Optimistic Rollups

Optimistic rollups is an Ethereum scaling solution that uses proof of fraud and runs on an EVM-compatible OVM virtual machine. They use two principles:

• Data sent to Layer 1 is assumed to be correct until discovered otherwise.

• Data senders must pledge ETH, which is confiscated in case of fraud. 

OP rollups’ main advantage is that they’re compatible with Ethereum contracts, so the code does not need to be rewritten. However, its withdrawal time is quite long as there is a need to wait for proof at the main blockchain level. Another disadvantage would be its low privacy.

Zero Knowledge Rollups

ZK rollups is a way to scale the blockchain using SNARK, the Succinct Non-Interactive Argument of Knowledge. The solution proves the correctness of transactions without disclosing their contents. A smart contract on the underlying blockchain quickly verifies proofs and rejects incorrect ones.

ZK Rollups pros include faster transactions, algorithmic transaction confirmation, and higher privacy. Its downside would be more complex calculations.

The Future of ZK Rollups and Optimistic Rollups

ZK rollups appear to be more efficient. By some estimates, ZK rollups will be able to scale Ethereum by 100-200x, while Optimistic by 10-20x.

However, developers are actively working to address the shortcomings of each.

With these two, the future sure sounds promising!

Plasma

Plasma is a solution based on which sidechains work. It uses Merkle trees to create an unlimited number of copies of the core network or sidechains.

Its advantages include speed and low fees. As for Plasma downsides, there are safety concerns due to a separate consensus mechanism.

The most popular Plasma-based sidechain is Polygon.

State Channels

State channels are a way to exchange private transactions outside the blockchain. Participants create a channel by freezing funds in a multi-signature contract. In the channel, they can conduct as many transactions as they like that are not recorded on the blockchain. 

The advantages of state channels include efficiency in saving time and resources as well as confidentiality. However, the possible liquidity crisis is its huge downside.

This solution is used in Lightning Network and Celer Network.

Rollup

Rollup is a solution that aims to speed up and cheapen transactions on the underlying network. They move some of the computations to sidechains and write them to the main blockchain after verification. There are two types of rollups: ZK-roll-ups and Optimistic roll-ups, which differ in the way transactions are verified.

Rollup’s biggest upsides are high speed of about 1000-4000 transactions per second, good security and decentralization, convenience, and ease of use. It is, nevertheless, less liquid than the underlying network, and the fees are higher than in sidechains.

Rollups are booming right now, and here are the reasons why:

• Convenience and simplicity for users.

• Best scalability solution for approaching mass adoption.

The best known are Optimistic rollups Arbitrum, Optimism, and the upcoming ZK rollups zkSync and Polygon zkEVM.