Rollup – a stepping stone to mass adoption of DePIN utility

Author: Arkreen; Translation: Vernacular Blockchain

Bitcoin has successfully solved the challenge of achieving consensus in the field of decentralization through the innovation of blockchain technology. Engineers then began grappling with the complex task of enhancing scalability, a daunting challenge due to the inherent conflict between scalability, security, and decentralization, a dilemma commonly referred to as blockchain Three problems. The scalability dilemma has proven to be a major obstacle to widespread adoption of blockchain. Striking a balance between ensuring security and decentralization, two aspects critical to the integrity of the blockchain, poses an ongoing challenge. If this delicate balance cannot be maintained, blockchains risk becoming similar to centralized systems. Additionally, low scalability also increases the cost of using blockchain. As a result, despite its potential, large-scale adoption of blockchain has been hampered in recent years.  

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1. Modular blockchain is What?

In recent years, engineers have been working hard to solve the challenges posed by the blockchain trilemma, and now have found a feasible solution: modular blockchain. This innovative approach involves dividing the blockchain into different modules and layers, with each layer specialized in handling specific needs. Typically, security and decentralization are prioritized at the first layer (L1), while scalability is addressed at the second layer (L2).

Conceptually, L1 and L2 can be viewed as interconnected but different blockchains. L1 is responsible for ensuring the security and decentralization of L2, so node status is resolved on L1. L1 mainly executes transactions and stores state, essentially operating as the backbone. It is worth noting that even in the event that all L2 nodes go offline, the community can restore L2 through the information stored on L1, thus enhancing the resilience of this modular blockchain solution.

In a typical module In the blockchain, the key modules drive functions:

1) Consensus: This module is crucial, it determines the transactions to be included in the blockchain and establishes their order.

2) Execution: Responsible for executing transactions and obtaining post-status.

3) Settlement: Determine the consensus status. Designed to determine consensus status, this module steps in when status disagreements occur to facilitate resolution.

4) Data Availability (DA): Ensuring universal access to transaction history within the community, this module is critical for settlement procedures and blockchain recovery efforts.

2. What is Layer2 (L2) and why does Ethereum need it?

Layer2 (L2) is a concept in blockchain technology that refers to protocols and solutions built on top of the main blockchain (usually the first layer, or L1) to improve Scalability and efficiency. As one of the leading blockchain platforms, Ethereum requires Layer 2 solutions to address its scalability limitations and high transaction fees.

The following are the reasons why Ethereum needs Layer 2:

1) Task 1: Clarify transaction details and sequence

As As the Ethereum network grows, the number of transactions increases, leading to congestion and higher fees. Layer 2 solutions can alleviate this problem by processing transactions outside the main Ethereum chain. These transactions are then bundled together and settled regularly on the main chain, reducing congestion and gas fees while still maintaining security.

2) Task 2: Communicate the latest status after the transaction is executed, and whether there is a way to verify its accuracy

Execute the transaction on Layer 2 Finally, Ethereum needs a mechanism to communicate the latest status back to the main chain (Layer 1). This typically involves the use of cryptographic proofs or commitments to ensure that state transitions are valid and verifiable. Verification mechanisms, such as fraud proofs or zk-rollups, help confirm the accuracy of transactions without compromising security.

3) Task 3: Is there a designated mechanism to facilitate cross-chain calls?

In order for Ethereum to interact with other blockchains or Layer 2 solutions Seamless interaction requires a designated mechanism to facilitate cross-chain calls. Interoperability protocols, such as bridges or cross-chain communication standards, enable assets and data to flow safely and efficiently between different chains, thereby expanding Ethereum’s functionality and ecosystem.

In summary, Layer 2 solutions are critical for Ethereum to solve scalability challenges, increase transaction throughput, and reduce fees while maintaining interoperability and security with other blockchains sex.

