Summary of New Rollup Initiatives

The growth of the blockchain industry has slowed significantly since the beginning of the bear market, which has undoubtedly alleviated the scaling hurdles faced by many blockchains during the bull run of 2021. As a result of costly gas fees on Ethereum, multiple Layer 1s (L1s) such as Avalanche and Solana have sprung up to handle the demand for block space. However, these L1s typically came with a native token that validator nodes are required to stake to participate in the chain’s consensus; tokens that have seen large drawdowns in price in the current bear market.

Given that there are additional costs associated with staking tokens to participate in a chain’s consensus, it would be more efficient to use a rollup for scaling purposes since the consensus falls back to the base layer. The rollup would then only need to ensure that there is a mechanism to enforce valid state transitions on the underlying layer. For instance, optimistic rollups rely on fraud proofs, whereas zero-knowledge (zk) rollups rely on validity proofs.Given that these mechanisms can be implemented on an underlying chain, it allows a rollup to inherit security from the base chain. With that in mind, numerous rollup efforts have been surfacing over the past quarter, a trend that will be covered in this piece.