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DeFi Education5 min read

What Are Rollups? The Technology Behind Ethereum Layer 2s

A deep dive into rollup technology — how it works, different types, and why it matters for scaling.

What Are Rollups?

Rollups are Layer 2 scaling solutions that execute transactions off the main chain (Layer 1) and post compressed transaction data back to it. This approach dramatically increases throughput while inheriting the security of the base layer.

How Rollups Work

  • Users submit transactions to the rollup
  • A sequencer orders and executes transactions off-chain
  • Transaction data is compressed and posted to L1
  • L1 verifies the data through proofs (ZK) or challenges (optimistic)

    • Types of Rollups

    Optimistic Rollups assume transactions are valid and use a challenge period (typically 7 days) for fraud proofs. If no one challenges the batch, it is finalized.

    ZK Rollups generate mathematical proofs (ZK-SNARKs or ZK-STARKs) that verify transaction validity. No challenge period needed — proofs provide immediate finality.

    Major Rollups

    • Optimistic: Arbitrum, Optimism, Base
    • ZK: zkSync Era, Scroll, Linea, Polygon zkEVM

    Impact on DeFi

    Rollups have made DeFi accessible by reducing fees from $10-50 to under $0.10, enabling new use cases and bringing DeFi to mainstream users.

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