Going back in time, during the Ethereum period, when we first embraced the smart-contract blockchains, all the operations that go into mining and validating a transaction, like data availability, consensus, execution and finality/settlement, happened on a single layer. As a result, the processing time of the blockchain was moving at a snail’s pace. Hence, the much infamous cryptokitty event led to the epiphany that scalability is the need of the hour.
Enter: Layer 2’s or Rollups
Now, rollups undoubtedly front-led the scalability bottleneck, but in doing so, they built a dependency on L1s nonetheless. So, even if you could supposedly scale to 2,000 to 10,000 TPS when it comes to proposing protocol upgrades or launching a new feature, the process still ended up slow, extraneous and complex.
Enter: Sovereign Rollups
Sovereign rollups have redefined an innovation where they broke the DA, EA, Consensus and Settlement layer but maintained full control over the Consensus and Settlement so that the base Layer or L1 will not sabotage their ecosystem. In this piece, we shall deep dive into learning in detail about sovereign rollups and their benefits, making them fit into the scalability with the sovereignty narrative.
What are Sovereign Rollups?
Unlike a smart-contract rollup that settles the entire block on an L1, the sovereign rollups use the L1s or other blockchains just for DA or Data Availability while handling consensus and settlement on their own layer.
How Do Sovereign Rollups Work?
To understand how sovereign rollups work, you must first understand the workings of the smart contract rollup. Have a look at the image below:
As you can see, the TX data is processed in the rollup chain, and proof is submitted to the Settlement Layer. The settlement layer will trigger call data to validate the Merkle Root of the transaction, and if the smart contract validating the transaction on top of the settlement layer is satisfied, the trades are mined into the block and added to Ethereum’s full node. Now, if the Ethereum Node rejects the transaction, the rollup state of the L2 will be rolled back to the previous.
Hence, as you can see, smart-contract rollups have to depend on L1s for finality. That’s what changes when you introduce Sovereign Rollups in the equation. Sovereign rollups do not have to depend on the Base Layer/L1s for settlement and finality. On the contrary, they just use other blockchains for DA while settling the transactions on their own chain. For example, rollkit uses Bitcoin as a DA layer while settling transactions on its own chain. The flow changes in the following manner:
In the above image, as you can see, the rollup is using an alternate blockchain as a DA layer while settling all the transactions on its own layer through a P2P node hosting their own chains. Due to such a trade-off, it is comparatively simpler to fork an application or introduce new features. But it also creates an unwanted necessity of the trust protocols that introduces the DA layer token within the Dapps environment using a sovereign rollup as L2.
Benefits of Sovereign Rollups
- Ability to work independently of the Data Availability/Consensus Layer
- They can define their own rules of forking
- Proof verification within their own P2P network significantly reduces the cost.
- Tokens can be easily sent to and fro among different rollup environments ensuring higher composability and interoperability.
Top Misconceptions Regarding Sovereign Rollups Usage
Sovereign Rollups Do not Inherit the Security
That’s the question which might baffle users because they have fears like what if the project chooses to shut down and run away with the funds. But such is not the case, because while using the DA layer, Sovereign Rollups inherit Liveness and Safety of the DA layer. To better break that down, though a sovereign rollups undoubtedly has full control to settle the transactions on its own layer, they have to receive the data supporting the transaction from the Base/L1 chain. Without that data, the state of the rollup shall not change. So, if it is a ZK-Sovereign Rollup, they will use the Zk -Validity proofs. While, if it is an optimistic rollup, in that case, it shall be using the fraud proofs to change the state of its own chain. In the absence of that data, the rollup state will be frozen until the data arrives.
Sovereign Rollups are Not Re-Org Resistant
Since the sequencers and settlement layer dwell within the same ecosystem, it becomes apparent that at the time of forking, a rogue node could include a false transaction to be included in the new forked chain. But to avert the reorg attack, all the recent transactions have to provide validity or fraud-proof inherited from the DA layer. With that said, the provenance of the proofs wouldn’t allow a new reorg or sequencing to happen on a new chain. Let’s simplify this: suppose there is a unified chain AB. This chain wants to break into A & B. Now, could chain A include some unauthorised transactions at the time of its birth as a new chain?
No, that’s not possible because the Re-Org mechanism of the DA layer will come into play. So, if Chain A wants to include an additional transaction on top of the existing ones, Chain A is supposed to provide a DA proof of that transaction to change the state of the rollup. In the event of being unable to provide the DA proof, the state of the roll remains frozen until the problem has been resolved. In this way, it safeguards the rollup against any type of hacks, sabotages or unethical practices.
Sovereign RollUps are Censored
Since Sovereign Rollups use the DA layer as an extended blockchain layer, they inherit the anti-censored feature of that blockchain due to its DA reliability. How? The transactions are sent to the DA Layer, and they finalise the consecutiveness of the transaction. In this way, if someone looks for omission or commission of the transaction, they will have to re-organise the sequencer set as per the data availability relayed to the execution and settlement environment of the sovereign rollup ecosystem.
Such a practice would make censoring a transaction very difficult for the P2P nodes of the sovereign chains responsible for including transactions inside the blocks of the Sovereign Rollup Chain.
Trust Bridging Is There
Trust bridging is indeed present in a sovereign rollup if the DA layer allows smart-contract bridges to operate on top of the sovereign rollup environment. However, some chains like Celestia do not provide smart contract bridging. Hence, applications developing on top of Sovereign Rollups using Celestia as a DA layer can create their own trust bridges among themselves instead of with Celestia to create a validity mechanism within the rollup ecosystem in the following manner:
Top Projects Using Sovereign Rollups
Chainway has developed an adapter set through its Sovereign SDX that allows projects to build and deploy their own rollup solutions with the ability to develop your own faucets, block explorers, indexers, wallet support, and you can bring your own sequencer sets and execution environment to fulfil the need of the project. The reason Chainway went for Bitcoin as a DA layer is because the chain has always been censorship-resistant and liveable to this day.
Right now, if your project is using a separate DA layer, one thing that they would like is the network effect. Bitcoin has the largest network effect you need as a project to host on top of a sovereign rollup chain. Hence, Chainway has proposed Bitcoin as a DA layer for its Sovereign SDX rollup. But that doesn’t restrict you because you can use your own DA layers like Celestia, Avail or any other as per your changing needs to help roll with the rollups as per your project.
Conclusion
The dream is a 10% GDP to the blockchain by 2030, and that couldn’t happen when projects are built within walled gardens. Instead, the blockchain ecosystem needs connective islands through straits and bridges that ideologies of Superchains, HyperBridges and HyperLanes have achieved. But they are not chain agnostic as per varying tech stacks. The need of the hour is where you can have quantum: (i) In blockchain and (ii) Out of blockchain simultaneously. Where you only inherit the positives of the Blockchains and use them to build on top of existing centralised solutions, which just need a force multiplier to reach the next level. Sovereign Rollups have been construed as something similar that gives flexibility to centralised systems but the security and transparency of blockchains, breaking the trilemma challenge from the ground up.
Here at VE3, we stand out as a pioneering force multiplier driving this transformative vision forward. With our innovative approach, we facilitates the integration of quantum capabilities into both blockchain and non-blockchain systems. By providing a seamless bridge between these realms, we empower businesses to leverage the advantages of blockchain technology without compromising on the efficiency of existing centralized solutions. Through unique features and capabilities, we contributes significantly to the realization of a connected and interoperable blockchain ecosystem. To know more, explore our innovative digital solutions or contact us directly.
