Bitcoin Magazine: What challenges does Rollup face?

Source: Bitcoin Magazine; Translation: Wuzhu, Jinse Finance

Rollups have recently become the focus of BTC expansion, becoming the first thing that truly steals the limelight from the Lighting Network and attracting wider attention. Rollups are designed to be an off-chain second layer that is not constrained or restricted by the Lighting Network’s core Liquidity limitations, meaning that end users need someone to pre-allocate (or ‘borrow’) funds in order to receive money, or intermediate routing nodes need channel balances to facilitate full flow of payment amount from sender to receiver.

These systems were initially deployed on Ethereum and other Turing Complete systems, but the recent focus has shifted to porting them to UTXO-based blockchains (e.g., BTC). This article is not intended to discuss the current state of implementation on BTC, but to discuss the idealized Rollup functionality that people have been pursuing in the long term, which depends on the ability to directly verify Zero-Knowledge Proofs (ZKPs) on BTC, a feature that BTC currently does not support.

The basic architecture of Roll is as follows: a single account (UTXO in BTC) holds the balance of all users in Rollup. This UTXO contains a commitment, which exists in the form of the Merkle root of a Merkle tree, committing to all current balances of accounts in Rollup. All these accounts are authorized using Public Key/Private Key, so in order to make off-chain spending, users still need to sign certain content with the Secret Key. This part of the structure allows users to exit at any time without permission, just by producing transaction proofs that their account is part of the Merkle tree, they can unilaterally exit Rollup without the permission of the operator.

Rollup operators must include a ZKP in the transaction to update the merkle root of the on-chain account balance during the process of completing off-chain transactions. Without this ZKP, the transaction will be invalid and therefore cannot be included in the Blockchain. This proof allows people to verify whether all changes to the off-chain account have been properly authorized by the account holder, and whether the operator has not maliciously updated the balance to steal user funds or dishonestly reallocate them to other users.

The problem is, if only the root of the merkle tree is published on-chain, and users can view and access it, how do they place their branches in the tree so that they can exit without permission when they want?

Proper Rollup

In the appropriate Rollup, each time a new off-chain transaction is confirmed and the Rollup account’s state changes, the information will be directly put on the blockchain. Not the entire tree, that would be too absurd, but the information needed to rebuild the tree. In a simple implementation, the summary of all existing accounts in Rollup will contain balances, and the accounts will only be added in the updated transactions of Rollup.

In more advanced implementations, balance diffs are used. This is essentially a summary of which accounts had funds added or removed during the update process. This allows each Rollup update to only include the account balance changes that occurred. Users can then simply scan the chain and ‘calculate’ from the beginning of the Rollup to derive the current state of account balances, allowing them to reconstruct the Merkle tree of current balances.

This can save a lot of expenses and Block space (thus saving funds), while still allowing users to ensure access to the information required for unilateral exit. The rollup rule requires that these data be included in the formal rollup provided to users using the Block chain, and transactions that do not include account summaries or account differences are considered invalid transactions.

Validity Period

Another way to address the issue of data availability for user withdrawals is to store the data outside of the Block chain. This introduces subtle issues as rollups still need to enforce that the data is available elsewhere. Traditionally, other Block chains have been used for this purpose, specifically designed as data availability layers for systems like rollups.

This has created a dilemma where security is equally strong. When data is directly published to the BTCBlock chain, Consensus rules can ensure that it is absolutely correct. However, when it is published to an external system, the best it can do is verify SPV proof, that is, the data has been published to another system.

This requires verifying that the data exists in other on-chain proofs, which is ultimately an Oracle Machine problem. The BTC blockchain cannot fully verify anything other than what happens on its own on-chain, the best it can do is verify ZKP. However, ZKP cannot verify whether a block containing rollup data is truly publicly broadcasted after it is generated. It cannot verify whether external information is truly publicly available to everyone.

This opens the door to data withholding attacks, which create a commitment to publish data and use it to advance rollup, but the data is not actually available. This prevents users from withdrawing funds. The only real solution is to rely entirely on the value and incentive structure of systems other than BTC.

Dilemma

This has brought a dilemma to rollup. When it comes to data availability issues, there is basically a binary choice of whether to publish the data to the BTC blockchain or elsewhere. This choice has a significant impact on the security, sovereignty, and scalability of rollup.

On the one hand, using BTCBlock chain as the data availability layer will set a hard limit on the scalability of rollups. Block space is limited, which sets a limit on the number of rollups that can exist at once and the total number of transactions that can be processed off-chain for all rollups. Each rollup update requires block space proportional to the number of accounts whose balances have changed since the last update. Information theory only allows data to be compressed to a certain extent, and at this point, there is no more potential for scalability.

On the other hand, using different layers to achieve data availability will eliminate the hard upper limit of scalability gains, but it also brings new security and sovereignty issues. In a Rollup using BTC to achieve data availability, if the data that users need to extract is not automatically published to the blockchain, the state of the Rollup cannot change. With Validiums, this guarantee depends entirely on the ability of the external system used to resist deception and data hiding.

Now, any Block producer on the external data availability system can hijack BTCRollup users’ funds by producing Blocks instead of actually broadcasting them, thus making the data available.

So, what would it be like if we really achieved the ideal Rollup implementation on BTC and truly realized one-sided user withdrawals?