Produced by: CGV Research
Author: Cynic ，Leo
Introduction
Recently, the Ethereum Rollup, which is garnering the highest market attention, has seen frequent developments in Rollup-as-a-Service (RaaS). Could we be on the verge of a Rollup-dominated summer? This article provides an overview, ecosystem analysis, and future prospects of RaaS, aiming to offer insights from a comprehensive perspective.
TL;DR
In the blockchain space, a “trilemma” exists, where achieving security, decentralization, and scalability simultaneously is a challenging task. Bitcoin and Ethereum have prioritized the first two, but have faced challenges in supporting scalability. This means a surge in transactions over a short period leads to network congestion and high transaction fees.
While Bitcoin’s ecosystem initially proposed scalability, aiming to build a virtual second layer for transactions on top of Bitcoin, with the main chain being used for settlement. Ethereum has attempted to achieve enhanced scalability through various approaches like State Channels, Sidechains, and Plasma. On September 5, 2018, Barry Hat introduced the concept of Rollup on Github. Eventually, Rollup technology gained community recognition, and the Ethereum Foundation labeled it as the sole Layer 2 technology.
In a span of five years, Ethereum Rollup, with the highest market attention, has recently witnessed the emergence of RaaS. Are we approaching a Rollup-dominated era soon? This article delves into the overview, ecosystem, and future development of RaaS, aiming to provide comprehensive insights.
RaaS Overview
From the technology perspective, Rollup’s implementation is complex, demanding high levels of specialized skills and development capabilities. This high entry barrier contradicts the permissionless ethos of blockchain.
RaaS packages Rollup as a service, offering a more user-friendly and simplified Rollup deployment experience for enterprises, organizations, and individuals. It is similar to Cosmos SDK and Polkadot Substrate.
Similar to what Layer 1 does for blockchain deployment, RaaS provides a universal SDK for Rollup, enabling autonomous Rollup development and deployment through simple configurations, ensuring project sovereignty through customization. Some RaaS projects even offer one-click deployment without the need for programming skills.
Rollup is highly modular, allowing independent iterative upgrades for the Sequencer and Prover. In RaaS, there are projects specializing in the design and development of Sequencers and Provers, providing services for all Rollup implementations.
RaaS brings about the following changes:
1. More cost-effective, efficient, and equally secure application chains: Rollup moves the expensive computation off-chain, making transactions cheaper and more efficient. By using the underlying public chain as the DA layer and validating proofs through smart contracts, it achieves the same level of security as the base layer.
2. Experimental ground for innovative ideas: Rollup uses the same virtual machine environment as the underlying public chain but at a lower cost. It serves as a battle-tested environment for proposals from the community before migrating them to the underlying public chain.
3. Enhanced interoperability: Rollup services from the same RaaS enable easy definition of message rules thanks to the use of a similar technical architecture. This eliminates the need for cross-chain bridging, allowing direct message transmission between Rollups and enhancing interoperability.
RaaS Ecosystem
Broadly speaking, all projects contributing to Rollup deployment are part of the RaaS ecosystem. Following the modular principle, this article categorizes the RaaS ecosystem from bottom to top into four levels: DA (Data Availability), SDK (Software Development Kit), Sequencer, and No-Code deployment.
2.1 DA (Data Availability)
In theory, any public blockchain can serve as the DA layer to store Rollup transaction data. However, without a stable and correctly functioning DA layer, Rollup cannot reliably verify state transitions.
For Rollup, there are two options. One is Smart Contract Rollup, which is the mode chosen by most Rollups. It relies on the underlying public chain for settlement and data availability. The other is Sovereignty Rollup, which separates data availability from settlement, relying solely on the data availability of the underlying public chain while handling settlement independently.
Representatives of the former typically select fully-featured public chains that are EVM compatible, Cosmos compatible chains, or platforms like Solana. The demand for the latter has led to projects specializing in data availability, including Celestia, EigenLayer, Avail, and others.
Celestia
Celestia is a PoS chain built using the Cosmos SDK, employing a modified Tendermint consensus algorithm and encoding block data using Reed-Solomon (RS) codes. By utilizing data availability sampling techniques, Celestia further reduces the verification cost for light nodes, which only need to download partial block data to verify data availability.
