Bitcoin Magazine: What challenges are Rollups facing?

Source: Bitcoin Magazine; Compilation: Wuzhu, Golden Finance

Rollups have recently become the focus of BTC scalability, becoming the first thing that truly steals the limelight from the Lighting Network and gains broader attention. Rollups aim to be an off-chain second layer that is not constrained by Lighting Network’s core liquidity limitations, where end users need someone to pre-allocate (or ‘lend’) funds in order to receive money, or intermediate routing nodes need channel balances to facilitate the smooth flow of payment amounts from sender to receiver.

These systems were originally implemented on Ethereum and other Turing Complete systems, but recently the focus has shifted to porting them to UTXO-based blockchains such as BTC. This article does not intend to discuss the current state of implementation on BTC, but rather the desired functionality of an idealized Rollup that depends on capabilities not currently supported by BTC, namely the ability to directly verify Zero-Knowledge Proofs (ZKPs) on BTC.

The basic architecture of Roll is as follows: a single account (UTXO in BTC) stores the balances of all users in the Rollup. This UTXO contains a commitment, which exists in the form of the Merkle root of the Merkle tree, committing all current balances of existing accounts in the Rollup. All these accounts are authorized using Public Key/Private Key pairs, so users still need to sign certain content with their Secret Key to make off-chain spending. This part of the structure allows users to exit at any time without permission, as long as they provide transaction proof that their account is part of the Merkle tree, they can unilaterally exit the Rollup without the operator’s permission.

Rollup operators must include a ZKP in the transaction to update the merkle root of the on-chain account balance during the process of completing off-chain transactions. Without this ZKP, the transaction will be invalid and cannot be included in the Blockchain. This proof allows people to verify whether all changes to the off-chain account have been properly authorized by the account holder and whether the operator has not maliciously updated the balance to steal user funds or dishonestly reallocate them to other users.

The question is, if only the root of the merkle tree is published on-chain, and users can view and access it, how do they place their branches in the tree so that they can exit without permission when they want?

Appropriate Rollup

In the appropriate Rollup, every time a new off-chain transaction is confirmed and the status of the Rollup account changes, the information is directly put into the blockchain. It’s not the entire tree, which would be too absurd, but the information needed to rebuild the tree. In a simple implementation, the summary of all existing accounts in the Rollup will include the balance, and the account will only be added in the updated transactions of the Rollup.

In more advanced implementations, use balance differences. This is essentially a summary of which accounts have increased or decreased funds during the update process. This allows each Rollup update to only contain account balance changes that have occurred. Then, users can simply scan the chain and ‘compute’ from the beginning of the Rollup to determine the current state of account balances, allowing them to reconstruct the Merkel tree of the current balance.

This can save a lot of expenses and Block space (thus saving funds), while still allowing users to ensure access to the information required for unilateral exit. The rollup rule requires that these data be included in the formal rollup provided to users using the Block chain, that is, transactions that do not include account summaries or account differences are considered invalid.

Validity Period

Another way to address the issue of user withdrawal data availability is to store the data outside the Block chain. This introduces subtle issues as rollups still need to enforce the availability of data elsewhere. Traditionally, other Block chains are used for this purpose, specifically designed as data availability layers for systems like rollups.

This creates a dilemma of having equally strong security. When data is directly published to the BTCBlock chain, Consensus rules can guarantee its absolute correctness. However, when it is published to an external system, the best it can do is to verify the SPV proof, that is, the data has been published to another system.

This requires verification that the data exists in proofs on other on-chain, which is ultimately an Oracle Machine problem. The BTC blockchain cannot fully verify anything that happens outside of its own block on-chain, and the best it can do is to verify ZKP. However, ZKP cannot verify whether the block containing rollup data has actually been publicly broadcasted after generation. It cannot verify whether external information is truly open to everyone.

This opens the door to data withholding attacks, i.e. creating commitments to publish data and using it to advance rollups, but the data is not actually available. This prevents users from withdrawing funds. The only real solution is to fully rely on the value and incentive structure of systems outside of BTC.

Caught in a dilemma

This has presented a dilemma for rollup. When it comes to data availability, there’s basically a binary choice of whether to publish data to the BTC blockchain or elsewhere. This choice has significant implications for the security, sovereignty, and scalability of rollup.

On the one hand, using BTCBlock chain as the data availability layer will set a hard limit on the scalability of rollups. Block space is limited, which sets a limit on the number of rollups that can exist at one time and the total number of transactions that can be processed off-chain for all rollups. Each rollup update requires block space proportional to the number of accounts whose balances have changed since the last update. Information theory only allows data to be compressed to a certain extent, and at this point, there is no more potential for scalability.

On the other hand, using different layers to achieve data availability will eliminate the hard upper limit of scalability gains, but it also brings new security and sovereignty issues. In the Rollup using BTC to achieve data availability, if the data that users need to extract is not automatically published to the blockchain, the state of Rollup cannot change. With Validiums, this guarantee depends entirely on the ability of the external system used to resist deception and data hiding.

Now, any Block producer on the external data availability system can hijack the funds of BTCRollup users by producing a Block instead of actually broadcasting that Block, thereby making the data available.

So, if we really achieve the ideal Rollup implementation on Bitcoin, and truly realize unilateral user withdrawals, what will it be like?