Bitcoin Magazine: What challenges is Rollup facing?

Source: Bitcoin Magazine; Translation: Wuzhu, Golden Finance

Rollups have recently become the focus of BTC expansion, becoming the first thing that truly steals the limelight from Lighting Network, in terms of broader attention. Rollups aim to be an off-chain second layer that is not restricted or limited by Lighting Network’s core Liquidity constraints, meaning that end users need someone to pre-allocate (or ‘borrow’) funds in order to receive money, or intermediate routing Nodes need channel balances to facilitate the full flow of payment amounts from sender to receiver.

These systems were initially running on Ethereum and other Turing Complete systems, but the recent focus has shifted to porting them to UTXO-based blockchains (e.g. BTC). This article does not intend to discuss the current implementation on BTC, but rather the idealized Rollup functionality that people have long pursued, which depends on the ability to directly verify Zero-Knowledge Proof (ZKP) on BTC, a capability that BTC currently does not support.

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 a Merkle tree, committing to all current balances of accounts in the Rollup. All these accounts are authorized using Public Key/Private Key pairs, so in order to propose off-chain spending, users still need to sign certain content with their Secret Key. This part of the structure allows users to exit unilaterally at any time without permission, by simply producing a transaction proving that their account is part of the Merkle tree, without the need for operator permission.

The operator of Rollup must include a ZKP in the transaction to update the merkle root of the on-chain account balance during the off-chain transaction process. Without this ZKP, the transaction will be invalid and cannot be included in the Block chain. 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 funds from users or dishonestly reallocate them to other users.

The problem is, if only the root of the Merkle tree is published on-chain, which users can view and access, how do they put their branches in the tree so that they can exit without permission whenever they want?

Suitable Rollup

In the appropriate Rollup, each time a new off-chain transaction is confirmed and the state of the Rollup account changes, the information is directly put on the blockchain. Not the entire tree, that 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 contain 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 include balance changes that have occurred in accounts. Then, users can simply scan the chain and “calculate” from the beginning of the Rollup to obtain the current status of account balances, which allows them to reconstruct the Merkle tree of the current balance.

This can save a lot of expenses and Block space (thus saving money), while still allowing users to ensure access to the information required for unilateral exit. The rollup rules require 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.

Expiration Date

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

This has created a dilemma where the security guarantee is equally strong. When the data is directly published to the BTCBlock chain, Consensus rules can ensure that it is absolutely correct. However, when it is published to an external system, the best it can do is to verify SPV proof, that is, the data has been published to another system.

This requires verification that the data exists in other on-chain proofs, which ultimately is an Oracle Machine problem. The BTC Block chain cannot fully verify anything other than what happens on its own Block on-chain. The best it can do is verify ZKP. However, ZKP cannot verify whether the Block containing rollup data has truly been publicly broadcast after generation. It cannot verify whether external information is truly publicly accessible to everyone.

This opened the door to data withholding attacks, that is, creating commitments to published data and using them to advance rollup, but the data is not actually available. This results in users being unable to withdraw funds. The only real solution is to rely completely on the value and incentive structure of systems other than BTC.

Dilemma

This poses a dilemma for rollups. When it comes to data availability, there is essentially a binary choice between publishing the data on the BTC blockchain or elsewhere. This choice has significant implications for the security, sovereignty, and scalability of the rollup.

On the one hand, using BTCBlock chain as the data availability layer will set a hard limit on the scalability of rollup. Block space is limited, which sets a limit on the number of rollups that can exist at once 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 expansion.

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 the Block, thereby making the data available.

So, if we really achieve the ideal Rollup implementation on BTC, and truly realize unilateral user withdrawals, what would that be like?