Bitcoin Magazine: What challenges does Rollup face?

Source: Bitcoin Magazine; Compilation: Wuzhu, Golden Finance

Rollups have recently become the focus of BTC expansion, becoming the first thing to truly steal the spotlight from the Lighting Network in a more widespread sense. Rollups are intended to be an off-chain second layer not constrained or restricted by the core Liquidity of the Lighting Network, meaning that end users need someone to pre-allocate (or ‘lend out’) 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 run 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 is not intended to discuss the current state of implementation on BTC, but rather to discuss the functionality of an idealized Rollup that people have long been pursuing, which depends on the ability to directly verify Zero-Knowledge Proofs (ZKPs) on BTC, a feature that is currently not supported.

The basic structure of Roll is as follows: a single account (UTXO in BTC) holds the balances of all users in 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 Rollup. All these accounts are authorized using Public Key/Private Key, so users still need to sign certain content with their Secret Key to make off-chain expenditures. This part of the structure allows users to exit unilaterally at any time without permission, simply by providing transaction proof 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 in order 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 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 and users can view and access it, 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, every time a new off-chain transaction is confirmed and the Rollup account’s state changes, the information is directly put on the blockchain. Not the entire tree, which would be absurd, but the information needed to reconstruct 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 Rollup transactions.

In more advanced implementations, use balance difference. 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 the 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 current balance Merkle tree.

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 rules require that these data be included in the formal rollup provided to users using Blockchains, and transactions that do not include account summaries or account differences are considered invalid transactions.

Validity Period

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

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

This requires verifying 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 is actually publicly broadcasted after generation. It cannot verify whether external information is truly public to everyone.

This opens the door to data withholding attacks, which create commitments to published data and use them to advance rollups, but the data is not actually available. This prevents users from withdrawing funds. The only real solution is to rely on value and incentive structures outside of BTC entirely.

Dilemma

This has brought a dilemma to rollup. When it comes to data availability issues, there is basically a binary choice of whether to publish the data to the BTC blockchain or elsewhere. This choice has a significant impact on 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 rollup. Block space is limited, which sets a limit on the number of rollups that can exist at once and the total number of off-chain transactions that all rollups can process. 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 eliminates the hard upper limit of scalability gains, but it also brings new security and sovereignty issues. In Rollups that use BTC to achieve data availability, if the data that users need to extract is not automatically published to the blockchain, the state of the 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 BTCRollup users’ funds by producing Blocks instead of actually broadcasting the Block, thus 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?