By Shervin Beyk, Investment Manager, A&T Capital
1. Overview of Rollup Technology
Source: @pseudotheos
Rollups alleviate the performance bottleneck of Layer 1 by efficiently executing transactions off-chain and transmitting verifiable execution results back to the chain. The security of Rollups is derived from the consensus and data availability of the underlying Layer 1. Although in the early stages of development, the Rollup ecosystem provides a versatile design for dApp developers due to its modular and customizable nature.
Rollups can be general-purpose, such as Arbitrum and Optimism, or designed for specific applications. General-purpose Rollups rely on Layer 1 for settlement, consensus, and data availability storage, and may cause congestion in the underlying Layer 1 network due to high demand for Layer 2 transactions. On the other hand, application-specific Rollups are similar to application chains, but are less resource-intensive because they do not require a separate set of validators. In summary, Rollups are not limited to a single blockchain development framework and can be customized to meet specific operational needs.
2. Overview of Rollups-as-a-Service (RaaS)
Rollup-as-a-Service (RaaS) projects aim to revolutionize the deployment of Rollups by providing easy-to-use tools and services, abstracting away complex technical details and making them available to everyone. These projects offer a variety of options, from SDKs and user-friendly code-free interfaces to seamless solutions with one-click deployment. In addition, there is the Rollup Sequencer-as-a-Service (RSaaS) solution, which aims to provide shared decentralized sequential processing capabilities for multiple Rollups, and this solution is also being built. Sequencer is a component of the Rollup framework, responsible for grouping transactions and submitting compressed data to the underlying layer. This decentralized design provides strong resistance to censorship and ensures the continuous operation of the network, enabling secure and seamless transaction processing.
2.1 SDK
Celestia's Rollkit Celestia's Rollkit is a solution that enables autonomous Rollup deployment, providing full control over execution and settlement. It is built using a modified version of the Cosmos SDK and communicates via IBC. Once deployed, these Rollups use Celestia for consensus and data availability.
ON stack
The OP stack uses OP Rollup technology to organize the network into three different layers: consensus layer, execution layer, and settlement layer. To simplify development, these three layers are standardized through APIs, allowing developers to easily fork and assemble components to meet their specific needs.
Dymension
RollApp Toolkit Dymension's RDK is similar to the Cosmos SDK and supports multiple virtual machines. This allows developers to choose from a variety of smart contract platforms, such as CosmWasm or Ethermint, or any other platform supported by the Cosmos ecosystem.
Sovereign SDK
The Sovereign SDK aims to simplify the creation of zk-Rollups, just as the Cosmos SDK has simplified it for App-chains. It will be the first rolling framework to eliminate the complexity of zero-knowledge, allowing developers to easily build their applications without the need for advanced cryptographic skills. Using the Sovereign SDK, developers can write their applications in Rust or C++, and the SDK will take care of compiling it into an efficient zk virtual machine.
Most RaaS projects use these SDKs to develop easy-to-use, code-free Rollup deployment solutions. The market for Rollups as a Service (RaaS) has been growing rapidly, and multiple SDKs have emerged to meet the needs of developers. These SDKs provide a variety of features and options to simplify the process of deploying Rollups, including full control over execution and settlement, standardization of the network into different layers, compatibility with various virtual machines, and simplified creation of zk-Rollups.
summary
Celestia's Rollkit provides a solution for deploying sovereign Rollups using the Cosmos SDK and communicating via IBC. OP Stack standardizes the network into three layers through an API, making development easier. Dymension's RollApp Kit provides compatibility with various virtual machines, allowing developers to choose from different smart contract platforms. Sovereign SDK is the first Rollup framework that eliminates zero-knowledge complexity, allowing developers to easily build applications without the need for advanced cryptographic skills.
- The availability of these SDKs signifies: (1) the continued maturity of the RaaS market and (2) the need for easy-to-use, user-friendly Rollup deployment solutions.
- Each SDK offers unique benefits and developers can choose the best-suited SDK based on their needs and requirements.
2.2 Codeless Rollup Deployment
Source: @0xConstellation
Constellation
Constellation makes it easy for developers to deploy Rollups using the OP Stack. These Rollups are compatible with OP EVM-compatible Rollups and are optimized for fast performance. Each "Constellation Chain" includes a block explorer and bridge that can be customized with options such as block time and account permissions.
