How Do Optimistic Rollups Work (The Complete Guide)

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Top Highlights

• Optimistic rollups are a layer 2 (L2) construction that improves throughput and latency on Ethereum’s base layer by moving computation and data storage off-chain

• An optimistic rollup processes transactions outside of Ethereum Mainnet, reducing congestion on the base layer and improving scalability.

• they publish little information about transactions on-chain and automatically assume all transactions are valid.

• They are called “rollups” because they aggregate (“roll up”) thousands of transactions into batches before submitting them on Mainnet.

• Optimistic rollups use smart contracts deployed on Ethereum to manage the interaction between the L2 chain and the L1 blockchain (Ethereum)

• sequencer

• On the rollup, users sign transactions and submit them to the sequencer who’s responsible for ordering and executing transactions. The sequencer verifies transactions, compresses the data into a block, and submits the batch to Ethereum as a single transaction.

• This is another area where the rollup contract comes into the picture. The on-chain contract stores a “state root”, which is a Merkle root of the rollup’s state.

• Once the sequencer submits the batch, the contract verifies that the pre-state root matches the existing state root. If the two match, the contract discards the old state root and stores the new state root proposed by the sequencer.

• the sequencer doesn't have to submit proof of the validity of batched transactions.

• The only time a proof is required is if a verifier reports a fraudulent rollup transaction using a fraud proof.

• A fraud proof is a claim that a state transition (i.e., transaction) is invalid and the entire batch should be reverted as a result.

• The process starts when a party (verifier) detects a mismatch between the rollup state referenced in the state root on the L1 chain and the actual state of the rollup chain.

• The verifier can “challenge” this state transition and prove its invalidity. This is possible because the verifier downloads data for every transaction, applies it to their copy of the rollup state, and computes the post-state root.

• If the sequencer’s post-state root matches the verifier’s, nothing happens. If, however, the sequencer’s post-state root is different—likely because it includes a false transaction, such as the one described in Alice’s case—then the verifier can trigger a fraud proof computation.

• A fraud proof is different from a validity proof mainly because it is computed on-chain. Validity proofs (also called zero-knowledge proofs) are computed off-chain (i.e., on the rollup) and verified on Ethereum.

• An optimistic rollup processes transactions outside of Ethereum Mainnet, reducing congestion on the base layer and improving scalability.

• ‍Optimistic rollups are a layer 2 (L2) construction that improves throughput and latency on Ethereum’s base layer by moving computation and data storage off-chain

• An optimistic rollup processes transactions outside of Ethereum Mainnet, reducing congestion on the base layer and improving scalability.

• The “optimistic” label points to a distinctive feature of optimistic rollups: they publish little information about transactions on-chain and automatically assume all transactions are valid.