Moreover, Celestia employs an Optimism mechanism to determine if a block has been correctly encoded. It initially chooses to optimistically assume correct encoding and, if no fraudulent proof is received within a period, confirms the block’s correctness. While this improves runtime efficiency, it introduces some latency.
Avail
Supported by Polygon Labs, Avail utilizes the BABE+GRANDPA consensus algorithm and also employs data availability sampling techniques. Unlike Celestia, Avail uses validity proofs to verify that blocks have been correctly encoded, employing the more efficient KZG proof rather than Merkel Proof.
EigenLayer
EigenLayer serves as a solution for heavy staking, leveraging liquidity from Ethereum staking to provide economic security for projects. With EigenLayer, new protocols don’t need to build their own distributed validation network. They can utilize the security of ETH staking through EigenLayer. EigenLayer excels in lightweight, permissionless, and decentralized scenarios. In the narrative of Ethereum scalability, the best use case lies within RaaS.
Since DA only encodes and commits to transaction data without performing transaction computation, it imposes lower requirements on nodes. With the use of the PoS algorithm, staked liquidity directly reflects blockchain security and availability, providing a prime opportunity for EigenLayer to shine.
EigenLayer exists as a smart contract on Ethereum, using KZG validity proofs to verify correct block encoding. However, the current EigenLayer has not yet adopted data availability sampling techniques, which may be related to Ethereum’s upcoming upgrade plans.
2.2 Sequencer
The role of the sequencer is to order received user transactions. Subsequent execution and block production will follow this order. In Ethereum’s architecture, due to the same entity handling both ordering and execution, validators have excessive power, leading to phenomena like MEV and censorship, which greatly impacts user experience.
Separating ordering from execution is an embodiment of the PBS (Propose Builder Separation) concept. However, the current Rollup architecture still heavily relies on centralized sequencers to determine transaction order, posing risks of single points of failure and censorship. A decentralized solution set still needs to be sought after.
Astria
Astra provides a solution with a shared sequencer. User transactions from different Rollups are collected into the Astria sequencer. As for Rollup nodes, they can directly obtain data from Astria for lower latency soft confirmations. Alternatively, they can wait for Astria to submit data to the DA layer and obtain the strongest finality confirmation.
Since the data submitted by Astria contains transactions from multiple Rollups, each Rollup needs to eliminate invalid transactions (including those from other Rollups) based on the consensus mechanism before processing the remaining data. Astria only provides data, leaving the choice of consensus to the Rollup nodes, hence safeguarding the sovereignty of Rollup.
OP Stack
The default configuration of OP Stack uses a dedicated sequencer to process transaction ordering. A simple modification involves using a licensed collection of sequencers, which can reduce the possibility of sequencer node misconduct through the PoS mechanism.
Following the introduction of the concept of Superchain, shared sequencers became an inevitable choice for OP Stack. Shared sequencers bring atomic cross-chain functionality, enhancing interoperability between Superchains.
Espresso
Espresso aims to leverage the liquidity of Ethereum stakers to achieve shared security through over-staking. Espresso integrates sequencers and DA, providing sorting results to Rollups via a REST API, thereby masking the details of DA. Consensus security is verified by smart contracts on L1, which leads to stronger reliability.
Saga
Initially serving a role similar to the Cosmos Hub, Saga provides shared security for application chains using Cosmos SDK on Saga with its own set of validators.
Amidst the fervor of Rollup, Saga collaborates with Celestia, utilizing Celestia as the DA. Saga then transforms its validators into sequencers, and exchanges information with upper-layer Rollups through Optimistic Rollup IBC, providing shared security.
SUAVE
Unlike other sequencers, SUAVE consistently targets the MEV market. Flashbots leads the MEV race, and SUAVE is a product proposed by them for cross-chain MEV capture, claiming that “The Future of MEV is SUAVE.” Through the shared sequencer provided by SUAVE, atomic cross-chain transactions become possible, which contributes to the efficiency of capital markets on different chains.
EigenLayer
As mentioned earlier, EigenLayer has use cases in the DA layer. Decentralization of the sequencer is also a strong suit of EigenLayer.
