An optimistic rollup is a type layer 2 scaling solution that relies on off-chain computation to trustlessly record transactions that happen in the layer 2.
What Is an Optimistic Rollup?
An optimistic rollup is a type layer 2 scaling solution that relies on off-chain computation to trustlessly record transactions that happen in the layer 2. Periodically the system publishes a merkle root of the transactions that happen within the rollup in order to update the “state” of the rollup on the main underlying blockchain. A network of external validators checks the Merkle roots to make sure that they are correct, before the state is updated some time later. If an inconsistency arises, then the validator can publish a fraud proof during the dispute period, which can cause the state of the system to be rolled back to the previous valid state.
The main downside to optimistic rollups compared to zero knowledge rollups is the time that it takes for layer 2 users to be able to withdraw their funds back to the underlying blockchain. As an optimistic rollup has to rely on external validators to check the merkle roots for ‘cheating’ before the state can be updated, there needs to be a sufficient amount of time for validators to check and challenge the activity that has happened on layer 2.
The main advantage to optimistic rollups compared to their zero knowledge equivalents is that they are more generalist and can support smart contracts in a similar way to the underlying smart contract enabled blockchain. Native support for smart contracts within the rollup means that apps can be launched much easier, without the need for additional development.
Author: Ross Middleton, co-founder and CFO at DeversiFi Ross is the co-founder of DeversiFi, a layer 2 decentralized finance (DeFi) trading platform powered by StarkWare’s scalable technology. He is responsible for finances as well as looking after DeversiFi’s project partners and biggest customers.
Previous to DeversiFi, Ross worked at the Ethfinex and Bitfinex exchanges. Before joining crypto, Ross was a professional energy trader and analyst in London for ten years. He worked on global energy trading desks at companies such as Centrica, Gazprom and RWE to deploy funds into advanced proprietary fundamental-backed trading strategies. Outside of the trading world, he is a committed angel investor and Ironman triathlete. Ross brings a wealth of both non-traditional and traditional asset trading and commercial experience as well as connections to the alternative finance space. Ross holds a BSc in economics.