Beginner: Layer 2, Plasma and Rollup

What is Layer 2?

Since the birth of Ethereum in 2015, its ecosystem has been increasingly enriched with the rapid development of DeFi, NFT, and games. However, at the same time, the scalability of the Ethereum network cannot meet the rapidly growing demand as it can only process about 15 transactions per second, resulting in high transaction fees and pricing out a lot of users.

 

In order to scale Ethereum, developers have proposed 2 solutions, namely, Layer 2 and sharding (a Layer 1 scaling solution). 

 

Layer 1 refers to the Ethereum blockchain itself, and Layer 2 is a network or technology that operates on top of Ethereum to improve its scalability and efficiency.

 

Mainstream Layer 2  projects include Arbitrum, zkSync, Optimism, etc.

What is Rollup?

Rollup is one of the Layer 2 solutions that perform transaction execution outside the main Ethereum chain (layer 1), but post the compressed data on layer 1.

 

According to the different schemes to ensure the validity of the compressed data, Rollup can be divided into ZK Rollup and Optimistic Rollup.

 

  • ZK Rollup: ZK Rollup bundles hundreds of transfers off-chain and generates a cryptographic proof, known as a SNARK (succinct non-interactive argument of knowledge). This is known as a validity proof and is posted on layer 1.

    Projects that use the ZK Rollup solution include: zkSync, etc.
     

  • Optimistic Rollup: One type of Rollups which optimistically believes that the data posted to the Ethereum mainnet is correct, and if anyone observes that the data is wrong (i.e., there is fraud), they can issue a challenge during a period. Therefore Optimistic Rollup is also called fraud proof. In this way, it is guaranteed that the data finally posted to the Ethereum mainnet is valid.

    Projects that use the Optimistic Rollup solution include: Arbitrum, Optimism, etc.

What is Plasma?

Plasma is one of the Layer 2 solutions. It was first proposed in 2017 to solve the transaction speed and cost problems of Ethereum, and it is also the first solution in the Ethereum community to try to solve such problems.

 

In order to improve transaction throughput, Plasma compresses multiple transactions into one block, and offloads the calculation and storage of transactions off Ethereum mainnet (e.g. Layer 1) into Plasma chains. Compressed data will be submitted to Layer 1, and if disputes arise during the process, Plasma will use fraud proof to arbitrate to ensure safety.

 

In theory, Plasma can increase the TPS of Ethereum to 1-9k, but in actual development, many problems have been exposed, such as the period for users to withdraw funds from it is too long, and all users are required to monitor all transactions on the Plasma chain. As a scaling solution, Plasma-based implementations continue to be explored.

 

Projects using Plasma technology include OMG Network, Polygon (formerly Matic Network), Gluon, LeapDAO, etc.

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