Rollups (aka Layer-2 or L2) are blockchain technologies that sits on top of Layer-1 like Ethereum and allow users to perform faster and cheaper transactions. Rollups then batch the L2 transactions and submit them to a L2 management smart contract deployed on L1 along with state change, such that anyone can validate the L2 transactions and state in a trustless manner. Note that, Layer-2s inherit the security of the underlying Layer-1 in strict terms. Based on the technique that L2 smart contract uses to evaluate the submitted L2 state change, L2's are categorized into 1) Fraud proof based (which accepts the state change, but relies on fraud reports to validate) and 2) validation using zero knowledge proofs. The Layer-2 technology then allows users holding assets in Layer-1 (e.g. USDT) to bridge them over to receive wrapped assets to be utilized in Layer-2 dapps.
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Rollup market is advancing rapidly with various types of rollups with varying speeds and costs are emerging, with Arbitrum leading the overall Total Value Locked (TVL). The table also lists the swap costs on various popular Rollups. One thing to note that, as the rollups become more and more popular, the increasing demand may also increase the cost.
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There is a class of rollups that are side chain based which are less talked about. However they can also be attractive solutions to scale Layer-1s like Ethereum. In terms of the difference between side chain rollups, when compared to strict rollups, the main difference is that side chain rollups security depends on its own network and not on Layer-1 network. In other words, the side chain rollups do not publish the transactions to Layer-1 network. In terms of state change of the L2 network, the rollups publish the state root in the form of regular checkpoints which can be verified in a trustless manner. The technology itself is also easily extendable across multiple layer-1s.
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Harmony as a side chain based layer-2 solution provides several advantages. First, the trust model, where Harmony network has over 150+ unique validators locking $700mm+ value with on-chain slashing makes it a reasonably decentralized secure network which can be trusted. Next, Harmony's 100% EVM compatibility when compared to other strict layer-2's custom virtual machines, allows dapp developers to write any generic EVM computations. Finally, Harmony's speed and cost is comparable (even better) than strict rollup solutions. The technology is designed to make it even faster and cheaper on higher demands. Come let's build Trustless bridges to connect blockchains and scale infinitely to benefit the end users.
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