It is no secret that Ethereum has yet to resolve the tradeoffs that come from prioritizing transaction speed and costs over security. This has persisted for years, but fortunately some solutions have been proposed to help reduce the costliness of transactions while still leveraging the security that comes from the Ethereum Network.

"Rollups" are one such solution and perhaps the most popular L2 scaling solution. What makes it "L2"? Well, L2 refers to Layer-2 insofar as it operates as a layer outside of the Ethereum (L1) layer. Think of it as like an underworld. You go through the Underworld and come ressurect back to L1 after you have executed all the tasks you'd like to execute. These "tasks" are really transactions which are, you guessed it, rolled up into the main (L1) network.

Before these transactions are rolled up, they undergo scrutiny in the form of a validation layer that uses fancy cryptography to verify their state to prove they are valid and viable for submission to the main (L1) network.

What is this "fancy cryptography"? In the world of Optimistic Rollups, they refer to a cryptographic method called a "fraud proof", which means the state that is passed on from L2 to L1 is given the BOTD and assumed to be valid, unless another party challenges it. You might be asking, why give them the benefit of the doubt? Well, mostly because this is cheaper and because there is an 

-- in other words, there is a punishment for those sneaky snakes who try to play the system. Continuing with the Underworld metaphor, the gatekeepers of the Underworld (L2) are referred to as Sequencers.

 process, bundle, and submit L2 transactions to an L1 and are required to 

 (aka lock funds) to gaurantee authenticity of their submissions, which are 

Let's breakdown the exact sequence of events for these transactions:

 The tranasction is originally initiated on a roll-up contract, which sends the transaction to an off-chain sequencer.

 As described above, the transactions locally executed and confirmed by the sequencer are bundled into a batch.

locally executed and confirmed by the sequencer are submitted to the L1 chain via a single transaction, which reduces the cost of individual transactions. 

Just like it sounds -- optimistic solutions are optimistic about the transactions they submit, though not naïve. Just like a criminal trial (in the USA) 

it takes time to ensure you are not up to no good

As such, it takes some time for the submitted transactions to actually make it onto the main chain. In the case of optimistic solutions, when a transaction is challenged, it may take upwards to 

, which means you, as a end-user have to be willing to wait for much longer than you would compared to using an L1 solution directly. 

L2 solutions have been relatively slow to reach the level of adoption of alternative L1 solutions

, such as Avalanche and Fantom, where you can benefit from the EVM technology without having to suffer from long wait times or costly transactions. Ultimately, I prefer to stick to alternatives to Ethereum, such as Avalanche and Fantom, over waiting around for L2 solutions to process my transactions. I find them just as reliable and I am not willing to wait for up to 7 days for my transactions to confirm.

Optimistic Scaling Solutions

 make extensive use of one way hashing and are established by 

 a hash’s corresponding hash together and climbing up the tree until you obtain the root hash which is or can be publicly known.

: Demonstrating that a leaf node is a part of a given binary hash tree requires computing a number of hashes proportional to the log of the number of leaf nodes in the tree.

Merkle Tree: Example of Hashing Transactions

 represents a higher order of hashing stemming from a 

. For each block-level above the original transaction, the subsequent 

, is passed through a hash function until reaching the highest block-level represented as the combination of all the 

The lowest-level hash values are referred to as leaves — containing the 

 associated with the leaf. The resultant hashing of leaves and their subsequent hashes, levels 3 and 4, are referred to as 

, stores the summary of all of the transaction data as a singular value.

Merkle (Hash) Trees: Explained

Modern cryptography has evolved with the convenient use of 

), which is a mathematical algorithm that maps data of 

 (a “hash”). The hash function is practically infeasible to invert as it is a one-way function. The only ways to intercept the message would be via 

, which iterates through possible inputs until it produces a match, or making use of a 

The ideal cryptographic hash function has the following properties:

: the same message always results in the same hash.

: designed to swiftly compute the hash value for any given message.

: it is infeasible to generate a message that yields a given hash value, aka to 

 the process that generated the given hash value.

: it is infeasible to find two different messages with the same hash value.

: a small change to a message should change the hash value so extensively that the new hash value appears uncorrelated with the old hash value (

 exhibits good avalanche effect (shown above). When a single bit is changed the hash sum becomes completely different.

Cryptographic hash functions have many information-security applications, notably in 

 (MACs), and other forms of authentication. They may also be used as ordinary 

, to index data in hash tables, for fingerprinting, to detect duplicate data or uniquely identify files, and as 

: In information-security contexts, cryptographic hash values are occasionally referred to as (

, even though all these terms stand for more general functions with rather different properties and purposes.

Cryptography

Optimistic Scaling Solutions

Merkle (Hash) Trees: Explained

Cryptographic Hash Function: Explained