How do Optimistic Rollups function?
Optimistic Rollups are a type of Layer 2 scaling solution designed to improve the transaction throughput of blockchain networks, particularly Ethereum. They function by executing transactions off-chain while maintaining a connection to the main blockchain to ensure security and correctness.
In an Optimistic Rollup, transactions are processed in batches, which are then submitted to the Layer 1 blockchain. The term "optimistic" refers to the assumption that all transactions are valid by default, meaning the Layer 1 does not check each transaction immediately. This reduces the computational load on the base layer.
To ensure integrity, a dispute resolution mechanism is in place. If a user believes that a transaction in the rollup is fraudulent, they can challenge it within a predetermined window of time. During this period, if invalid data is provided, the system reverts to the last valid state and the dishonest party faces penalties.
This model allows for significantly reduced fees and faster confirmations compared to executing all transactions directly on the Layer 1 blockchain. As a result, Optimistic Rollups facilitate greater scalability for applications and users, making blockchain technology more practical for everyday use.