The adoption of blockchain technology and cryptocurrency usage is increasing daily. As the number of users and transactions on a blockchain network increases, transaction processing slows down, and fees rise.

That's where Optimistic rollups come in - providing scalability while maintaining security.

Optimistic rollups are a type of Layer 2 scaling solution that leverages the core principle of assuming transaction validity unless proven otherwise. They work by executing transactions on a separate Layer 2 chain or rollup and only periodically publishing compressed transaction data to the Layer 1 chain (e.g., Ethereum mainnet).

The key idea is that transactions on the rollup chain are considered valid by default - optimistically unless a violation of rules is detected and proven through a fraud-proof mechanism. This optimistic approach allows for very high throughput on the rollup chain while still inheriting Ethereum's strong security guarantees.

Learn more about Optimistic Rollups in this video:

Technical Details

You can look at Optimistic rollups as additional lanes built alongside the main highway (the main blockchain). These lanes process transactions off-chain, increasing the overall network throughput.

Here's the core principle behind optimistic rollups:

Transaction Batching: Transactions are grouped into batches and sent off-chain for processing by a specialized program called a sequencer.
Optimistic Assumption: The sequencer broadcasts these transaction batches to the main blockchain, assuming they are valid.
Fraud Proofs: Anyone can challenge the validity of a transaction by submitting a fraud-proof to the main chain. This proof demonstrates that a transaction within the batch is indeed invalid.

While the core concept is simple, optimistic rollup operations involve some technical details such as:

Validity Proofs: Even though transactions are processed off-chain, the sequencer generates cryptographic proofs (using techniques like zk-SNARKs) that attest to the validity of the state changes resulting from the processed transactions, without revealing the actual transaction data.
Dispute Resolution: The main chain maintains the final say. If a fraud-proof is valid, the main chain reverses the disputed transaction and penalizes the sequencer.

Here's a high-level overview of how optimistic rollups operate:

User transactions are submitted and executed on the rollup chain, updating its state.
The roll-up chain periodically generates compressed commitments representing the state transition of many transactions.
These commitments are published to the Layer 1 Ethereum chain via a smart contract.
A challenge period allows anyone to submit a fraud-proof if an invalid state transition occurred.
If no valid fraud-proof is submitted, the new rollup state root is accepted as valid on Ethereum.

Advantages of Optimistic Rollups

Optimistic rollups offer several advantages which include:

High Scalability: By processing transactions off-chain, optimistic rollups can handle significantly more transactions per second compared to the main blockchain.
Lower Transaction Fees: Due to reduced load on the mainchain, transaction fees on optimistic rollups are considerably lower.
Fast Transactions: Users experience faster transaction processing times compared to the main blockchain.

Notable Projects

Some of the major optimistic rollup projects include Optimism, Arbitrum, and Offchain Labs. These have seen significant adoption and usage from applications seeking to scale while benefiting from Ethereum's robust decentralized security model.

Optimistic rollups represent an innovative and promising approach for scalable, secure execution leveraging optimistic security models.