Rollup
In simple terms
A rollup batches many transactions together, processes them elsewhere, and writes a compressed summary to the main blockchain. That makes each transaction far cheaper while still relying on the main chain to keep everyone honest.
Definition
A Layer 2 network that executes transactions off the main chain and posts the results back to it for security.
In depth
Rollups execute transactions off-chain and publish transaction data plus a state commitment to a settlement layer, which is what allows anyone to reconstruct and verify the rollup's state. Optimistic rollups assume validity and provide a challenge window in which fraud proofs can revert an invalid state, which is the source of their multi-day withdrawal delay. Validity rollups publish a succinct cryptographic proof verified on the settlement layer, giving fast finality at higher proving cost. Both derive security from the settlement layer, distinguishing them from sidechains.
How does Rollup work?
A sequencer receives transactions, orders and executes them, and gives users near-immediate soft confirmation. Batches of compressed data and a new state root are posted to the settlement layer. Under the optimistic model a challenge period follows in which a fraud proof can overturn an invalid batch; under the validity model a proof is verified immediately. Fees are low because the cost of one settlement-layer posting is shared across every transaction in the batch.
An example
A swap that would cost an illustrative $12 on the settlement layer costs cents on a rollup, because the batch cost is split across thousands of transactions. Moving funds back out is instant on a validity rollup and takes roughly a week on an optimistic one.
Figures are illustrative only.
What beginners get wrong
- Expecting withdrawals to be as fast as deposits. On an optimistic rollup they are not, by design.
- Overlooking sequencer centralisation. Most rollups run a single sequencer today, which can delay or reorder transactions even though it cannot steal funds.
- Sending assets to a rollup address from an exchange that does not support that network.
Related terms
Part of
How does a blockchain transaction actually work? — the subject page for blockchain mechanics, with all 15 of its definitions in one place.
Educational only — not financial advice.