Rollup

A rollup is a scaling technique, mostly used on Ethereum, that processes transactions outside the main blockchain and then “rolls them up” into a single batch posted back to it. It is the most common type of layer-2 network: users get cheaper and faster transactions, while the base chain still guarantees that the data is available and the result can be checked.

How a rollup works

An operator, often called a sequencer, collects many user transactions, executes them and compresses the result. It then publishes the batch data on Ethereum, together with a summary of the new state. There are two families:

• Optimistic rollups assume the batch is correct. Anyone can challenge it during a window of roughly seven days by submitting a fraud proof. This is why withdrawing directly back to Ethereum takes about a week.
• Zero-knowledge (ZK) rollups attach a validity proof, a piece of cryptography that proves the batch was computed correctly. Once the proof is verified on Ethereum, withdrawals do not need a long waiting period.

Since the Dencun upgrade of March 2024, rollups can post their data in “blobs”, a cheaper type of storage that Ethereum keeps for about 18 days, which cut rollup fees sharply.

A simple example

Imagine 1,000 people each paying a $2 fee to make a transfer directly on Ethereum: $2,000 in total. A rollup packs those 1,000 transfers into one batch. If posting the batch costs $50 and the operator keeps a margin, each user may pay a few cents instead of $2. The numbers are illustrative, but the logic is the same: the cost of one entry on the main chain is shared by everyone in the batch.

Why rollups matter

Ethereum itself handles a limited number of transactions per block, so fees rise when demand peaks. Rollups make everyday uses such as payments, trading or games affordable without creating a separate chain with its own, weaker security. Ethereum’s roadmap relies on them to scale. Learn more in our guide What is Ethereum?.

Risks and limits

• Many rollups still run a single sequencer, which can censor or delay transactions and is a point of failure.
• Upgrade keys held by the team can change the contracts, so “inherits Ethereum security” is only partly true until these controls are removed.
• Moving funds between rollups often requires a bridge, and bridges have been a favourite target of hackers.
• Liquidity is split across many rollups, which can mean worse prices for traders.