Rollups As You Knew It

Joowoong Byun

Data Scientist/

Xangle

Sep 19, 2023

Table of Contents

1. Introduction

1-1. The Rollup Debate

1-2. So What?

2. Blockchain, Modular

2-1. Blockchain 101

2-2. Modular Architecture

3. Rollups As You Knew It

3-1. Rollup 101

3-2. Rollup’s Proof System

3-3. Trust-Minimized Bridge

4. Validating Bridges are not Rollups

4-1. Why Rollups Should Not Be Bridges

4-2. Then Who is ZK Rollup?

5. Declaration of Independence of Rollups

5-1. Blockchain Forks and Social Consensus (Governance)

5-2. Smart Contract Rollup and Sovereign Rollup

5-3. All Rollups are Sovereign Rollups

6. Conclusion

1. Introduction

1-1. The Rollup Debate

Not long ago, a fiery debate blazed across the online space among blockchain infrastructure researchers. It all started with a presentation called How rollups “actually” work by Kelvin Fichter of the Optimism Foundation. Fichter delved into the widespread misconceptions and misunderstandings surrounding rollups. He contended that our present understanding of how rollups operate and their potential is based on a model that was established roughly 4-5 years ago. He also pointed out that this outdated model has lost much of its precision since the advent of the modular blockchain narrative.

The spark set off a flurry of responses among infrastructure researchers for the subsequent weeks, prompting a series of articles and threads. Jon Charbonneau, a named researcher and investor at DBA, jumped into the fray after Fichter, adding fuel to the flames. He published a series of lengthy articles, challenging the mental models of rollups quite radically. On the other side, Dankrad Feist of the Ethereum Foundation (Proto-Dank sharding is named after him) responded with a series of tweets that blended counterarguments and satire. For weeks, the debate over the mental model of rollups has dominated conversations in blockchain infrastructure for weeks, stirring up an exceptional discourse between opinion leaders in the Ethereum and Layer 2 space.

In this article, we'll delve in the essence of the rollup debate and their interpretation of rollups within the context of a modular blockchain are. The rollup debate can be summarized as a clash between two different mental models: Do rollups exist solely to provide scalability for Ethereum, or do they represent a new type of modular blockchain. To deem a rollup as the same thing as its validating bridge is to regard them as a passive tool for transaction compression and scalability of Ethereum. The existing mental model of "bridge = rollup" significantly limits the potential of what a rollup blockchain can achieve. While rollups were originally designed to achieve scalability of Ethereum, the true potential of a rollup lies in the fact that it signifies a generalized implementation of modular blockchains. And yet, if rollups are to unlock their full potential, they first need to break out of the misperception of “rollup = bridge.” Before you read on, note that this article consists of 80% of facts and 20% of opinions. My caveat is that there is always room for different interpretation on the same architecture and mechanisms.

Here's an overview of the chapters. The next chapter introduces the basic concepts of modular blockchain related to the contents covered in this article. Readers familiar with the concept of modular blockchain can move on to the third chapter. The third chapter deals with the elements that make up roll-up and the operating principles. What makes a rollup a rollup is a proof system and a trust-minimized bridge to verify that the transition is executed correctly. Chapter 4 explains why roll-ups should not be identified with bridges. Currently, the most prevalent distinction bases itself on the proof system, Optimistic vs. ZK rollup, but falls short of a precise definition of rollup in the world of modular blockchains. It is even more so considering that an optimistic rollup may eventually upgrade to a ZK rollup in the future. The final chapter addresses the sovereignty and social consensus of rollup. A rollup is also a blockchain, and a blockchain can only be forked by social consensus among participants. In establishing independence from bridges, rollups need the authority to determine its own state as a blockchain, that is, to implement a hard fork. However, altering the bridge of a rollup will inevitably entail the cost of applying additional security assumptions or losing bridged assets.

1-2. So What?

The discussion surrounding the rollup debate in this article aims to correct the current mental model of rollups. Without a deep understanding of modular blockchains and rollups, this article wouldn’t be an easy read without a better grasp of the jargons and definitions. Before we get into the nitty gritty, I'd like to mention why we need to address the topic "what is a rollup.”

In my view, the reason the rollup debate has become such an important topic for many blockchain researchers and engineers is to answer the question "what are the real problems.” The current blockchain infrastructure is not yet capable of accommodating millions of users. While blockchains have just come out of its infancy through a brief but tumultuous period, an extensive array of challenges persists that must be addressed to realize the future we envision for blockchain. We prioritize problems based on our blueprint for the future and invest time and energy to solving them. For some, it might be building a good service or getting government regulations right and for others, it might be building a better blockchain infrastructure. Of all the challenges in the blockchain space, rollups stand out as one of the most dinamically evolving areas, fraught with various technical and philosophical complexities. For them, setting the right direction and identifying the priority of problems are never trivial.

