Evolving Ethereum: Unveiling Based Rollups for Improved Incentives
Based rollups, an innovative scaling strategy for Ethereum’s layer 2 (L2) networks, are gaining traction for their unique ability to harmonize incentives between L2 networks and base layer validators. Setting themselves apart from traditional rollups, based rollups make use of Layer 1 (L1) blockchain sequencers instead of establishing their own, resulting in notable advantages in terms of security, decentralization, and cost-effectiveness.
By harnessing the sequencing capabilities of L1 blockchains, based rollups inherit the robust security and decentralized nature of the base layer, while also enjoying the liveness assurances provided by L1. Through streamlining the architecture and eliminating the necessity for additional consensus mechanisms, based rollups offer substantial reductions in operational and transaction expenses compared to alternative rollup models.
Noted expert Adam Cochran from Cinneamhain Ventures highlights the transformative potential of this innovative approach to incentivizing rollup activity, suggesting a significant boost in demand for ETH as a potential outcome.
Despite the alluring perks of based rollups, they do come with challenges. Depending on L1 sequencing may impose constraints on transaction sequencing flexibility and could present hurdles in implementing specific sequencing services. Moreover, based rollups might reduce direct revenue streams for L1 validators by relinquishing maximal extractable value (MEV) earnings.
Nonetheless, projects like Taiko are actively delving into based rollup implementations, with a testnet already incorporating elements of this groundbreaking model. Conceived by Ethereum researcher Justin Drake in early 2023, based rollups signify a promising advancement in enhancing the economic alignment between L2s and L1 validators, ultimately fostering the sustainability of Ethereum’s multi-layered ecosystem.
