Detailed explanation of Based Rollup: a solution that fully inherits Ethereum’s activity

Original title: "What is Based Rollup that can inherit Ethereum's liveness?"

Original author: 0xNatalie, ChainFeeds

With the completion of the Cancun upgrade and the reduction of L2 Gas fees, the market's focus has returned to L2 again. There are currently two main categories of Rollup L2 solutions: Optimistic Rollup and ZK Rollup. Optimistic Rollup occupies most of the market share due to its mature market applications. However, both Optimistic Rollup and ZK Rollup have some problems. In order to solve these limitations and further optimize efficiency and decentralization, Based Rollup came into being. It not only simplifies technical complexity and reduces transaction delays, but is also the only solution that fully inherits Ethereum's liveness. Among all known projects, only ZK Rollup team Taiko is currently developing a solution based on Based Rollup.

Problems with Existing Rollups

Optimistic Rollup requires a longer challenge window, usually 7 days, when confirming transactions in order to correct potential fraud. This design results in a longer wait time before funds can be withdrawn, slowing down the overall transaction process. Moreover, during the peak of the Ethereum network, Optimistic Rollup involves high gas fees when processing fraud proofs. Although ZK Rollup can provide faster transaction confirmation times and reduce transaction data storage on the chain to save costs, it consumes a lot of computing resources and time in the process of generating zero-knowledge proofs, resulting in costs and transaction processing speed (TPS) being affected.

In short, the technical complexity of Optimistic Rollup and ZK Rollup results in them both needing to maintain a complex set of infrastructure and security mechanisms to process and verify L2 transactions, which has a negative impact on transaction costs and network efficiency.

Based Rollup Solution

Justin Drake, a researcher at the Ethereum Foundation, proposed Based Rollup in March 2023, which can effectively overcome these problems. Based Rollup, also known as L1-sequenced Rollup, is a Rollup whose sorting is completely driven by the underlying L1. This design allows L1 proposers to collaborate with L2 searchers and builders without permission to include Rollup blocks directly in L1 blocks, that is, outsourcing the sorting rights to L1 validators. The consensus layer, data availability layer, and settlement layer of Based Rollup are all Ethereum, and only the execution layer is built on the Rollup network, which is responsible for handling the execution and status updates of transactions. It is worth noting that Based Rollup solves the Rollup efficiency problem from the perspective of sorting, which is different from the classification of Optimistic Rollup and ZK Rollup from the perspective of verification. Because the dimensions are different, they do not conflict with the classification of OP and ZK. That is to say, if Optimistic Rollup or ZK Rollup outsources the sorting rights to L1 validators, it can be called Based Rollup.

Based Rollup inherits the security and activity of L1 by transferring the responsibility of transaction ordering to L1, while optimizing the performance of L2. It is the only Rollup solution that inherits 100% of Ethereum's activity. This design brings the following advantages:

· Complete inheritance of activity:The security and decentralization of Based Rollup are consistent with Ethereum, and no additional security mechanisms or consensus algorithms are required to ensure the validity and order of transactions. Compared with Rollup with an escape hatch mechanism, it is safer, faster and more convenient. In a Rollup with an escape hatch mechanism, if the Rollup fails or is attacked, users can safely return their funds to L1 through the escape hatch, but they must wait for a period to guarantee settlement.

· Simplify technical complexity:When L2 needs to handle transaction ordering and data availability issues on its own, it will introduce additional complexity and potential security risks. Shifting the responsibility of sorting to L1 simplifies the structure of L2, eliminating the need for sorter signature verification, escape hatches, and external PoS consensus.

· Reduced latency: Using L1 to sort transactions allows for quick confirmation of transaction validity and order, which reduces confirmation time and improves the responsiveness and efficiency of the entire network.

· Reduced operational costs: Since L1 already handles the sorting of transactions, L2 can batch and confirm transactions more efficiently on this basis, reducing L2's verification complexity and the resources and costs required for sorting alone. This cost efficiency is more pronounced when the transaction volume is large.

· Economic incentive consistency: L1 miners can receive additional fees and incentives from participating in L2 transaction sorting, which increases their motivation to maintain the overall health of the network. This design also helps maintain the consistency of incentives between different layers in the network and enhances the economic security of the entire ecosystem.

Challenges faced by Based Rollup

Although Based Rollup can solve some of the shortcomings of the current Rollup solution, this technology also faces some challenges:

· Revenue restrictions:Relying on L1 sorting limits the opportunity to obtain MEV, and most of Based Rollup's MEV will flow to L1 validators. Based Rollup itself cannot directly benefit from it.

· Sorting flexibility: Delegating sorting tasks to L1 may reduce the flexibility of sorting, affecting the implementation of specific transaction sorting strategies and fast transaction confirmation. For example, L1's sorting decision may be that miners choose to prioritize certain transactions to maximize their own interests, so if you want to implement an FCFS (First-Come First-Served) sorting mechanism similar to Arbitrum in Based Rollup, additional technical support (such as EigenLayer) is required.

Projects building Based Rollup

Since the concept of Based Rollup has only been proposed for a year, it is a relatively new concept, and its theoretical and implementation details are still in the exploration and improvement stage. Therefore, there are few projects building Based Rollup. The most well-known project is Taiko. Taiko is an L2 that uses ZK Rollup technology and has developed Type-1 zkEVM, which provides exactly the same opcodes and functions as Ethereum, ensuring high compatibility with the existing Ethereum ecosystem. Soon after the concept of Based Rollup was proposed, Taiko began to build Based Rollup, handing over transaction sorting to Ethereum's validators and using Ethereum as a settlement and data availability layer and consensus mechanism to simplify the structure of Rollup. On January 15, 2024, Taiko launched the Katla testnet and implemented Based Contestable Rollup (BCR), a Based Rollup that incorporates the dispute resolution process (similar to the fraud proof system) into the transaction verification workflow.

Future Outlook

Although the development of Based Rollup may require more time and resources, as well as dual verification of the market and technology. In the long run, Based Rollup will gain an advantage in market competition due to its enhanced security, decentralized characteristics, simplified structure and consistency of goals. Especially in the field of DeFi, Based Rollup has shown faster transaction confirmation speed and lower transaction costs, and has significant potential advantages. It is believed that with the continuous improvement of technology and the gradual recognition of the market, Based Rollup is expected to occupy a place in the Rollup L2 solution market.

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