An Updated View of Rollups Development

Rollups refer to the infrastructure built on top of Layer 1s (L1s), mainly Ethereum, where transactions are rolled up and submitted as a single L1 transaction. Over the past year, there have been various developments in the rollups domain as Ethereum gas fees surged, pricing out many retail users. By amortizing multiple transaction costs into a single transaction, rollups have managed to significantly bring transaction costs down. For instance, a typical token swap on Arbitrum costs less than $5 and NFT transactions on ImmutableX currently have no fees.

In addition to lowered fees, rollups, also known as Layer 2s (L2s), have significantly better user experiences. Transactions on L2s typically have much faster confirmation times than transacting on Ethereum itself, owing to the fact that transactions are confirmed by L2 sequencers, and for the all production-ready rollups today, the sequencer node is still mainly controlled by a single entity with no need for nodes to arrive at a consensus. The main reason for fast finality on L2s today is that the single sequencer node for these rollups behaves honestly, so there are no alternative states proposed. That said, finality on L2 does not imply finality on L1, and the state transitions proposed on L2 can still be challenged or rejected on L1.