Optimistic Rollup: Technical Analysis

Abstract Concept

Rollup is a scaling solution for Ethereum Layer 2, designed to enhance Ethereum's throughput by processing transactions off-chain. Optimistic Rollup assumes that all Layer 2 transactions are valid and compresses multiple transactions into a single submission to Ethereum. After submission, there is a one-week period during which any network participant can challenge the authenticity of the transactions. If fraud is detected during the state update, the challenger can receive a reward.

How Optimistic Rollup Works

On Layer 2, user transactions are sent to Optimistic Rollup node operators. These nodes act as "validators" and "aggregators," responsible for combining and verifying transactions. The nodes compress data from multiple transactions into a single transaction that enters the Ethereum Layer 1 transaction pool.

Anyone can become an Optimistic Rollup node; however, nodes must provide a security deposit to the network as a guarantee of their integrity. When publishing a block, nodes provide a one-week "fraud proof" period. If no node or user challenges the block's legitimacy during this period, the block will be confirmed.

Data Compression Techniques

A typical Ethereum transaction occupies approximately 110 bytes, but when sending ETH on Optimistic Rollup, it consumes only about 12 bytes. The compression methods include:

• Nonce is completely omitted and recovered from the previous state
• Gas-related information is moved outside Layer 2 transactions
• Indexes are used instead of Ethereum addresses for "To" and "From" fields
• Values are stored using scientific notation
• Transactions are aggregated using BLS aggregate signatures
• Transaction data is stored in the on-chain Calldata field

Data Submission to Ethereum

Optimistic Rollup deploys a special smart contract called the Rollup contract on Ethereum Layer 1. This contract manages the Rollup state, including tracking user balances, processing deposits, handling withdrawals, and resolving disputes.

Transactions are collected and aggregated by off-chain nodes, combining multiple transactions into a "Rollup block." Later, nodes publish the aggregated data as calldata on Ethereum. Calldata is more economical for storing data on-chain.

State Commitments

The submitted data includes transaction content and the Merkle tree root before and after the transaction. The Merkle tree root represents the state of the Optimistic Rollup at any given time, including accounts, balances, and contract codes.

The Layer 2 operator maintains a state tree of Layer 2 accounts locally, recording the root hash value before and after executing batch transactions. This state root references the latest Rollup state and is stored in the Rollup contract.

Fraud Proof Mechanism

Optimistic Rollup establishes a one-week window during which users can dispute blocks. If someone raises a dispute, the protocol initiates a fraud proof calculation.

By replaying transactions, a new state root is calculated and compared with the state root proposed by the node. If a discrepancy is found, the state transition is reversed, and the node's deposit is confiscated and transferred to the challenger.

OVM Virtual Machine

Optimistic Rollup incorporates all Ethereum smart contract functionality into the Layer 2 framework, providing a fully Turing-complete OVM virtual machine for developing and deploying dApps.

The OVM virtual machine is fully compatible with the Ethereum EVM. It simplifies the process of migrating dApps to Layer 2.

Conclusion

Two Layer 2 networks developed based on the Optimistic Rollup protocol are Optimism and Arbitrum. Over time, these have become the largest Layer 2 ecosystems in the Ethereum space.

Optimistic Rollup relies on fraud proofs, whereas ZK Rollup is a solution based on zero-knowledge proofs. The superiority of one solution over the other requires further investigation over an extended period.

FAQ

What is Optimistic Rollup? How does it achieve Layer 2 scaling?

Optimistic Rollup is a Layer 2 scaling solution that processes transactions off-chain and records them on-chain after validation. It increases transaction throughput, reduces costs, and improves Ethereum's overall capacity by batching transactions efficiently.

What is the technical principle of Optimistic Rollup? How does the fraud proof mechanism work?

Optimistic Rollup uses sequencers to batch transactions and reduce fees. The fraud proof mechanism verifies transactions through challenges, ensuring security by allowing users to dispute invalid state transitions on-chain.

What are the differences between Optimistic Rollup and ZK-Rollup? What are their respective advantages and disadvantages?

Optimistic Rollup assumes transactions valid until proven otherwise, offering lower complexity and cost but longer withdrawal times. ZK-Rollup uses zero-knowledge proofs for instant validation, providing faster transactions and stronger security but greater complexity and higher computational demands.

How is the security of Optimistic Rollup guaranteed? What are the potential risks?

Optimistic Rollup ensures security through challenge periods allowing dispute resolution and fraud proof mechanisms. Potential risks include centralized sequencers, transaction finality delays, and reliance on honest validators. Ongoing improvements focus on permissionless verification and decentralization.

How much performance improvement can Optimistic Rollup provide? How much can transaction costs be reduced?

Optimistic Rollup significantly boosts transaction throughput by 10-100x and reduces transaction costs by up to 90% compared to Layer 1 networks, enabling faster and cheaper transactions.

Which projects currently adopt Optimistic Rollup technology? How do Arbitrum and Optimism compare?

Arbitrum and Optimism are leading Optimistic Rollup solutions. Arbitrum has a larger ecosystem with 442+ applications and earlier market entry (2021). Optimism emphasizes modular design via OP Stack. Both enable Ethereum Layer 2 scaling with distinct technical implementations and growing adoption.

What is the Challenge Period for withdrawals in Optimistic Rollup, and why is this mechanism necessary?

The Challenge Period for Optimistic Rollup withdrawals is typically 7 days. This mechanism prevents fraud by allowing validators to challenge invalid withdrawal claims during this period. It ensures transaction finality and security by giving time for verification before funds are released.