Source: Modular Rollup Theory Through the Lens of the OP Stack, Kelvin Fichter

Kelvin Fichter, who started the rollup controversy and will often be mentioned in this article, introduced the OP Stack, a software architecture for modular blockchains, at last year’s Devcon in Bogotá. It should be noted that Optimism had previously developed its own execution environment, the Optimism Virtual Machine (OVM) 1.0, and a fraud proof mechanism that were halted without ever seeing the light of day. Fichter admitted that he and his team initially didn’t fully grasp the significance and potential of rollups; their focus was solely on building the essentials for rollups. As their work progressed, they began to develop an in-depth understanding of the system and eventually pivoted towards separating the execution environment from the proof system and creating an architecture for a modular blockchain—OP Stack. As deployments have just begun, it may be too early to judge the success of Optimism's pivot and OP Stack. Nonetheless, it still underscores that comprehending the implications of a new system that hasn't existed before and charting the right course can be more powerful than the ability to solve the imminent problems.

Even if you're not necessarily a builder of a rollup chain, the unfolding of the rollup debate will (inevitably) give you a deeper understanding of the theme of modular blockchains. Personally, I believe that modular blockchains are a necessary path for this industry to scale in the future. Regardless of occupation or interest, you’ll come across the topic of modular blockchains or rollups more often over time. The rollup debate will be an valuable case study to understand the principles and concepts of modular blockchains.

This article assumes that the reader already has a basic understanding of how blockchains and Layer2 work as well as the concept of modular blockchains. The second chapter of this article explains some of the fundamental concepts that will be frequently mentioned in this article. Since it may be a lot to take in in one sitting, if you're looking to dive a little deeper into the topic covered in this article, I highly recommend exploring the curated resources below.

2. Blockchain, Modular

2-1. Blockchain 101

Source: Rollups Are L1s (& L2s) a.k.a. How Rollups Actually Actually Actually Work, Jon Charbonneau

Before we dive in, I'd like to go over some of the key concepts and features of blockchain that would come up most often. If you're familiar with the mechanisms and the basic concepts of blockchain, you can skip ahead to the next chapter.

Essentially, a blockchain is a state machine that allows any participant in the network to read and write data. In computer science or mathematics, a state machine is a system where a machine can have only one state at a given point in time. To represent a state machine, we need a genesis state, state transition functions, and input values.

The elements that make up a blockchain state machine are as follows:

State: A state indicates the value of assets, code and memory at all the addresses on the blockchain at any given time. Depending on the type of node, it may store all of the state data (full node) or just a summary of all the transactions in a block, called the Merkle Root (light node).
Transaction: A transaction is an input value that changes the state of the blockchain. Examples include sending assets to another account or invoking a smart contract.
State Transition Function: It is a predetermined rule for obtaining the next state for the given blockchain state and transactions. For example, EVM is the state transition function of Ethereum.

Therefore, the functions required to create a state machine like a blockchain can be divided into: 1) a database to execute the operations of the state transition function, and 2) security to ensure that all participants share the same state. Since the initial state of the blockchain and the state transition functions are values or operations determined by the client software, it is possible to calculate the state of the blockchain at any point in time by repeatedly executing them, as long as there are a list of transactions and the correct ordering. In this regard, as the name suggests, storing a collection of transactions in the form of blocks is a necessary and sufficient condition for determining the state of a blockchain.

A user of a blockchain (usually a light node) who wishes to verify if a transaction was executed correctly should be able to access and download the actual transaction data. In blockchain, data availability refers to the ability to provide transaction data, which ensures that any participant in the network can reproduce the current state of the blockchain.

A blockchain's consensus mechanism aims to determine the order of transactions that enter a state machine on a distributed system, and to make it difficult for a malicious actor to alter it. Since state machines generally do not have a commutative law, resultant states may vary depending on the order of data entry. When it comes to consensus, how and by whom consensus is reached is determined by the blockchain network. While Bitcoin employs Proof of Work (PoW) between Bitcoin nodes, Ethereum uses Proof of Stake (PoS) between Ethereum nodes to reach consensus. The effort (or economic contribution) of the nodes in each chain provides security to the network.

2-2. Modular Architecture

Source: Modular blockchains for beginners, Celestia

While a monolithic blockchain can handle the core functions of a blockchain, it is also possible to assign each function to separate blockchains. A system in which individual functions of a blockchain are allocated to each chain or protocol is called a modular blockchain. The fundamental functions of a blockchain can be categorized into three elements: execution, consensus, and data availability. The layers that constitute a modular blockchain represents each of these functions.

- Execution: The execution layer provides the environment and operations to obtain the next state of the blockchain. It receives transaction data from users and calculates the next state of the blockchain.

- Consensus: The consensus layer provides security to the network. It allows network participants to agree on the order in which transactions are recorded in blocks and makes it difficult to change the sequence of recorded data.

- Data Availability: The DA layer provides downloadable transaction data, enabling participants to verify and reproduce the state of the blockchain.