Ethereum plasma aims to establish a framework of secondary chains that will rarely communicate and interact with the main chain. The main chain is the Ethereum blockchain system. This Ethereum plasma framework is built to function as a blockchain tree. The blockchain tree is arranged hierarchically to ensure smaller chains are created on top of the main one. 

These smaller chains are also called Plasma chains or child chains. It is vital that note that Plasma chains are similar to sidechains, but they are not the same thing. The plasma structure is built using smart contracts and Merkel trees, thus enabling the creation of an unlimited number of child chains. These child chains are smaller copies of the parent Ethereum blockchain. More chains can be created on top of each child chain, giving rise to a tree-like structure. 

Generally, every child chain is a customizable smart contract designed to work singularly, serving different needs. The implication is that the chains can coexist and still be operating independently. In the end, Plasma will enable companies and businesses to implement scalable solutions in various ways. 

Therefore, the successful development and deployment of Ethereum Plasma technology will ensure the main chain will be less likely to get congested. Each child chain is designed to work in a distinct way to achieve a specific goal. These goals are not necessarily related to the goals of the main chain. In essence, child chains would reduce the overall work of the main chain. 

How Stellar Architecture works? Read here

Ethereum Plasma Architecture  

The Ethereum Plasma constitutes blockchains in a tree-like structure, and each is managed as a separate blockchain. An enforced blockchain background and MapReducible calculations are embedded in Merkel proofs. By reframing a block into a child blockchain supported by the parent chain, users can achieve a broad scale application. The implication is that there will be reduced trust in the root blockchain presence and accuracy. 

Ethereum Plasma Architecture
Ethereum Plasma Architecture

All blockchain calculations are framed into a community of MapReduce structures. They also include an additional way to execute Proof-of-Stake token linkage ahead of preexisting blockchains. However, it comes with the conception that Nakamoto Consensus Drivers discipline with block any restraint. This is guaranteed by implementing a smart contract on the root blockchain using the Proof-of-Fraud method. 

In the Ethereum Plasma architecture, the decision to ensure correctness typically depends on all participants testing the chain. Participants must thoroughly check each block to ensure accuracy before they can be considered. A temporary obligation is used to create a reliable bond so that the claimed data is subject to a controversial period. Within this period, participants are allowed to ensure the data conforms with the state. 

Plasma technology also provides a framework that allows participants to enforce consequences. However, it can only happen if an incorrect state is claimed. The proof model enables interested participants to claim ground truths to non-interested participants on the parent blockchain. This architecture is used for both payments and commutation; thus, making blockchain the decision-maker for contracts.

How Secure is Plasma Technology 

Fraud proofs secure all communications between the child chains and the main chain. Therefore, the root chain is responsible for maintaining the security of the network and punishing malicious actors. Each child chain has a specific mechanism for validating blocks. Fraud proof ensures that users can report dishonest nodes in case of any malicious activity. Users can also protect their funds and exit the transaction whenever there is malicious activity. The fraud proofs are mechanisms that allow a plasma child chain to file a complaint to its parent chain to the root chain.  

Plasma employs the Ethereum blockchain as an arbitration layer, and users can still return to the root chain as a trusted source. The Ethereum main chain is linked to child chains through root contracts. These root contracts are smart contracts on the Ethereum blockchain. 

Conclusion 

The Ethereum Plasma has all it takes to enhance the scalability of blockchain systems. At the moment, the Plasma protocol is still under test. However, experts who were part of the test noted a high throughput of up to 5,000 transactions per second. The implication is that increase in the number of projects on the Ethereum platform will not be correlated with network transaction delays.  

Also learn about Optimistic Rollups in our article.

Optimistic Rollups: What are They?

Overview

One of the biggest setbacks of the Ethereum protocol is the lack of throughput. Optimistic Rollups (ORUs) are layer 2 solution technology helps to scale Ethereum smart contract and Dapps. Optimistic Rollups can scale the Ethereum protocol up to 100 to 2000 transactions per second (TPS). The major advantage it has over other scaling solutions is that it enables Turing-complete smart contracts on layer 2 using Optimistic Virtual Machine (OVM). Thus reducing user transaction cost. 

All the scaling solutions we have seen are layer 2 solutions. Meaning that they deploy alongside the main Ethereum chain. The drawback is that such a layer 2 solution cannot bring a fundamental change to the chain itself. However, Optimistic Rollups seem to have what it takes to scale the Ethereum protocol. 

There are two types of Rollup: Optimistic and ZK Rollups. Rollups works like Plasma. Both Rollups and Plasma scale Ethereum by moving transactions off-chain onto a layer 2 sidechain. Mainnet secures the layer 2 sidechain, also known as layer 1. Plasma and Rollups deploy smart contracts to the mainnet. Which takes custody of all funds deposited into the sidechain.

