Bitcoin Magazine: What challenges does Rollup face?

Source: Bitcoin Magazine; Translation: Wuzhu, Golden Finance

Rollups have recently become the focus of BTC scalability, becoming the first thing to truly steal the spotlight from the Lighting Network in terms of broader attention. Rollups aim to be an off-chain second layer that is not constrained or limited by the core Liquidity of the Lighting Network, which means that end users need someone to allocate (or ‘lend’) funds in advance in order to receive money, or intermediate routing nodes need channel balances to facilitate the full flow of payment amounts from senders to receivers.

These systems were originally run on Ethereum and other Turing Complete systems, but the focus has recently shifted to porting them to UTXO-based blockchains (e.g. BTC). This article is not intended to discuss the current implementation on BTC, but to discuss the idealized functionality of Rollup that people have been pursuing for a long time, which depends on the ability to directly verify Zero-Knowledge Proof (ZKP) on BTC, a feature that BTC currently does not support.

The basic structure of Roll is as follows: a single account (UTXO in BTC) holds 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 the current balances of all existing accounts in the Rollup. All these accounts are authorized using Public Key/Private Key pairs, so in order to make off-chain withdrawals, users still need to sign certain content with their Secret Key. This part of the structure allows users to exit at any time without permission, by simply producing a transaction proving that their account is part of the Merkle tree. They can unilaterally exit the Rollup without the permission of the operator.

The operator of Rollup must include a ZKP in the transaction 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 are properly authorized by the account holder, and whether the operator has not maliciously updated the balance to steal users’ funds 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 place their branches in the tree so that they can exit without permission when 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 ridiculous, but the information needed to rebuild 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 updating transactions of the Rollup.

In a more advanced implementation, 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 include changes in account balance 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 this data be included in the formal rollup provided to users using the Block chain, i.e., transactions that do not include account summaries or account differences are considered invalid.

Validity Period

Another way to deal with the issue of user withdrawal data availability is to place the data outside of the blockchain. This introduces subtle issues where rollups still need to enforce that data is available elsewhere. Traditionally, other blockchains have been 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 its absolute correctness. However, when it is posted to an external system, the best it can do is verify the 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 blockchain 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 broadcast after it is generated. It cannot verify if external information is truly publicly accessible to everyone.

This opens the door to data withholding attacks, i.e., creating commitments to publish data and using it to advance rollup, but the data is not actually available. This prevents users from withdrawing funds. The only real solution is to fully rely on the value and incentive structure of systems other than BTC.

Caught in a dilemma

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

On the one hand, using BTC blockchain as the data availability layer will set a hard upper limit on the scalability of rollups. Block space is limited, which sets an upper 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 room 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 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 the funds of BTCRollup users 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 achieve unilateral user withdrawals, what would that be like?