Layer 2 Rollups

The main chain of a blockchain like Ethereum ("Layer 1") can only process a limited number of transactions per second before fees spike, because every node must verify every transaction. A Layer 2 rollup works around this by moving execution off-chain: thousands of transactions are batched and run on a separate, cheaper network, and only a compressed summary, the resulting account balances plus a proof it was done correctly, gets posted back to Layer 1.

Two flavors differ in how they prove that summary is honest. Optimistic rollups post results and assume they're correct, but allow anyone a challenge window (often about a week) to submit fraud proof if something's wrong. Zero-knowledge (ZK) rollups post a cryptographic proof alongside the results that mathematically guarantees correctness immediately, with no challenge window needed.

Worked example. A swap that costs $15 in gas fees directly on Ethereum Layer 1 might cost $0.30 on a rollup, because the rollup batches that swap together with hundreds of others and splits one Layer 1 posting fee across all of them. The tradeoff on an optimistic rollup: a withdrawal back to Layer 1 must wait out the full challenge window, often days, unless the user pays a third party a fee to front the funds instantly. ZK rollups skip that wait because the correctness proof removes the need for a challenge period at all, the cost is that generating the cryptographic proof is computationally heavier to build.