Can Optimistic Rollups Resolve Ethereum’s Scalability Issues?

For major cryptocurrencies on the market, the only way to overtake traditional payment methods and fiat currencies as a medium of exchange is to introduce better scalability solutions. For the world’s most popular cryptocurrency, Bitcoin (BTC), the trade-offs are dramatic if it were to increase its transaction processing speed. Ethereum (ETH), on the other hand, appears to be in a much better place in this regard, since many solutions such as Optimistic Rollups are introduced to enhance its scalability.

On the latest episode of the Blockcrunch podcast, Kevin Ho from Optimism commented on the current state of the Ethereum Network’s scalability options and how Optimistic Rollups can assist Ethereum. He stated that the main concept behind Optimistic Rollups is centered around adding transaction data on-chain but moving computation off-chain. With this implementation, Ho noted that:

“The big shifts in optimistic Rollups comes as a sort of combination of the realized limitations and complexity of supporting these off-chain data along with the fact that they can’t support general solidity smart contracts, and realizing that putting all data on-chain actually isn’t that big of a limiting factor.”

Data from Etherscan indicates that there has been a slight decline in network utilization on Ethereum compared to the previous year. The 2019/20 State of Adoption report published recently had outlined that for Ethereum, scalability is still an urgent issue and the implementation of Ethereum 2.0 will have to address the same.

Speaking about Ethereum’s ongoing scalability debate and how it can stimulate wider adoption and interest, Ho explained how the implementation of Optimistic Rollups would take place on the network and reduce transaction costs. He noted:

“Imagine a world in which Ethereum is layer one Optimistic Rollup is layer two. And you know, state channels and plasma exist as a third layer on top of optimistic Rollups. You can process all the smart contracts that you need to use and interact with but if you want to get even cheaper transaction fees for specific use cases, like sending lots of transactions, then you can open up a channel or you can join Plasma.”