Understanding Base Rollups for Ethereum
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Scaling Ethereum has long been one of the most pressing challenges in the crypto space. To tackle this, the Ethereum community has adopted a rollup-centric approach (Based Rollups). The premise is straightforward: rather than running all applications directly on Ethereum, rollups take the lead by offering faster and more affordable transactions, while still relying on Ethereum for final settlement. This approach allows for speed and cost efficiency without compromising Ethereum’s robust security.
Currently, optimistic rollups such as Arbitrum, OP Mainnet, and Base, alongside zk-rollups like ZKsync, are playing pivotal roles in Ethereum’s expansion. These rollups are driving user growth and increasing value within the network. However, concerns persist around issues like centralized sequencers and liquidity fragmentation across various chains.
This is where based rollups enter the picture. They are designed to integrate more seamlessly with Ethereum’s infrastructure, aiming to retain value within the ecosystem. This novel approach to building rollups could potentially bring even more value to Ethereum and its native token, ETH.
What Are Based Rollups?
Based rollups, also known as L1-sequenced rollups, are a type of rollup in which the base Layer 1 (L1) chain—such as Ethereum—handles transaction sequencing directly.
Unlike traditional rollups that use their own sequencers, based rollups leverage the L1’s infrastructure for transaction sequencing. This includes actors like proposers, searchers, and builders, who permissionlessly incorporate based rollup blocks into L1 blocks. By doing so, they inherit the security, liveness, and decentralization of Ethereum itself.
At first, this method was viewed skeptically; Ethereum co-founder Vitalik Buterin once referred to it as “total anarchy” in a 2021 article on rollups. However, in 2023, Ethereum researcher Justin Drake revisited the concept, arguing that based rollups offer better alignment with Ethereum’s principles and eliminate the need for separate security measures for each individual rollup. As a result, this approach has become far more viable, offering a promising path forward for Ethereum’s scalability.
How It Work
Based rollups utilize Ethereum’s Layer 1 (L1) for consensus, data availability, and settlement, while independently managing transaction execution. Here’s a breakdown of how they function:
- Execution Layer: Transactions are executed off-chain by the rollup.
- Consensus Layer: Ethereum validators sequence transactions.
- Data Availability Layer: Ethereum ensures transaction data is accessible for validation.
- Settlement Layer: The final transaction states are recorded on Ethereum.
Unlike traditional rollups that rely on dedicated sequencers, based rollups use Ethereum’s infrastructure to sequence transactions. Instead of sending transactions to a single sequencer controlled by the rollup, users’ transactions are directed to Ethereum block builders who handle both Ethereum and the rollup, ensuring greater security and reliability.
Key Projects in Based Rollups
Though still emerging, several projects are making strides in based rollups:
- Taiko: A Type 1 ZK-EVM that maximizes Ethereum compatibility without adding new trust assumptions.
- KeySpace: A zk-rollup from Coinbase focused on smart wallets that work across chains.
- Taiko Gwyneth: A based rollup designed for synchronous composability with Ethereum, using pre-confirmations.
- UniFi: Developed by PufferFi, this rollup enhances user experience with pre-confirmations.
- Spire Labs: A framework allowing developers to build based appchains on Ethereum.
Why Choose This?
According to Ethereum researcher Justin Drake, based rollups have several key advantages:
- Liveness and Decentralization: Based rollups inherit Ethereum’s operational guarantees. As long as Ethereum runs, so does the rollup.
- Economic Synergy: Priority fees and MEV (miner extractable value) generated by based rollups flow back to Ethereum, creating mutual benefits.
- Cost Efficiency: By leveraging Ethereum for transaction sequencing, based rollups reduce development and operational costs.
However, this approach comes with trade-offs. Based rollups rely on Ethereum’s block times, which can lead to latency, and they miss out on the additional fees and MEV that traditional rollups can capture by managing their own sequencers. Solutions like pre-confirmations are being explored to address user experience issues, but they may introduce complexity that undermines the simplicity and security that make based rollups attractive in the first place.