3. Explore how Rollups accomplish these three tasks

Rollups are called L2; let’s see how it works to accomplish the above three tasks A task.

1) Task 1: Data Availability (DA)

First, start the process by sending a specified amount of ETH to the Layer-2 (L2) network , to pay for gas. This step is performed via the L1->L2 cross-chain bridge and is called "depositing". Typically, the L2 network will also run L1 nodes; just wait for the final confirmation of the L1 block containing the deposit transaction; once confirmed, the deposit will be safely held.

Next, send the transaction to the L2 sequencer. The L2 sequencer node will manage these transactions efficiently. Think of it like a standard blockchain process: the sequencer builds blocks containing transactions, executes those blocks, and maintains the latest state of the chain. Typically, every two minutes or when a sufficient number of transactions are collected, the L2 sequencer will compress transactions and securely submit them to the L1 chain. This strategic approach ensures that L1 fully understands L2 transactions and their specific sequence. After completing task one, we call the entire process "Data Availability (DA)".

2) Task 2: Optimistic (OP) and Zero-Knowledge (ZK) Rollups

Now, both L1 and L2 nodes can see the L2 sequencer Transactions executed. These transactions are significantly compressed and stored only in calldata, resulting in minimal gas costs. Other L2 nodes prefer to get DA (data availability) data from L1 as a trusted source rather than relying on the L2 peer-to-peer network, although they also receive blocks from L2 (although they do not fully trust it). Typically, e.g. every hour, the L2 sequencer node submits the Merkle root of the L2 state to the L1 RollUp contract. This operation ensures that the latest status of L1 and L2 are synchronized. However, at this point, L1 does not automatically trust this information. L2 uses two methods, OP and ZK, to convince L1 of its accuracy - these details will be discussed later. After completing task two, let us cheer!

3) Task 3: Withdraw money from Layer 2

Once you have completed your activity on L2 and decided to withdraw your ETH back to L1 , this process is called "withdrawal". While it may be similar to cross-chain operations in other scenarios, the key difference is that the withdrawal originates from L2, causing its security guarantees to be different from other cross-chain operations. On the L1 side, withdrawal operations must be handled with caution. Since it originates from the external world outside L1, initiating this operation triggers an L1 transaction (e.g., transferring a token). If this transaction is executed incorrectly, it may result in a change of L1 status.

The withdrawal process includes the following steps:

1) Start a withdrawal transaction on L2, similar to other cross-chain scenarios.

2) Wait for the transaction to be rolled to L1, covering data availability (DA) and status. Verify the accuracy of the status using OP or ZK methods.

3) Execute withdrawal transactions on L1, similar to other cross-chain scenarios.

4. OP and ZK Rollups

Let us take a deeper look at OP and ZK to understand how L2 ensures the accuracy of the state submitted to L1, which is the basis of Rollups security.

OP stands for optimism. L1 optimistically assumes that the L2 sequencer node is real, but does not blindly trust it. It starts a challenge window, which usually lasts seven days. Within the challenge window, any L2 node can challenge the correctness of said root. The challenge's transactions are then replayed on L1 to determine correctness between the sequencer node and the challenge node. A successful challenge results in the sequencer node being punished and the challenger receiving staked funds on L1. The status is adjusted according to the correct values, but please note that only the status root is modified, not the transaction list.

In a typical setup, L2 DApp operators manage their own L2 nodes, opening the door to potential challengers. From a challenge perspective, if the sequencer node provides inaccurate information, a successful challenge may result in significant rewards from the funds staked by the sequencer node on L1. Therefore, it is crucial to challenge incorrect states when they occur. Converselyfrom the perspective of the sequencer node, if it commits the wrong state root, then a challenge is inevitable, resulting in penalties, loss of staked funds on L1, and the incorrect state root being reverted . This avoids committing inaccurate state roots and ensures safe operation of optimistic solutions.

