Rollups are a relatively new L2 solution being implemented on Ethereum that enable exponential scalability gains while providing (nearly) identical security guarantees as mainnet Ethereum. The primary innovation of rollups is that they move computation off-chain, while storing only the bare minimum of transaction data on-chain with no added trust assumptions. Rollups execute transactions in a new environment (off-chain) and bundle them before delivering the changed state and transaction data to Ethereum. The executed changed state is then sent to Layer 1 and confirmed in a verification contract using either validity or fraud proof techniques.
There are two primary types of rollups: Zk-rollups and Optimistic rollups. The primary difference between the two implementations lies with their cryptographic proofs: validity proofs for ZK-rollups (ZKR) and fraud proofs for Optimistic rollups (OR). Each rollup deploys a set of smart contracts on L1 Ethereum that are responsible for processing deposits/withdrawals and verifying the submitted proofs. The main value proposition of rollups is that they minimize the data footprint on L1 while still preserving the ability to check for fraud.
In the case of Optimistic rollups, no computation is actually done. ORs “optimistically” assume all state changes are valid and post the off-chain transactions to Ethereum’s layer 1 as <a href="https://link.coindesk.com/click/26723254.21049/aHR0cHM6Ly9ibG9nLm9wZW56ZXBwZWxpbi5jb20vZXRoZXJldW0taW4tZGVwdGgtcGFydC0yLTYzMzljZjZiZGRiOS8/5f9775e16365176ab6627f42Bbbe89bbc">calldata</a>. To counter any potential fraudulent transactions, a challenge/dispute period is put in place for ~one week after posting to L1. During this time any third party can publish a fraud proof to verify the validity of the transactions across L1 and L2. If the transactions are found to be invalid, the invalid transactions and all affected transactions will be reverted. Arbitrum, Optimism, Boba, and Fuel are examples of Optimistic rollups.