Pro
Rollups: Execution Through the Modular Lens
Key Insights
- Modular Layer-1s (L1s) are evolving how rollups function and how they fit into the rest of a blockchain system.
- Traditional rollups differ from sovereign rollups in where they settle disputes on: within their own network versus a monolithic L1.
- Only 1% of total fees on Ethereum can be attributed to Layer-2 (L2) security fees, which continue to be low and in effect encourage more rollups to continue settling on Ethereum.
Rollups combat the transaction processing bottleneck within the execution layer of a monolithic blockchain. Monolithic chains assume all functions of a blockchain while modular chains offload functions into completely separate L1s in order to increase throughput capacity. Ethereum is monolithic, but with a rollup-based architecture, it is moving towards a modular design.
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Eshita is a Research Analyst at Messari focused on Web3 topics. Previously, she was a Venture Fellow at Bloomberg Beta and prior to that was working on data at Shareworks by Morgan Stanley.
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