Since the sequencer is responsible only for ordering and not execution, it imposes low requirements on nodes. The key to decentralization lies in reducing the possibility of node misconduct through a penalty mechanism. EigenLayer provides a deep staking pool, utilizing Ethereum’s decentralization to nurture the decentralization of Rollup sequencers.
2.3 SDK (Software Development Kit)
Similar to the Cosmos SDK, the SDK provided by RaaS enables developers to reuse a plethora of software modules, allowing for cost-effective customization of the required Rollup, thereby making software development less complex.
Rollkit (Optimism)
Originally incubated within the Celestia community, Rollkit has now evolved into an independent project. Utilizing Celestia as the DA layer, Rollkit offers an ABCI-compatible client interface, providing services for all Rollups compatible with ABCI (on the Cosmos chain).
Currently, Rollkit employs a single centralized sequencer and supports integration with Cosmos SDK, Ethermint, and CosmWasm. Users have the flexibility to choose their preferred execution environment. In the future, Rollkit will be further developed to support a broader range of configuration services.
Dymension (Optimism)
Dymension divides its service into front-end and back-end components. The front-end supports customizable RollApps, backed by the Dymension RDK (modified Cosmos SDK). The Dymension Hub in the back-end coordinates the entire system and handles DA and sequencing.
Dymension operates on the Optimism mechanism, where the Dymension Hub optimistically receives status updates from the sequencer. If valid fraud proofs are received, it rolls back state changes. RollApps have currently achieved an average latency of 0.2 seconds and a peak TPS of 20,000.
Dymension employs an elastic block production scheme. When there are no transactions in a block, block production is halted, significantly reducing sequencer operational costs. Currently, Dymension’s product is still in development, and there is no explicit choice for the DA layer.
Sovereign (ZK)
The Sovereign SDK provides zk-Rollup as a Service, offering general modules for building blockchains and a zkVM that shields the underlying zero-knowledge proof details. This allows developers to write programs in Rust, and the SDK can compile them into an efficient zk-friendly format.
As the project name suggests, the Sovereign SDK emphasizes sovereignty. Rollup determines the legality of state transitions through custom consensus rules, without the need for DA layer verification.
Currently, the Sovereign SDK is adapted to Celestia and Avail at the DA layer. It supports Risc0’s zkVM and enables deployment and demonstration of Rollup.
Stackr (Unknown)
Stackr proposes a more radical innovation by migrating the microservices architecture from the traditional internet to the blockchain. It introduces the concept of micro-rollup.
The relationship between conventional Rollup and micro-rollup is akin to that of a virtual machine and container. With the Stackr SDK, developers only need to define the desired data structures and state transition functions, leaving the rest to Stackr.
Stackr supports various execution environments, such as EVM, Solana VM, and FuelVM. It allows users to choose the environment they wish to use.
AltLayer (Optimism)
AltLayer, as a decentralized and flexible RaaS, provides a developer-oriented SDK and a No-Code Dashboard that requires no coding experience, hence enabling one-click chain deployment.
AltLayer offers a unique form of elastic Rollup called the Flash Layer. When application demand surges, a Rollup chain can be rapidly deployed. Once demand returns to normal, settlement occurs on L1 and the Rollup can be discarded, achieving horizontal scalability commonly seen in internet systems.
AltLayer’s goal is to support multiple chains and execution environments. Currently, it has implemented support for EVM and WASM.
OP Stack (Optimism)
OP Stack is built to support the Optimism Superchain, a proposed network with shared security, communication layer, and collaborative development stack at the L2 network. Following the Bedrock upgrade, Rollups created using OP Stack are natively compatible with the Superchain. Of course, components of OP Stack can be modified to obtain customized features, and projects like base and opBNB are developed based on OP Stack.
The security and availability of OP Stack have been thoroughly tested on networks like OP Mainnet and base. However, challenges persist, including a lack of fraud proofs and centralization of sequencers. OP Stack is exploring new avenues, such as adopting more cost-effective DA layers, utilizing ZK Proofs, and implementing shared sequencers.
