What Is Rollup?
A rollup is a Layer 2 scaling solution that processes transactions off the main chain (Layer 1) but posts transaction data back to L1 for security guarantees. Rollups inherit the security of the underlying L1 while providing dramatically higher throughput and lower costs. They are the primary scaling strategy for Ethereum.
How Rollup Works
Two types of rollups exist: Optimistic Rollups (Arbitrum, Optimism, Base) assume transactions are valid and use a challenge period (typically 7 days) where anyone can submit a fraud proof if they detect an invalid transaction. ZK-Rollups (zkSync, StarkNet, Polygon zkEVM) use zero-knowledge proofs to cryptographically prove the validity of all transactions, enabling faster finality and potentially stronger security guarantees.
Why It Matters for Traders
Rollups have become the primary venue for DeFi trading — Arbitrum and Base alone process more transactions than Ethereum mainnet. For traders, this means: lower gas costs (often 10-50x cheaper), faster confirmation, and an increasingly vibrant DeFi ecosystem. The trade-off is bridge risk (moving assets to L2 involves trust assumptions) and liquidity fragmentation (the same token might have different liquidity on different L2s).
