As explained in my other post, there is a scaling problem with these blockchain-based entities.
Along with the scalability problem, there was a problem with how long these transactions take. It could take up to an hour for any type of transaction to go through. Along with the long transactions, the fees associated with these them could also cost a lot. According to The Bitcoin News, "If you wanted to carry out a smart contract transaction, such as a token exchange on a decentralized exchange like Uniswap or Sushiswap, you found yourself in the awkward situation that the transaction costs alone amounted to over 100 US dollars at times."
Transaction fees may also rise when there are a lot of users trying to make transaction all at once.
"Optimized scaling of the Ethereum blockchain and the associated cheaper transaction fees would lead to increased user-friendliness and the opening up of new use cases. Both would have the consequence that new users would join or use the network" (The Bitcoin News).
So what solution is there to help with these problems?
Well, the co-founder of Ethereum, Vitalik Buterin, says that the solution to these problems is something called rollups.
Rollups allow for transactions to essentially be "bundled" and "compressed" together. But this is done off-chain before the verification process. This allows multiple transactions to take place on a single transaction chain. This definitely would allow for more scalability. Having multiple transactions going through on one chain transaction instead of having individual transactions would change the speed of transactions from being 15 tps to 3000+ tps.
Even though there will be fewer transactions happening at once, the security of the transactions wouldn't be compromised.
There are two different types of rollups: Optimistic rollups and ZK rollups.
Both optimistic and ZK rollups are a layer 2 scaling solution.
Thes rollups allow for there to be thousands of transactions to be made without worrying about the gas prices on the layer 2 solutions. All the transactions being made are recorded and then "rolled up." So once they are all published on the "rollup," it then all moves back to the main chain of Ethereum to be published.
The time between moving the transactions on layer 2 and being brought back down to the main chain is to be able to detect if everything is legitimate. This prevents false transactions to be published on the main chain.
Both of these roll-up types are similar in how they are processed.
But, here are some differences between them:
Optimistic rollups:
- Fixed gas cost per batch is about 40,000
- About a 1 week withdrawal period
- Low complexity of technology used
- Relies on information being correct until proven not
ZK-Snark rollups:
- Fixed gas cost per batch is about 500,000
- Very fast withdrawal period
- High complexity of technology used
- Relies on information being incorrect until proven correct
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