Bitcoin Magazine: What challenges does Rollup face?

Source: Bitcoin Magazine; Translation: Wuzhu, Golden Finance

Rollups have recently become the focus of BTC expansion and are the first thing to truly steal the spotlight from the Lighting Network, in a more widespread sense of attention. Rollups aim to be an off-chain second layer not constrained or restricted by the core Liquidity of the Lighting Network, i.e., end users need someone to pre-allocate (or “lend out”) funds in advance 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 deployed 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 does not intend to discuss the current state of implementation on BTC, but rather the idealized functionality of Rollup 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 the Merkle tree, committing all current balances of existing accounts in the Rollup. All these accounts are authorized using Public Key/Private Key pairs, so in order to make off-chain expenditures, users still need to sign certain content using the Secret Key. This part of the structure allows users to exit at any time without permission, just by making a transaction proving 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 have been 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 can they place 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 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 Rollup transactions.

In more advanced implementations, the balance difference is used. 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 the account balance changes that have occurred. Then, users can simply scan the chain and ‘calculate’ from the beginning of the Rollup to determine the current state of the account balances, which allows them to reconstruct the Merkle tree of the current balances.

This can save a lot of expenses and block space (thus saving money), while still allowing users to ensure the information needed for unilateral exit. The rollup rules require these data to be included in the formal rollup provided to users using the blockchain, 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 withdrawal data availability is to place the data elsewhere outside the Block chain. This introduces subtle issues, as rollup still needs to ensure that the data is available elsewhere. Traditionally, other Block chains are used for this purpose, specifically designed to serve as the data availability layer for systems like rollup.

This has created a dilemma where security is equally strong. When 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 verify SPV proof, that is, the data has been published 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 truly publicly broadcast after generation. It cannot verify whether external information is truly made public to everyone.

This opens the door to data withholding attacks, i.e., making 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 rely entirely on the value and incentive structure of systems other than BTC.

Dilemma

This has brought a dilemma to the 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 significant implications for the security, sovereignty, and scalability of the rollup.

On the one hand, using the BTC Blockchain as a data availability layer will set a hard limit on the scalability of rollups. 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 limit on 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 on 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 user funds by producing Block instead of actually broadcasting the Block, making the data available.

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