How Do Optimistic Rollups Our Works

These Optimistic Rollups (ORUs) introduce key actors called aggregators. These bonded aggregators bundle all transactions submitted by users into rollup blocks on the sidechain. These users pay aggregator fees to enable them to submit their transactions. The new sidechain state root to the mainnet. The aggregators accumulate a large number of transactions and publish them to the smart contract on the mainnet. In fact, aggregators have the trust to deploy contracts. Then process all user transactions, and finally adding them in a “rollup block.”

Any user can become an aggregator and start processing rollup blocks. They do this by putting down a bond in the mainnet contract. Additionally, any user can also download the rollup blocks and earn a reward. The reward is earned when a user proves that a state transition is invalid. Once a user successfully invalidates a block, they slash the aggregator’s bond and the bond of all aggregators who built on top of the invalidated block. Consequently, the challenger earns a portion of the slashed bonds. 

This process allows for consensus to reach on a batch of transactions instead of the network having to reach consensus on each transaction. A new rollup block can be challenged if the aggregator fails to include a transaction or posts an invalid transaction. The Optimistic Rollup contract consist of three basic parts:

Transactions will go straight to the Canonical Transaction Chain when users put their ETH on the Ethereum main chain. Once the transaction executes, the results will be posted to the State Commitment Chain. Optimistic Rollups are assumed to be correct until someone proves it wrong. The Fraud Verification Contract recognizes if there is cheating and goes ahead to delete the state if it is wrong. It will not touch the state commitment chain if the contract recognizes that there is no cheating. 

Optimistic Rollups relies heavily on trust and game theory. In general terms, there is an assumption that every aggregator will act honestly. The reason is that their bond will cut-off if they act maliciously. In like manner, these aggregators determine how fees will be submitted. This means that the more developers these aggregators can convince to trust them with their contracts, the more they stand to gain. 

The Merged Consensus Of Optimistic Rollups

The merged consensus is one of the major distinguishing features that differentiate ORUs from other scaling solutions. The merged consensus is a consensus protocol that can be verified on-chain, except for actual block validation. Actual block validation takes place implicitly through fraud-proof. The sidechain of Optimistic Rollup is fork-free (there is no split in the network) by design. Therefore, a non-trivial fork choice rule is irrelevant. A blockchain fork is basically a split in the blockchain network or a change in protocol. 

Here, the validity of blocks executes off-chain and can be proven incorrect on-chain through fraud-proof. This leaves us with leader selection and Sybil resistance. The leader selection algorithm has to do with who is permitted to attempt to progress the chain by adding a new block. A Sybil attack happens when an attacker subverts the reputation system of a network service. The attacker does this by creating a large number of pseudonymous identities. He also uses these identities to gain a disproportionately large influence. 

For the ORUs, the main chain provides Sybil resistance, while leader selection is implicit and post facto. Therefore, ORUs do not need a complex leader selection algorithm or an expensive Sybil resistance mechanism to provide security. The consensus protocol of Optimistic Rollups runs completely on-chain in a smart contract. Therefore, it does not affect or require any support from the mainnet’s consensus rules. Thus ORUs are permissionless through merged consensus. 

Transaction Latency 

Contrary to certain claims, Optimistic Rollups does not reduce transaction latency. Every sidechain block on ORUs needs to be committed to the main chain. So, users do not get blocktimes lower than the main chain. Aside from the use of fully-collateralized channels, there is no known secure and rustle way of reducing this latency. 

Users don’t have to wait for confirmation of sidechains before accepting its transactions. Since Optimistic Rollups are fork-free, valid blocks accepted on-chain are guaranteed to finalize eventually. All the data are available since all blocks are posted on-chain. Also, users have the permission to carry out client-side validation to accept transactions immediately. 

Difference Between Optimistic Rollup and ZK Rollup

Optimistic Rollups sacrifice some scalability to enable them to accommodate smart contracts on layer 2. Also, there is a slight delay in enabling users to challenge invalid blocks from bonded aggregators. On the other, ZK Rollups submit ZK-SNARK to the main chain Rollup contract. Then the main chain smart contract verifies and accepts all valid proofs. This process happens almost in an instant, and it scales immensely. 

Example of ORU 

A good example of Optimistic Rollup in action is UniPig. It is a demo for Uniswap, built using ORU in collaboration with Plasma Group. The demo can process 250 transactions per second (TPS). However, the developers claim that it has the potential to reach 2000 TPS.

Conclusion 

Optimistic Rollups will undoubtedly increase the throughput of Ethereum. Hence driving further innovation in the scalable and sustainable data availability front. As Ethereum prepares to lunch Eth2 or Serenity, ORUs will play a vital role in helping bridge the gaps. Currently, it is not clear whether the ecosystem will adopt ORUs at large. The reason is that there are many layer 2 projects banking on their solution(s) to drive the success of their products. However, time will tell how the mainstream will adopt ORUs.  

Also read Chainlink: An In-Depth Explanation

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