Arbitrum Orbit (Optimism)
On June 22nd, Offchain Labs released tools for launching the Arbitrum Orbit Chain. Orbit Chain operates as Layer3 on top of Arbitrum Layer2, allowing users to settle on one of three Layer2 options: Arbitrum One, Arbitrum Nova, or Arbitrum Goerli. Users have the choice between using Rollup or Anytrust technology. The key distinction is that Anytrust employs a DAC and does not require transaction data to be submitted on-chain, resulting in lower costs but slightly weaker security. Orbit Chain’s advantages lie in its straightforward chain launch process, interoperability with the Arbitrum ecosystem, real-time updates via Nitro, and compatibility with EVM+ through Stylus (supports Rust, C, C++, and runs on the WASM virtual machine). Users can customize and launch their own Orbit Chain without having to acquire permissions, but settlement must occur on Arbitrum Layer2. Otherwise, users need to contact Offchain Labs or the Arbitrum DAO for authorization.
ZK Stack (ZK)
On June 26th, zkSync announced that it would modify existing open-source code in the coming weeks to introduce ZK Stack. This enables users to build their own customized ZK superchains. Unlike Arbitrum’s Orbit Chain, ZK Stack places emphasis on sovereignty and interoperability. Users have complete customization based on their needs, and chains built with ZK Stack can achieve bridgeless interoperability. ZK Stack can be used for constructing both Layer 2 and Layer 3, and the official team has not imposed any restrictions, nor is it required to settle on zkSync. From this perspective, ZK Stack seems to offer a higher degree of sovereignty.
Starknet Stack/Madara (ZK)
Originally, Madara was positioned as a sequencer on Starknet. Leveraging technological expertise, the team successfully developed Starknet Stack based on the original product, which facilitates the creation of application-specific Rollups on Starknet. With Ethereum as the DA layer and utilizing Starknet’s shared prover, settlements occur on Starknet. From the perspective of availability, Madara has already assisted a team in achieving the launch of an application-specific Rollup within 24 hours during the PragmaOracle hackathon, complete with a video demonstration. In comparison to zkSync’s ZK Stack, Madara exhibits a higher level of completeness.
2.4 No-Code Deployment
No-code deployment is a lower barrier solution that provides non-developers with an option for one-click chain deployment. It has the potential for increased adoption.
Caldera (Optimism)
Caldera Chain offers a fully customizable one-click chain deployment solution. At the execution layer, it supports OP Stack and Arbitrum Orbit, while the settlement layer can choose from EVM-compatible chains like Polygon, BSC, Evmos, and others. The DA layer is supported by EigenLayer and Celestia.
In addition to the Rollup chain itself, Caldera also provides a range of complementary infrastructure, including a blockchain explorer, testnet faucet, oracle, and bridges supported by Hyperlane, further reducing the cost of chain deployment.
Eclipse (Optimism+ZK)
Eclipse boasts high levels of customizability. It supports EVM and SolanaVM at the execution layer, integrates Celestia, Avail, and EigenLayer at the DA layer, and offers Optimistic settlement at the settlement layer. It is also in the process of developing RISC0 zkVM for ZK settlement support.
Users can also customize the chain’s permissions (permissioned/unpermissioned), choose whether to charge Gas Fees, allow MEV, specify certain opcodes, and adjust block size. This grants them a high degree of flexibility.
Opside (ZK)
Opside’s most notable feature is its establishment of a decentralized ZKP market. Originally, it was intended to describe the Prover as a separate layer, but due to the limited number of projects, this idea was abandoned. Zero-knowledge proof (ZKP) places high demands on computational power. Against the backdrop of a growing market share for zkRollup, the decentralization of ZKP is a major direction for future development.
Opside employs a permissionless PoW consensus mechanism to incentivize miners to generate ZKPs, ensuring the security and availability of zkRollup without requiring chain deployers to consider proof generation. At the validator level, a PoS mechanism is used to lower the barrier to entry and promote validator decentralization.
Opside offers customized services, allowing users to choose between zkEVM solutions like zkSync, Starknet, and Polygon zkEVM. Users can also modify the economic model and adjust Gas fees.
Future Development of RaaS
More ZK
Compared with Optimistic Rollup, zkRollup upgrades security from economic guarantees to cryptographic guarantees, hence providing a higher level of security. It eliminates the need for long challenger periods, which results in lower confirmation delays, and offers higher data compression, making DA more cost-effective.
While Optimism’s solution has gained a significant market share due to its high technical maturity and early-stage advantage in product releases, ZK, as a revolutionary technology, is expected to play an even more crucial role in the future. Vitalik’s speech in Montenegro, placing ZK technology on an equal footing with blockchain technology, indirectly reflects the importance of ZK.
