Grokking Cartesi Rollups, Part 1

The scalability issue at a glance

The blockchain technology stack is often viewed as serving several crucial functions, including consensus, data availability, and execution. Until relatively recently, these functions were all performed by individual blockchains like Ethereum. This setup, referred to as a monolithic blockchain, doesn’t scale very well.

Monolithic chains struggle to scale without sacrificing decentralization, due to the incredible demands placed on the nodes that validate the network’s state. With one chain handling every function, the same set of nodes is simultaneously called upon to verify each and every action, by every dApp and user in the network.

As usage increases, dApps and users are forced to compete for blockspace, which becomes an unmanageably scarce resource. The result is those who can’t win blockspace bidding wars are excluded from participating in the network.

Ultimately, this monolithic setup degenerates into high fees, posing an ever-growing entry barrier for projects and users alike. For example, a single popular NFT mint or highly anticipated airdrop can render the network unusable for nearly everyone else.

What is a rollup?

To address some of these scaling issues, Ethereum pivoted in late 2020 to a rollup-centric roadmap. Boiled down to the basics, blockchain rollups offer Layer 1 (L1) chains a way to alleviate congestion by delegating certain functions to systems running off-chain. The results are then added to the underlying L1 in a way that’s cryptographically verifiable.

Ethereum’s rollup-centric path was rooted in the idea that scalability constraints can be broken down into two discrete issues: data scalability and computational scalability. What this means, in simple terms, is that Ethereum’s usage can be limited by two fundamental problems: how much data it can store and how many tasks it can process. As a result, Ethereum shifted its focus to scaling how much data blocks can hold, while delegating computational scalability (processing power) to rollups projects.

The “shared” rollup

The first major wave of rollups adoption began in 2021, with the launch of Layer 2 (L2) projects like Arbitrum and Optimism based on “shared” rollups architectures. The rollups from these projects are “shared” in the sense that each dApp on the protocol shares space inside a single rollup with other dApps deployed on the same L2.

dApps deployed on shared rollups theoretically enjoy gains in computing power as long as the L2 is less congested than the underlying L1. But there’s a catch. With each dApp sharing space inside the same rollup, there’s still competition amongst dApps for the processing power of L2 validators.

Just as is the case with monolithic blockchains, periods of heavy usage on shared blockchain rollups can cause L2 fees to spike to unpredictable levels. Ultimately, once a shared rollup gains enough popularity, it’s vulnerable to the same exact congestion and cost dynamics posed by a monolithic design.

The shared rollup approach brings us back to square one – albeit with a bit of buffer time.

The arrival of app-specific rollups

In search of maximum scalability, customizability, and fee predictability, projects like Cartesi have moved beyond shared rollups architectures, specializing instead on building app-specific rollups (commonly referred to as appchains).

Similar to shared rollups, app-specific rollups act as off-chain execution layers that inherit security and censorship guarantees from the Ethereum base layer. But now, instead of sharing space inside a single rollup, each dApp has its own dedicated rollup to process off-chain computation.

This setup not only solves the issue of bidding wars amongst applications, but also provides significant gains in computational scalability. With only one application per rollup, each dApp now commands the full (unshared) computing power of validators tasked with processing the rollup’s state. Rather than competing in a zero-sum game for validator computing power, each dApp has its own high-performing rollups chain.

With this increase in computational capacity, dApps deployed on app-specific rollups can now begin to more closely mimic traditional software applications in terms of programmability, cost efficiency, fee predictability, and user experience.

The Web3 cone of innovation

Ethereum’s rollup-centric vision calls for a collective effort. For its part, Ethereum has several initiatives on its roadmap that are poised to scale data availability, like EIP4844 and sharding. But for Web3 to reach its full innovative potential, rollups projects must continue to push the boundaries of decentralized computation.

The figure above helps visualize how scaling data availability and computation together can pave the way for previously impossible decentralized applications. On the x-axis, data availability improves with the implementation of EIP4844 and sharding. On the y-axis, computational capacity scales as we move from a monolithic L1 blockchain, to shared rollups, to app-specific rollups.

The light gray area on the graph is what we can call Web3’s Cone of Innovation. As scaling progresses in both dimensions, more complex dApps become possible. By contrast, the dark areas outside the cone show what happens when data availability and computation don’t scale in tandem.

(The applications and their positioning inside the cone aren’t intended to be taken as gospel. Rather, the figure is meant to provide an intuitive outlook on the growing horizon of decentralized applications.)

The main takeaway is that gains in data availability can’t be fully utilized without concurrent gains in computational capacity, and vice-versa. Both need to grow together if we are to push the boundaries of web3 innovation.

App-specific rollups are a prime solution for scaling the Ethereum network’s computing power.

Read Part 2 for a deeper dive into the vast new design space that becomes possible as a result of the computational capacity that app-specific rollups bring to the table.

Dive deeper in the docs. You can also stay in the loop with everything happening in the Cartesi ecosystem by joining the community. Better yet, start putting app-specific rollups to the test with the new Honeypot challenge, the first Cartesi Rollup dApp to go live on mainnet!