What do you prefer - Maximum Security or Cheaper Transactions?

Polygon Labs

September 16, 2021

The Ethereum scaling solutions space has been heating up lately. Which is a good thing, because Ethereum (and its community) needs scaling as soon as possible.

As you know, Polygon's mission is to develop various kinds of Ethereum scaling solutions, from sidechains to rollups (and more).

But all these solutions come with trade-offs. There's no perfect scaling solution that would satisfy everyone and any need.

The two most popular types of scaling solutions right now are sidechains and rollups.

Sidechains

Sidechains are sometimes referred to as "childchains", but the "sidechain" term is more commonly used.

A sidechain is a type of blockchain. In practice, most sidechains are EVM-compatible chains, which means they use the same technology as the Ethereum blockchain (usually a Geth node software), but with some modifications.

That's why the experience of using EVM sidechains is the same as using Ethereum. You can easily use MetaMask with any EVM-compatible sidechain, except you need to change the network in MetaMask from Ethereum to the specific sidechain.

But not all EVM-compatible chains are sidechains! For example, BSC and Tron also use EVM and Ethereum node software, but they are not Ethereum's sidechains.

For something to be a sidechain/childchain to Ethereum, it needs to have a dependence on it.

For example, the Polygon PoS Chain has all the staking management defined on Ethereum, which means it depends on Ethereum. If Ethereum stops working, Polygon cannot properly function anymore.

BSC and Tron do not have any dependence on Ethereum. They can easily exist without Ethereum. That's why these two chains are Layer 1 blockchains (L1). Polygon PoS Chain, on the other hand, is not an L1 because it cannot exist on its own. It's a sidechain (or childchain) to Ethereum because it depends on it.

The advantage of sidechains is to have high throughput (high TPS) and very low transaction fees because they can produce bigger blocks and have a shorter block time. This of course has an impact on decentralization, but it is a tradeoff that makes sense for scaling solutions to make.

> That said, Polygon PoS Chain still has a very good level of decentralization with 100+ distinct PoS validators (compared to other scaling solutions that are currently mostly completely centralized).

Rollups

Similar to sidechains, rollups are also blockchains. Optimistic rollups usually use customized Geth for EVM compatibility, while ZK-rollups build their own node software from scratch, that's why they are not EVM compatible by default (more on ZK rollups in one of our future blog posts).

But what really sets rollups apart from sidechains, is that rollups store all their transactions on L1 (on Ethereum).

What's the point of doing that?

The reason to do that is to offer users the maximum security of their funds. If rollup block producers (BPs) start behaving maliciously or stop working for some reason, the rollup users are still able to get their funds back to Ethereum without needing any permission from rollup nodes.

> Besides storing transactions on L1, an important security mechanism is validity/fraud proofs. We'll talk more about that in another blog post.

There are various ways to get funds back to L1, but the most common one is an "escape hatch". It is basically a way for users to "escape" from a rollup back to L1 in case something bad starts happening on a rollup.

For an escape hatch to work permissionless, all rollup transactions need to be stored on Ethereum.

But if transactions are stored on Ethereum, why would you use a rollup chain anyway? Isn't that the same as using Ethereum then?

Not really. The key here is that transactions are only stored on Ethereum, but they are not processed on Ethereum. Processing a transaction is the bigger part of transaction costs. Storing transactions is cheap.

As we said, a rollup is a separate blockchain and you'd use it in the same way as you use Ethereum. Each time a rollup BP creates and processes a new block of transactions, it also stores it on Ethereum in order to enable the Escape Hatch mechanism. Moreover, in case all rollup nodes malfunction and lose all data, the rollup chain can be easily restored from data stored on Ethereum (it's kind of like a backup).

What's important to note here is that when a rollup block producer stores block data on L1, it does that by making a transaction on L1. This transaction includes all rollup transactions (from that block) as data. As we said, these transactions are not processed on L1, they are just stored there. But there's a limit on how much data you can store within one transaction on L1.

As Vitalik wrote in his blog post about rollups, you could store up to 62,500 rollup transactions in one L1 block, which gives you a theoretical rollup TPS limit of around 4807 TPS.

Note that this is a theoretical limit because it would mean that this BP's transaction on L1 takes the whole L1 block space, which is extremely unlikely to occur. Especially with multiple rollups competing for L1 block space.

A more realistic TPS limit for rollups is a lot lower, probably at around 300 TPS and likely even less until sharding arrives. Just for comparison: Polygon PoS Chain (a sidechain) has a theoretical limit of 7200 TPS, but in reality we've seen it getting closer to 1000 TPS.

So the thing that makes rollups more secure (storing transactions on L1) also limits their scalability. This means that rollups will always be more expensive than non-rollup scaling solutions, which can have a much higher TPS.

What to choose then? Lower gas fees or higher security?

Luckily, you don't have to choose just one of these. We live in a multichain world where many people are already active on multiple chains. These can be either sidechains, or rollups, or even other L1s (although we prefer chains within the Ethereum ecosystem).

All it takes is just switching your network in MetaMask, but even that will be automated for you in the future by wallets. Some mobile wallets like Rainbow already do that.

A typical blockchain user will probably have some funds on Ethereum L1 (funds that will be rarely moved), some on sidechains (for high-frequency activities like trading), and some on rollups (for less regular activities like weekly yield farming).

What's most important is that people have a choice and can choose which solution to use based on their needs.

About Polygon

Polygon is the leading platform for Ethereum scaling and infrastructure development. Its growing suite of products offers developers easy access to all major scaling and infrastructure solutions: L2 solutions (ZK Rollups and Optimistic Rollups), sidechains, hybrid solutions, stand-alone and enterprise chains, data availability solutions, and more. Polygon’s scaling solutions have seen widespread adoption with 500+ applications hosted, ~600M total transactions processed, ~60M unique user addresses, and $5B+ in assets secured.

If you're an Ethereum Developer, you're already a Polygon developer! Leverage Polygon’s fast and secure txns for your Dapp, get started here.