Thread by @skesslr

The leading rollups (Optimism and Arbitrum) – while impressive/important – are still WAY more centralized than people realize.

Here's how 🧵

1/13

https://twitter.com/CoinDesk/status/1585229027085778946

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

2/13

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

3/13

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.

4/13

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)

5/13

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

6/13

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)

coindesk.com/tech/2022/08/0…

7/13

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.

8/13

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.

9/13

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.

coindesk.com/tech/2022/07/2…

10/11

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

11/13

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.

12/13

For a more granular breakdown of L2 risks, check out
l2beat.com

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

13/13