Crypto glossary

Rollup

A rollup is a scaling solution that executes many transactions outside the base blockchain, then posts them in compressed batches, together with the resulting state, back to the base layer so anyone can verify or reconstruct them.

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How a rollup works

Users send transactions to the rollup instead of to the main chain. An operator, usually called the sequencer, orders them, executes them and bundles hundreds or thousands into a batch. The batch's transaction data, heavily compressed, is published on the layer 1, along with a commitment to the new state: who owns what after those transactions.

Because the data sits on the layer 1, anyone can rebuild the rollup's state independently. That is what separates a true rollup from a sidechain, which keeps its own data and security.

Two ways to prove correctness

Optimistic rollups assume each batch is correct. During a challenge window, often about seven days, anyone watching can submit a fraud proof showing an error, and the bad batch is reverted. Arbitrum and Optimism work this way.

Zero-knowledge (ZK) rollups attach a validity proof, a piece of cryptography showing the batch was executed correctly, which the layer 1 checks before accepting it. Withdrawals can be faster, but generating proofs is computationally heavy.

Why they matter

Rollups are the main scaling path on Ethereum. The base chain does not have to execute every transaction; it only stores data and checks proofs. Ethereum's Dencun upgrade in March 2024 (EIP-4844, also called proto-danksharding) added a cheaper data space called blobs specifically for rollups, which cut their costs significantly.

Risks to keep in mind

Many rollups still depend on a single sequencer and on admin keys that can upgrade contracts. Some optimistic rollups have had limited or permissioned fraud proofs. A bug in the proof system or bridge contract could put funds at risk. It is worth checking how far a given rollup has actually decentralized.

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Frequently asked questions

What is the difference between a rollup and a layer 2?

A rollup is one type of layer 2. Layer 2 is the broader category that also includes payment channels and other designs.

Why do withdrawals from optimistic rollups take a week?

The official bridge waits until the challenge window has passed, so any fraudulent batch can still be disputed.

Are ZK rollups better than optimistic rollups?

They have different trade-offs: faster finality and stronger proofs versus more complex, costly proving. Neither is simply better.

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All glossary terms · Educational reference only — not investment, legal, tax or financial advice.