This article was first published on Kyber Network - Medium
Transacting on Ethereum’s base layer has become extremely expensive as demand for block space has increased with the growth of the Ethereum ecosystem, while on the other hand, block space supply has remained the same. Interacting with DeFi applications can cost hundreds of dollars in gas and many end-users have effectively been priced out. Rollups aim to reduce some of this demand pressure on the base layer by moving transactions to a cheaper secondary layer (L2) where transactions can be carried out cheaply before proofs of these transactions are batched into single transactions and submitted to the base layer for settlement, thus requiring significantly less block space for any given number of transactions.
Rollups come in various flavors, each with its own set-off trade-offs across throughput, latency, security, usability, and operational costs. This blog post lays down a Rollup analysis framework around these trade-offs and analyses where the various Rollup implementations fit within this framework. We hope this can provide teams with a good starting point when considering which Rollup approach is best suited for their needs.
Since Ethereum’s inception, its throughput limitations have been well known and ETH2.0, with its sharded proof-of-stake structure, has always been envisioned as a solution to this scaling constraint. Although ETH2.0 launched Phase 0 with the beacon chain in December 2020, it is not before Phase 2’s launch a few years down the line where it can have a meaningful impact on scaling and throughput.
In the meantime, Rollups has emerged as the de-facto solution to alleviate some of the short-term scaling limitations. In a recent post, Vitalik presented his proposed roadmap for a rollup-centric Ethereum stating “the Ethereum ecosystem is likely to be all-in on rollups (plus some plasma and channels) as a scaling strategy for the near and mid-term ...
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Kyber Network - Medium