AltLayer
AltLayer enables developers to launch scalable OP Rollup execution layers. Each Rollup is customized for a specific application, and the platform is designed to work with multiple blockchains and virtual machines. It supports Ethereum (EVM) and WebAssembly (WASM) for versatility. AltLayer serves as a flexible scaling solution for all compatible chains, not just limited to a single layer1 or layer2.
Eclipse
Eclipse provides developers with extensible options, enabling them to create and deploy their own Rollups, while also being able to choose any blockchain for added security and data storage.
Saga
Saga is developing Web3 infrastructure to enable developers to create applications with exclusive block space. This exclusive block space guarantees fast speeds, independence from other applications using Saga, hassle-free upgrades, and reduced congestion.
Many RaaS projects start by focusing on one area, usually starting with OP deployment. Some projects immediately focus on zk-RaaS. The ultimate goal of most projects is to provide a flexible RaaS solution that works across a variety of execution environments, deployment types, zk or OP, sequencers, and provides flexible options for settlement, consensus, and data availability.
summary
In summary, the codeless Rollup deployment solutions listed above are designed to provide developers with tools and resources to easily and efficiently deploy scalable Rollup solutions. Each solution has its own unique characteristics, such as compatibility with various blockchains and virtual machines, customizable block browsers and bridges, and dedicated block spaces for fast and efficient application development. These solutions help advance rolling technology by providing flexible and diverse solutions to meet the specific needs of each project. As the technology continues to develop and mature, the future of development can see the emergence of more advanced and feature-rich codeless rolling deployment solutions.
2.3 Shared Transaction Sequencer
Transaction sorters are nodes that collect transactions, create blocks, and send compressed transaction information to the main layer. Currently, all mainnet rollups use centralized transaction sorters, but RaaS projects like The Optimism Collective, Dymension, and Saga are developing decentralized transaction sorter systems.
For the Optimism Collective, Optimism is creating a shared set of transaction sorter nodes for chains made with the OP Stack. Chains using the OP Stack can choose to join the group of transaction sorter nodes managed by the Optimism Collective.
Regarding Dymension, nodes will hold Dymension's native token on the Dymension settlement layer and will be elected based on their stake weight. Finally, Saga creates a set of transaction sorter nodes for Rollkit-powered chains through RaaS. Depending on the node's stake weight, operators will be assigned tasks in Roll-up and may lose their tokens if they censor or experience downtime.
Decentralized transaction sorter nodes process multiple Roll-up applications simultaneously and use cryptocurrency as an incentive. By sharing transaction sorter nodes, cross-chain Roll-up communication can be secure and reliable because blocks on various chains are generated simultaneously.
3. Summary: Advantages of RaaS
More control and customization: Rollups as a Service (RaaS) provides developers with more control over application development and deployment. This increased control enables developers to tailor their applications to specific business needs and provides them with greater flexibility in choosing the functionality and features that best meet their needs.
Avoiding sudden increases in transaction fees: One of the key advantages of RaaS is that it minimizes the risk of sudden increases in transaction fees due to network congestion. This ensures that developers can deploy their applications without having to worry about the negative impact of unexpected fee increases.
Low latency and high throughput experience: RaaS provides developers with a low latency and high throughput experience, which is critical for applications that require real-time transactions. This provides developers with the ability to build and deploy fast and reliable applications to meet customer demands.
Bridging Fees
Serialization Fees
Rollup development costs
Settlement layer fees
Empowering developers to realize their visions without compromise: Fundamentally, RaaS frees developers to create what they envision within the constraints currently faced by blockchain development.
Internalizing MEV: RaaS provides developers with the ability to internalize Miner Extractable Value (MEV), which can increase the overall profitability of the application.
Potential for transaction fees as protocol revenue: RaaS offers the potential to capture transaction fees as protocol revenue, which can increase the overall revenue of the application.
Adding more utility to the repurchased native token: RaaS adds more utility to the repurchased native token, which can increase its overall value and provide additional benefits to token holders.
Source: Constellation Feature Map
summary
While Rollups-as-a-Service offers many advantages, new technologies still carry potential risks. These risks include centralization, security and bridging vulnerabilities, and fragmentation of liquidity. Despite these concerns, as the technology advances, Rollups will simplify the experience for developers and users through improved user interfaces and greater flexibility in the design of native token economies. By improving security, reducing costs, and providing more control, Rollups have the potential to change the way blockchain applications are developed and used. By carefully evaluating these risks and benefits, developers can leverage Rollups-as-a-Service to solve their specific needs.