However, the OP's solution has a drawback: the 7-day challenge window. This means that if you plan to withdraw Tokens to L1 via the official OP bridge, you must wait 7 days after initiating the withdrawal operation on L2. However, for users who withdraw fungible tokens (such as ERC20Token), using third-party DApps can speed up the process at minimal cost.

ZK, or zero-knowledge, on the other hand, relies on a cryptographic algorithm called zero-knowledge proof. The sequencer node runs zk-EVM on L2 and generates a ZK proof that verifies the transition of L2 state from pre-state to post-state after applying a set of transactions. This proof can be verified in the L1 contract, ensuring that L1 can trust the correctness of the state transition. Generating ZK proofs can be challenging and take several hours. However, the verification process is simple and only involves simple transactions on the EVM. Compared to the OP, fetch delays using ZK are typically measured in hours, providing a more efficient option. Additionally, with more powerful computers, latency can be reduced even further.

Looking closely at OP and ZK, it is clear that both can extend L1 by simply trusting in transactions on L1 and removing the need to trust anything in L2. When considering a RollUp system consisting of L1 and L2, security and decentralization are closely aligned with L1, while scalability extends to the combined potential of L1 and L2. Rolling multiple L2s onto the same L1 significantly extends scalability.

ZK-Rollups packages transactions into batches, Chainlink

5. Pioneering mass adoption: Rollups in DePIN's role in utility

Usually utilizing Rollup allows Ethereum's TPS to reach into the thousands. However, the current bottleneck is data availability (DA). Although L2 transactions are effectively compressed before committing them to L1, gas costs rise as the number of transactions increases. An alternative is to submit transactions to a third-party decentralized storage service, thereby achieving significant gas savings in L1 blocks. This, combined with other solutions, potentially provides nearly unlimited scalability. However, this comes with some trade-offs, as the impact of third-party decentralized storage services on system security must be considered. In summary, blockchain can achieve tremendous scalability while remaining secure and decentralized. The three problems of blockchain have been solved. This breakthrough opens up the potential for mass adoption. Therefore, Rollup becomes a key milestone in the practical widespread adoption of DePIN.

DePIN, the decentralized physical infrastructure network, uses blockchain rewards to promote the development of physical infrastructure networks. Take Arkreen as an example; it uses blockchain rewards to incentivize individuals to contribute to building a clean energy network. In this case, miners build solar systems, collect power generation data, and submit it to the Arkreen network. The Arkreen network will identify and filter out honest and valuable data and provide token rewards to miners based on the data. The Arkreen network operates in a decentralized manner and currently has over 12,000 miners and is expected to grow to millions in the near future. Therefore, it requires a highly scalable blockchain infrastructure to accommodate this large group of miners. In the past, achieving this level of scalability has been both technically and economically challenging. However, with the support of scalability introduced by modular blockchains such as Rollups, this becomes feasible.

It is envisioned that a DePIN project built on a modular blockchain such as Rollup could achieve high scalability at minimal cost while still benefiting from the security and security of an underlying blockchain like Ethereum. Decentralization. The Token issued by the DePIN project is called RWA (Real World Asset), and its value is derived from real assets. These assets with on-chain liquidity generate funds for miners, incentivizing them to contribute to the growth of the DePIN network, thereby creating a wheel of value. Multiple DePIN projects can cooperate in the real world and form a DePIN ecosystem on the chain, further increasing the value of DePIN. The real-world collaboration of multiple DePIN projects builds the on-chain DePIN ecosystem, thereby enhancing the overall value. This collaborative approach enables blockchain to serve the real-world economy and promotes new growth in the blockchain field.

6. Summary

Modular blockchain (such as Rollup) effectively solves the three problems of blockchain, provides improved scalability, and provides Paving the way for widespread adoption. In the context of the DePIN project, the need for high-performance and cost-effective blockchain services finds a suitable solution in modular blockchains. Powered by a modular blockchain, the DePIN project is expected to gain tremendous value.