Ethereum is making moves towards scalability, after a long period of network congestion. However, the second-largest cryptocurrency is still slow and expensive compared to its rivals. So developers keep working on creating new alternatives to scale the blockchain. ZK and Optimistic Rollups may look very similar at first, but there are fundamental differences between these two technologies. The first can achieve faster settlement times, but fees can also be higher. Optimistic can be easier to implement and reduce fees, but transactions in Layer 1 take longer to settle.
Which will take the lead in 2025 and make investors swap BTC to ETH to start participating in this ecosystem?
ZK and optimistic rollups – Key technical differences
The main feature of these technologies is that they’re Layer 2 solutions. That means they work outside the main Ethereum layer, but ultimately settle transactions on it. Rollup, on the other hand, means they bundle transactions to process them in Layer 2, and then deliver the result to the main chain. Beyond these similarities, let’s take a look at their technical differences.
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Transaction processing
After the transactions are processed off-chain, ZK-Rollups provides validity proof to the main chain. This signals Ethereum that the output is valid, even if the detailed transactions aren’t shown.
Optimistic Rollups, on the other hand, “trust” the off-chain validators and don’t provide Ethereum any validity proof. Instead, they allow for a challenge period of one week, where anyone can contest the outcome with a fraud-proof. During this time, users can’t withdraw their funds directly to Ethereum.
While the Optimistic approach takes days to finally settle the transactions, ZK-Rollups are final once submitted.
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Security models
Optimistic models rely on the challenge period to ensure that invalid transactions can be contested before settled on the main chain. And the network continues operating on the assumption that previous blocks are valid. A successful fraud-proof, while protecting the network, also causes additional complexity to the system, when it comes to reverting invalid transactions.
ZK-Rollups ensures transactions are valid through cryptographic proofs, but their performance depends on the particular infrastructure of each implementation. Moreover, they are more technically challenging than Optimistic Rollups and harder to integrate into existing systems.
Gas fees & scalability
Average fees on Ethereum are around $0.5-$0.8, so these solutions become necessary to reduce the cost of using the network. In both cases, the batching process reduces the average fee for each transaction. In practice, both have similar average costs, depending on the particular implementation.
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Regarding scalability, it’s also highly variable. Loopring, a ZK-Rollup solution, can handle up to 2,000 transactions per second (TPS) — nearly the same as Optimism, while Arbitrum can go up to 40,000.
Which projects are leading the ZK-Rollup & optimistic rollup adoption?
Since these technologies work on a second layer, they’re not implemented as an upgrade to the existing Ethereum blockchain. Instead, new projects build on top of Ethereum, with distinct tokens.
ZK-Rollups may seem more secure and efficient thanks to their cryptographic proofs but face some technical difficulties regarding their implementation. While historically limited in supporting complex smart contracts, zkEVMs advancements have fixed this issue. Optimistic is more versatile in this regard; that’s why Optimistic models have had a wider success, especially in market performance.
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The leading projects on the Optimistic side are Arbitrum and Optimism, ranked #48 and #54 by market capitalization. On the ZK side, the leaders are Starknet, ZKSync, and Loopring — the earliest implementations of this technology. However, the first two rank #109 and #145, while Loopring’s down to #252.
3 expert insights into the future of layer 2
It’s hard to predict which model will have a wider adoption in the future. Optimistic Rollups could continue with their predominance, or ZK could move forward and improve their applicability, raising adoption rates. Let’s take a look at three possible scenarios for the future of Layer 2 solutions.
Overtake optimistic rollups
Some experts believe that ZK-Rollups will take over. In their opinion, this model offers better performance, privacy, and security. While the challenge period is a potential flaw in the system, it’s ahead in terms of adoption. Even Vitalik Buterin, Ethereum’s creator, has expressed his support for ZK-Rollups. But this doesn’t mean the ecosystem will necessarily move that way.
Default for ethereum transactions
Whatever the leading model is, it’s clear that Ethereum is relying more and more on Layer 2 solutions. Although upgrades lowered the average cost of fees, it’s still more expensive than other blockchains. Moreover, Ethereum can only process 14 transactions per second, while Layer 2 chains can go up to 40,000.
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The growth of the DeFi ecosystem demands a high-performance chain that can process the thousands of transactions that take place every minute. In the future, we could see the existing Layer 2 projects taking a major lead, or new ones conquering the top spaces.
Hybrid rollup models
Developers are already working on hybrid models. Metis is a project launched in 2021 that combines the architecture of Optimistic rollups with the security and settlement time of ZK. This option is still behind on market adoption, but it could grow in the future, as limitations of previous models become evident.
The next generation of rollups – What’s coming next?
Ethereum is still the leading blockchain for building DApps. Besides that, it’s also a popular crypto ETFs option, next to Bitcoin. That’s why, even though other blockchains may have a better performance, developers still focus on improving it. And the solution is definitely Layer 2 scaling. We’ve seen that both Optimistic and ZK Rollups have advantages and disadvantages, and there are attempts to combine both models. Maybe hybrid rollups will expand its presence, or ZK will improve and take over Optimistic. Whatever the case, it’s clear that rollups will define the future of Ethereum’s scalability.