As the technology continues to mature, more zk-Rollup as a Service projects will come into the public eye, providing users with more choices.
More Non-Ethereum
To this day, the Ethereum ecosystem still holds an absolute dominant position in the entire blockchain industry. Despite continuous innovation in other communities, the throne of the Ethereum ecosystem remains unshaken.
In the realm of RaaS, things seem to be a little different. Due to Ethereum’s low-capacity and high-cost data storage, people can choose more cost-effective DA layers like Celestia, Avail, or Polygon. Ethereum is non-modular, making modifications complex. People can opt for highly modular solutions like Cosmos SDK. EVM’s execution efficiency is low, and people can choose more efficient options like Solana VM, Move VM, and CairoVM.
Diversity in solutions outside the Ethereum ecosystem will bring new vitality to RaaS.
More Modularity
Modularity serves two purposes: it allows each module to iterate quickly, improving development efficiency, and significantly reduces the complexity of customization.
In the current market environment, it’s nearly impossible to independently develop an all-in-one solution. The overall pace of innovation will never catch up with the rapid iteration of small modules. Extreme customization requirements lead to further refinement of module divisions. Without modularity, projects may ultimately be fragmented by other projects, as seen with OP Stack and Arbitrum Orbit being separated by Caldera from execution layers.
More Customization
As scaling technologies mature, transaction costs decrease, and infrastructure improves, people will realize the importance of application-specific rules and patterns. A one-size-fits-all solution cannot accommodate complex application ecosystems. Therefore, more customization is needed.
From block size to data structures, from transaction fees to transaction delays, from admission mechanisms to security assumptions, from contract engines to token empowerment, the level of Rollup customization will gradually increase, providing more flexible solutions for applications.
More Interoperability
As mentioned earlier, the Ethereum ecosystem dominates the blockchain ecosystem, largely due to the massive liquidity it has locked in. In the crypto market, since each chain exists independently, liquidity cannot exist simultaneously on two chains. An increase in the number of Rollups will further fragment liquidity, posing a serious problem.
Stronger interoperability can reduce cross-chain friction, allowing liquidity to flow smoothly between different chains and to be even referred to as shared liquidity. Projects like OP Stack, Arbitrum Orbit, ZK Stack, and Starknet Stack are attempting to build extensive application chain ecosystems using the same technology stack. Due to their similar technical architectures, Rollups built with them can achieve native interoperability without the need for cross-chain bridges.
More Heavy Staking
Currently, many services in RaaS adopt a PoS model, using economic penalties to increase the cost of malicious behavior and enhance security. However, economic security requires a deep staking pool as a guarantee, leading to low capital utilization and increased startup costs for service providers.
Heavy staking could be a great solution. By utilizing the massive staking pool of Ethereum’s consensus, sharing security with other services through heavy staking not only increases income for stakers but also improves capital utilization. Currently, EigenLayer and Espresso are working on related initiatives, and it’s foreseeable that more services will rely on heavy staking to ensure economic security.
In summary, the most significant beneficiary of RaaS development is the application chain. Can the concept of application chains proposed by Cosmos and Polkadot in the early days experience a renaissance and achieve an explosion in the RaaS ecosystem? We’ll have to wait and see.
Perhaps, only innovation at the application layer can drive a major breakthrough in the RaaS ecosystem. After all, even the best road needs vehicles running on it to be considered good infrastructure.
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About Cryptogram Venture (CGV):
CGV (Cryptogram Venture) is a crypto investment institution headquartered in Tokyo, Japan. Since 2017, its fund and predecessor funds have participated in investing in over 200 projects, including the incubation of the licensed Japanese yen stablecoin JPYW. CGV is also a limited partner in several globally renowned crypto funds. Since 2022, CGV has successfully hosted two editions of the Japan Web3 Hackathon (TWSH), supported by Japan's Ministry of Education, Culture, Sports, Science and Technology, Keio University, NTT Docomo, and other institutions and experts. CGV has branches in Hong Kong, Singapore, New York, Toronto, and other locations. Additionally, CGV is a founding member of the Bitcoin Tokyo Club.
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