Which Layer 2 Rollup is the Best?

Ethereum’s scaling problem is slowly being solved as more Layer 2 solutions and rollup technologies become adopted, integrated, and built upon. Naturally, this leads to the question of which one of the currently-available rollups is superior, and what each one’s strengths and weaknesses are. 

Rollups are a type of Ethereum scaling solution that makes transactions more efficient while still having similar security guarantees to mainnet Ethereum. They accomplish this feat by moving the execution of transactions off-chain, but still posting the transaction data to the main chain. Additionally, data from multiple transactions can be put together and essentially “rolled up” into one transaction on the main chain, hence the name. Through this compression and removal of the expensive execution, transactions become much quicker and cheaper than on layer 1. Many see rollups as the future of Ethereum scaling and believe it will help Ethereum keep its standing as the dominant smart contract platform. 

Right now, the most popular type of rollups are optimistic rollups. They use a fraud-proof model, which means that transactions are assumed to be correct until otherwise proven incorrect, hence why these rollups are called “optimistic.” If a transaction is invalid or malicious, any validator can dispute it within a certain window, typically one week, and the network will run a fraud proof to determine whether or not the transaction was fraudulent. If it was invalid, the validator that caught it will receive an Ethereum reward directly from the malicious actor who submitted the transaction. 

The two most popular optimistic rollup solutions are Arbitrum and Optimism, both of which can handle around 2000-5000 transactions per second at full capacity. Currently, both are still in the development phase and have throttled their transaction capacity to prevent issues. Transaction fees are also around 50 cents to send ETH, which is also expected to decrease when the throttling is turned off. 

Even though Optimism was once touted and hyped as having the possibility to be the main layer 2, their delays and lack of communication have seen them fall to second place behind Arbitrum. They currently have around $500 million in total value locked, and their dApps are Synthetix and Uniswap. 

Arbitrum took advantage of Optimism’s delays and issues to quickly and dominantly overtake them as the main layer 2. Presently, they have around $2 billion in value on their rollup and several more dApps available for use. 

The other type of rollups, zero-knowledge rollups, are still in the very early stages of development and are thus not nearly as adopted as their optimistic counterparts. Their complexity does allow for them to be faster and potentially cheaper. Today, there are a few zk rollups, such as Loopring, ZkSync, and Polygon Hermez, with Loopring being the biggest. However, they all have specialized use cases, such as payments and swapping, and have yet to implement general smart contract functionality. This makes them ideal for certain users, but far from the all-in-one platform that they one day plan to become.

For the time being, it appears that Arbitrum is the ideal layer 2 rollup to use, as it has the most dApps while still having relatively cheap and fast transactions. However, once the zk rollup projects are able to implement the Ethereum Virtual Machine compatibility, the feature that allows for smart contract deployment, they will likely be the platforms of choice for most users. 

Adoption by exchanges is also a critical factor in which rollups become the most popular. If the average crypto user can only withdraw to Optimism, they may never want to deal with bridging to another rollup.

It is also possible that different rollups will become known for different features and dApps. This is already seen with Loopring, which is generally seen as the rollup best for exchanging crypto. This would also be ideal from a security perspective, as a freak accident, hack, or failure of one rollup would not be as catastrophic. 

Even though we cannot say with certainty what the future of rollups looks like, they appear to be moving in an incredibly exciting and positive direction that will make Ethereum usable by everyone.

By Lincoln Murr

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