Rollups-as-a-Service: A New Era of Scalability

Author: Shervin, Investment Manager at A&T Capital

Twitter: https://twitter.com/5herv1n?s=21&t=VDLeWBKhmM-BKB3fXCNOuw

An Overview of Rollup Technology

Rollups enhance scalability by executing transactions vertically, thereby alleviating the bottlenecks that come with Layer 1’s. They execute transactions and offer compressed transaction data for validation, eliminating the need for separate validator sets. In addition, their security is derived from the consensus and DA of the underlying layers. Despite being in the early stages of development, rollup ecosystems offer a versatile design for dApp developers due to their modular and customizable nature.

Rollups can either be general-purpose, such as Arbitrum and Optimism, or application-specific. General-purpose rollups depend on a Layer 1 for settlement, consensus, and DA and may experience network congestion due to high demand for L2 blockspace. On the other hand, application-specific rollups resemble app chains, but are less resource-intensive as they do not require separate validator sets. In conclusion, Rollups are not limited to a single blockchain development framework and can be tailored to meet specific operational needs.

Rollups-as-a-Service (RaaS) Landscape

Rollup-as-a-Service (RaaS) projects aim to revolutionize the deployment of rollups, by providing user-friendly tools and services that abstract away complex technicalities, making them accessible for all. These projects offer a variety of options, ranging from SDKs and user-friendly no-code interfaces that allow for seamless, one-click deployment. Furthermore, there are efforts to create Rollup Sequencer-as-a-Service (RSaaS) solutions, which aim to provide shared, decentralized sequencing capabilities for a multitude of rollups. Sequencers are integral to the rollup framework, performing the task of grouping transactions and submitting the compressed data to the underlying layer. This decentralized design provides robustness against censorship and guarantees the continual operation of the network, enabling secure and seamless transaction processing.

SDKs

Celestia’s Rollkit is a solution that enables the deployment of sovereign rollups, providing full control over execution and settlement. It is built using a modified version of the Cosmos SDK and facilitates communication through IBC. When deployed, these rollups utilize Celestia for consensus and DA.

The OP Stack leverages optimistic rollup technology and organizes the network into three distinct layers: the consensus layer, the execution layer, and the settlement layer. To simplify development, the three layers are standardized using APIs, allowing developers to effortlessly fork and assemble components to meet their specific needs.

Dymension’s RDK, like the Cosmos SDK, offers compatibility with a wide range of virtual machines. This gives developers the freedom to select from a variety of smart contract platforms, such as CosmWasm or Ethermint, or any other platform supported within the Cosmos ecosystem.

The Sovereign SDK aims to simplify the creation of zk-rollups, much like the Cosmos SDK did for layer 1 chains. It will be the first rollup framework to eliminate the complexity of zero-knowledge, allowing developers to easily build their applications without needing to have advanced cryptography skills. With the Sovereign SDK, developers can write their apps using Rust (or later, C++), and the SDK will take care of compiling it into a highly efficient zk virtual machine.

Most RaaS projects are using these SDKs to develop user-friendly and easy-to-use, no-code rollup deployment solutions. The market for Rollups as a Service (RaaS) has been growing rapidly and multiple SDKs have emerged to meet the demand of developers. These SDKs offer a range of features and options to simplify the process of deploying rollups, including full control over execution and settlement, standardization of the network into distinct layers, compatibility with various virtual machines, and simplifying the creation of zk-rollups.

Celestia’s Rollkit uses the Cosmos SDK and facilitates communication through IBC, providing a solution for deploying sovereign rollups. The OP Stack standardizes the network into three layers using APIs, making development easier for developers. Dymension’s RollApp Kit offers compatibility with a wide range of virtual machines, giving developers the freedom to select from different smart contract platforms. The Sovereign SDK is the first rollup framework to eliminate the complexity of zero-knowledge, allowing developers to easily build their applications without having advanced cryptography skills. In conclusion, the availability of these SDKs is a sign of the growing maturity of the RaaS market and the desire for user-friendly and easy-to-use solutions for rollup deployment. Each SDK provides unique benefits, and developers can choose the one that best fits their needs and requirements.

No-Code Rollup Deployment

Constellation enables developers to easily deploy rollups with the OP Stack. These rollups are compatible with optimistic EVM compatible rollups that are optimized for fast performance. Each “Constellation Chain” includes a block explorer and a bridge, and can be customized with options like block time and account permissions.

AltLayer enables developers to launch scalable optimistic rollup execution layers. Each rollup is tailored to a specific app, and the platform is designed to work with multiple blockchains and VMs. It supports both Ethereum (EVM) and WebAssembly (WASM) for versatility. AltLayer operates as a flexible scaling solution for all compatible chains, rather than being limited to a single layer 1 or 2.

