Sam Kessler Profile picture
Oct 27 13 tweets 3 min read
The leading rollups (Optimism and Arbitrum) – while impressive/important – are still WAY more centralized than people realize.

Here's how 🧵

Arbitrum and Optimism comprise 80% of the rollup market today (>$3B TVL).

Both reduce gas fees by ~95%

They are pitched as secure alternatives to sidechains and commit chains – scaling solutions that pass data to Ethereum without correctness guarantees

Arbitrum and Optimism are "optimistic rollups" – networks that bundle up transactions and pass them back to Ethereum for settlement

During a brief window after transactions are passed to Ethereum, validators can submit "fraud proofs" to call out faulty/fraudulent activity

Fraud proofs are the bread and butter of optimistic rollups since they definitively "prove" that rollup data can (or can't) be trusted.

But neither Arbitrum or Optimism have fully-baked fraud proof systems.

Optimism does not use fraud proofs at all (yet).

Arbitrum has fraud proofs, but only a select handful of whitelisted validators are allowed to submit them. None ever have. (Aribturm says its proof system will open up to everyone in 2023)

Both Arbitrum and Optimism also have centralized sequencers.

A single party is responsible for bundling/ordering the txns that get passed down to mainnet.

Sequencers can't spoof txns, but they can (theoretically) slow down txns or reorder them to extract MEV

Arbitrum and Optimism smart contracts can also be hacked to drain user funds.

Today, their core devs can quickly make upgrades and fix bugs (good)

BUT ease of upgradeability can also make it easier for malicious/buggy upgrades (bad – see Nomad)…

TLDR: the leading layer 2 platforms are today more like fancy sidechains (eg. Polygon/Ronin) than "trustless" rollups

In other words, they are still in Beta despite having "launched" on Ethereum's mainnet.

It is completely understandable that Optimism and Arbitrum need to stay centralized as they test their tech.

They plan to progressively mature and decentralize.

But users should know that today's rollups don't have the same security guarantees as Ethereum itself.

And let's not just pick on today's largest rollups.

zkEVMs – fancy competitors to optimistic rollups – are planning big mainnet launches.

ALL of them will be riskier and more centralized than Arbitrum and Optimism for the foreseeable future.…

Also, it will be *significantly* harder to tell whether "zero-knowledge proofs" – the zkEVM analog to fraud proofs – work as intended.

Rollup tech is rapidly progressing, super impressive, and will serve as the foundation for most Ethereum activity in the years ahead.

BUT rollup creators should be more up-front about their present risks and limitations. Some have been more up-front than others.

For a more granular breakdown of L2 risks, check out

Thank you @bkiepuszewski for helping me break this down in my article!


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More from @skesslr

Oct 18
After an investor lost access to its Terra wallet in 2019, a chain fork quietly moved its funds — 9M $LUNA — from one wallet to another.

The excellent @laurashin asked @stablekwon why this was swept under the rug.

Here’s how my sources and I uncovered what happened 🧵
In the process of upgrading the Terra blockchain from Columbus-1 (version 1) to Columbus-2 (version 2) in June 2019, Terra instructed validators to run a script which discretely moved 9 million $LUNA (worth >$1B at peak) from one wallet to another.…
The code in question contained a line tagged “Change wallet address of translink capital”

TransLink Capital is a Silicon Valley venture firm, and its website lists Terra as a portfolio company

This script literally changes Terra’s genesis block. Image
Read 13 tweets
Oct 17
Reminder: No rollups fully "borrow Ethereum's security" as claimed.

*All* rollups – Arbitrum & Optimism included – have tons of limitations right now (ie. fully-permissioned/non-existent fraud proofs)

Upcoming zkEVMs will be even more limited.
Why is this a problem?

Current marketing from Layer 2s might mislead consumers into thinking that they are using platforms with 100% equivalent security to Ethereum.

They're not.

Today's rollups can be exploited and carry different degrees of centralization/censorship risk.
The loose definitions being used in the zkEVM marketing race are the latest (and potentially most egregious) example of how consumers are being misinformed re: Layer 2s.

Layer 2 tech is impressive and rapidly evolving, but still nascent.
Read 4 tweets

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