Thread by @ryanberckmans

1/ Optimistic rollups vs. zero-knowledge rollups

Optimistic rollups, like Arbitrum and Optimism, have different costs and benefits compared to zero-knowledge rollups, like Immutable X and Loopring.

Let's explore👇

2/ Immutable X is an ethereum L2 focused on gaming and NFTs, powered by StarkWare's zero-knowledge rollups. The recent high gas prices and NFT frenzy, and a lack of fast withdrawals for NFTs on optimistic rollups have helped drive Immutable X's growth.

3/ Over the past month, Immutable X had a wave of announcements of serious game developers building on their L2. Immutable X's success highlights the different costs and benefits of optimistic rollups compared to zero-knowledge rollups.

4/ Let's take a look at optimistic rollups vs. zero-knowledge rollups. We'll start with their similarities and then move on to their differences.

5/ Both optimistic rollups and zero-knowledge rollups scale ethereum by compressing transactions to use 98%+ less L1 gas. In a rollup, the L1 gas bill is split between a much larger set of L2 transactions.

6/ Optimistic rollups allow any existing solidity app to scale today and provide a composable, permissionless L2 environment similar to ethereum itself. No zero-knowledge rollups do this yet. It's expected to be a year or two before zero-knowledge rollups can match this benefit.

7/ Some of the benefits of zero-knowledge rollups are:

- increased security
- faster withdrawals, which is worth a lot of money
- potential to eventually offer much lower fees for end-users

8/ Zero-knowledge rollups have increased security vs. optimistic rollups because zero-knowledge rollups are based on "validity proofs", which mathematically guarantee no fraud or errors. Optimistic rollups use "fraud proofs" that rely on 3rd parties to report fraud for a reward.

9/ Zero-knowledge rollups have faster withdrawals vs. optimistic rollups because withdrawals from zero-knowledge rollups don't require a fraud dispute period as there's no fraud (validity proofs). Fast withdrawals on optimistic rollups use fungible tokens and don't work for NFTs.

10/ Zero-knowledge rollups may eventually offer much cheaper fees for end-users. It's because zero-knowledge rollups have a mathematical ability to validate a batch of transactions using far less L1 gas than optimistic rollups.

11/ Zero-knowledge rollups also may offer app developers the option to checkpoint their app's state to ethereum less often. For example, an app might checkpoint itself on ethereum once per day and save money on fees. Between daily checkpoints, validity proofs keep things secure.

12/ Zero-knowledge rollups are expected to eventually replace optimistic rollups entirely. However, optimistic rollups are critical to scale ethereum this year.

13/ Optimistic rollups allow any existing solidity app to scale today and provide a composable, permissionless L2 environment similar to the L1. This is critical to scale ethereum this year as it replicates the magic of the L1 in an L2 environment with 98%+ reduced fees.

14/ Many of ethereum's existing apps seem likely to scale this year on optimistic rollups, especially on Arbitrum or Optimism. However, zero-knowledge rollups may be a great fit today for apps related to NFTs, or apps wanting a scaling strategy that's maximally future proof.