Musings on the future of rollups
When talking about rollups and layer ones the classical analogy from biology about parents and offspring is not out of place. The parent(L1) secures the child(rollup) until it is big enough to secure itself. Child also resembles it's parent in it's traits, since it is safe to assume many early users who shape its culture are also users of underlying L1, at least in the early days.
Nomenclature For easier understanding and better imagery, I will use the terms "layer one / L1" and "rollup / L2" interchangeably with "parent" and "child" respectively.
Currently rollups are either app specific (Dydx, Deversify) or in it’s infancy(Arbitrum, Optimism). The sequencer (block producer) is currently centralized. In generalized rollups there is no token yet and development teams are in control of the protocol updates. Said simply, currently L2 seem like a quite different animal to L1s. However, the roadmaps of all generalized rollups include decentralizing the sequencer (rollup term for block producer) and introducing a token. All major rollup teams are also dedicated to decentralize rollup governance.
Differences & Similarities
Put simply, a fully developed generalized rollup is a separate chain that outsources its security to the parent L1.
Inherent tension between children and parents
Classical analogy from biology about parents and offspring is not out of place here. The parent(L1) secures the child(L2) until it is big enough to secure itself. Child also resembles it's parent in it's traits, since it is safe to assume many early users who shape its culture are also users of underlying L1, at least in the early days. In biological systems *children are dependent on their parents, but only up to a point after which they become fully self sufficient. Will it be any different with rollups?
What makes a mature rollup different from L1 is that it outsources its security to its parent chain. It of course has to pay for this in terms of tx costs on the main chain. It would seem like a symbiotic relationship, but therein lies inherent tension. It is often said that every rollup makes the parent block space more valuable, which should be bullish for the whole ecosystem. But the darker side of this dynamics is that the child chain is leaking value to its parent. It's reasonable to assume that a market cap of a successful rollup would increase as its usage increases. However, if rollup token holders are rational and want to increase its utility hence its value, it would make sense for them to leave the parent L1 entirely. Why? They are basically leaking value out to the parent chain when paying for the security. This value could be kept within the child chain by simply keeping its state internally and implementing EIP1559-like fee burn mechanism. But wait! doesn't it compromise the security of a rollup?
The child chain at its mature rollup stage already has its own execution and consensus layer. So if it where to leave its "parent" the only extra work for the validators would be to keep the state of rollups on their nodes instead of posting it to L1. They would loose the security guarantees of L1, but as the market cap of the rollup's token continues to increase, this is less and less of an issue. The question rollup token holders will start to ask themselves is,
How much security is "enough" for our rollup? Do we at this stage really need to rely on the security of the L1 chain?
Depending on the use case, the answer would seem to turn to NO at some point in its life.
Due to the inherent tension described above, L1s could serve only as a springboard for L2s to bootstrap security and leverage network effects of the underlying L1 and then grow up into separate L1s as the chain matures.
There are other forces at play, so what may keep the rollup centric future alive?
If currently publicized rollup construction becomes predatory, it does not mean that rollups are fundamentally broken. These constructions do not lead to rollups becoming L1s, at least not from the reason described above.
At this stage, there is little doubt that every rollup will have its own token. Right now, all rollups seems to be very aligned with Ethereum, but there is no token yet. Rollups are far from being mature and will continue to be dependent on the L1 for a long time. The narrative of a rollup centric future is also going strong and will not change over night even when incentives will.
I see two forces one pulling the rollups away from L1s and the other joining them together. The force pulling rollups apart from L1 is high fees for calldata. This could be to a large extent neutralized by drastically lowering them both with EIP4488 and sharding. The other force pushing them together is implementation of cross rollup interoperability (Danksharding), making rollups behave like a part of a super chain rather than a separate chain, thus strictly better to small L1s from interoperability perspective.
In other words, if Ethereum development were to stop today and rollups were to continue developing this would become an issue. However, Ethereum development seems to be picking up steam and going strong.
So lo and behold to the rollup centric future!!!