What are Optimistic Rollups?

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An optimistic rollup is a Layer 2 solution that addresses the scaling issues of Ethereum and other L1 blockchains. It employs an 'optimistic' approach to transaction verification.
Arbitrum and Optimism are among the most prevalent Layer 2 networks that utilize optimistic rollup technology.

How Do Optimistic Rollups Work? ⚙️

Rollups work by bundling several transactions into one package, drastically cutting down computational load and data storage on the main network. This leads to enhanced throughput, lower transaction expenses, and a more streamlined user experience.

Setting itself apart from other types of aggregations (like ZK-rollups), the concept behind optimistic rollups is rooted in the presumption that all submitted transactions are honest unless proven otherwise — an approach known as optimistic consensus.

In practice, the blockchain takes snapshots of the state before and after transactions. However, these transactions are not immediately processed on the L1 network. Instead, they are carried out off-chain in a virtual machine that replicates the L1 environment. This setup allows for the potential reversal of any fraudulent transactions that may be identified and verified within a specific timeframe.

➕ Pros of Optimistic Rollups

  • These Rollups inherit the same level of security as the underlying blockchain.

  • They are compatible with the Ethereum Virtual Machine (EVM).

  • They offer low-cost transaction execution.

➖ Cons of Optimistic Rollups

  • They sometimes struggle with ensuring data availability.

  • There are enforced wait times before a transaction is confirmed on the underlying blockchain. This feature protects against fraudulent activities, but it can cause delays for legitimate users in finalizing their transactions.

  • If there are any capacity issues within Ethereum, these would directly affect the efficiency of the Layer 2 network.

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