Eclipse aims to offer scalable options for developers to create and deploy their own rollups using Solana’s virtual machine, while also being able to choose any blockchain for added security and data storage.

Saga is developing Web3 infra to empower developers to create apps with their own exclusive block space. This exclusive block space guarantees fast speeds, independence from other apps using Saga, effortless upgrades, and reduced congestion.

Many RaaS projects begin by focusing on one area, usually starting with optimistic rollups. Some are immediately focused on zk-RaaS. The ultimate goal for most projects is to provide a versatile RaaS solution that works across various execution environments, rollup types, zk or optimistic, sequencers, and offers flexible options for settlement, consensus, and DA.

In conclusion, the no-code rollup deployment solutions listed above are designed to provide developers with the tools and resources needed to easily and efficiently deploy scalable rollup solutions. Each solution has its own unique features, such as compatibility with various blockchains and virtual machines, customizable block explorers and bridges, and exclusive block space for fast and efficient app development. These solutions are helping to advance the rollup technology by providing flexible and versatile solutions that can be tailored to meet the specific needs of each project. As the technology continues to evolve and mature, developers can expect to see even more advanced and feature-rich no-code rollup deployment solutions emerge.

Shared Sequencers

Sequencers are nodes that gather transactions, create blocks, and send compressed transaction information to primary layers. Currently, all mainnet rollups use centralized sequencers, but some RaaS projects like The Optimism Collective, Dymension, and Saga are developing decentralized sequencer systems.

As for the Optimism Collective, Optimism is creating a shared group of sequencer nodes for chains made with the OP Stack. Chains that use the OP Stack can choose to join a group of sequencer nodes managed by the Optimism Collective.

In regards to Dymension, nodes will hold Dymension’s native token on the Dymension settlement layer and are chosen based on their stake weight. Finally, Saga is creating a group of sequencer nodes for Rollkit-powered chains through RaaS. Operators are assigned tasks across rollups based on their stake weight and may lose their stake if they censor or experience downtime.

Decentralized sequencer nodes handle multiple roll-up applications at the same time and use cryptocurrencies as incentives. With shared sequencer nodes, cross-chain rollup communication can be made secure and trustworthy as blocks are generated simultaneously across various chains.

The Advantages of RaaS

● More control and customizability: Rollups as a Service (RaaS) provides developers with more control over the development and deployment of their applications. This increased control enables developers to customize their applications to meet specific business needs and provides them with greater flexibility in choosing the features and functionalities that best meet their needs.

● Protects against unexpected increases in transaction fees due to network congestion: One of the key benefits of RaaS is that it minimizes the risk of sudden and unexpected increases in transaction fees due to network congestion. This helps ensure that developers can deploy their applications without having to worry about the negative impact of unexpected fee increases.

● Low latency and high-throughput experiences: RaaS provides developers with low-latency and high-throughput experiences, which are essential for applications that require real-time transactions. This provides developers with the ability to build and deploy fast, reliable applications that meet the needs of their customers.

● Bridge fees

● Sequencing fees

● Rollup development fees

● Settlement layer fees

● Empowers developers to bring their visions to life without compromises: In essence, RaaS liberates developers from the restrictions faced in current blockchain development, allowing them to create exactly what they envision without any compromises.

● Internalizing MEV: RaaS provides developers with the ability to internalize Miner Extractable Value (MEV), which can increase the overall revenue generated by the application.

● Potential to capture transaction fees as protocol revenue: RaaS provides the potential to capture transaction fees as protocol revenue, which can increase the overall revenue generated by the application.

● More utility to the rollup’s native token: RaaS provides more utility to the rollup’s native token, which can increase its overall value and provide additional benefits to token holders.

While rollups-as-a-service offer numerous benefits, it’s important to keep in mind the potential risks associated with any new technology. These risks include centralization, security and bridging vulnerabilities, and the fragmentation of liquidity. Despite these concerns, rollups and modular construction are essential for unlocking scalability in blockchain technology. As the technology advances, rollups will simplify the experience for both developers and users through improved user interfaces and greater design flexibility for native token economies. With their ability to enhance security, reduce costs, and provide more control, rollups have the potential to revolutionize the way blockchain applications are developed and used. By carefully evaluating these risks and benefits, developers can determine if rollups-as-a-service are the right solution for their specific needs.

About A&T Capital:

A&T Capital is an early-to-growth stage venture fund for emerging disruptive technologies. Led by three founding partners based out of Berlin, Singapore and Shanghai, it is supported by a global dynamic team of researchers and analysts. In 2021, it raised 100M pool of funds. The portfolios include Bitcoin Suisse, Celestia, Cobo, Consensys, Gnosis Safe, Infstones, Mysten Labs, and Scroll.

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