Scalability is crucial when it comes to blockchain. A scalable blockchain role is to increase the transaction speed and higher transaction output (higher number of transactions per second) considering decentralization and working on security grounds.
As the number of crypto users who buy Ethereum grows, the demand has made Ethereum have certain limitations for making transactions, which results in extremely high gas fees and makes it expensive for everyday users to pay for their transactions.
There are three ways to scale Ethereum.
For layer 1, ETH-2 is the chosen solution for scaling blockchain as it helps undergo interconnected changes such as migration to proof-of-stake (Pos), merging the proof of work (PoW) chain with the updated PoS, and sharding with rollups.
The layer 2 scale consists of channels secured by Ethereum but is compatible with specific sets of applications. Layer 3 scale can make general applications compatible but have their consensus model for security and does not rely on the security of Ethereum. To tackle this issue of scalability to make secure and compatible applications, the developers came up with the most anticipated scaling solutions known as rollups.
According to ethereum.org, Rollup is a solution that performs transaction execution outside the main Ethereum chain and posts final transaction data on the main chain. Rollups tend to be the most anticipated scaling solution.
The Ethereum network blockchain can handle two core components posted in the blockchain, one is the transaction and the other is data. Transactions simply put is sending ETH from one address to another address. Ethereum blocks can allow the storage of any data, from simple files to complex smart contracts code.
Roll-ups, as per their name, can roll up several transactions and turns them into data transferred to the blockchain instead of sending transactions one by one. As making each transaction comes up with scaling issues, bundling those many transactions into a single file with approved security has proved maximum reliability.
Rollups work by executing each transaction outside and posting back a bundle of transaction data on layer one. Moving the process off-chain can allow the processing of more transactions, which are stored as data and are sent back to the main Ethereum chain.
ZK rollup or the ZKsnarks roll-up means the “Zero Knowledge succinct Non-interactive argument of knowledge” rollup which from a general perspective means the main chain has zero knowledge, does not have to see through all the transactions, and has no interaction with other resources to verify the process. Instead, the side chain provides the succinct proof of the transactions as data, as a validity proof by the zk checker, and sends it to the main chain with verified signatures.
The ZK rollup runs the transactions outside the layer 1 blockchain and submits the transaction as “validity proof” to the layer 1 blockchain. The validity proof is similar to the proof of work for validating all the transactions in the rollup. This off-chain validation is done to check fraudulent transactions and send only the secure ones to the layer 1 chain and thus the security is never compromised.
Blockchain enthusiasts claim that zk rollup updates in the future can scale extraordinary loads of transactions which can be a huge milestone in the blockchain technology next to the Ethereum merge.
The ZK rollup has been shown to provide a highly scalable solution to tackle transaction loads and comes up with many benefits on usage. However the persistence of challenges such as Composability, meaning composing transactions of different protocols on the same rollup and fractured liquidity, where the liquidity halt could be an additional problem.