Where do Ethereum rollups execute and settle?

Quick read

Ethereum can keep its base layer secure and widely verifiable, but executing every transaction there is costly when demand is high. This lesson explains how rollups execute transactions elsewhere, submit batches and data to Ethereum, settle through Layer 1 rules, and why a rollup is not simply a sidechain or bridge.

Why move some work away from Ethereum Mainnet?

Ethereum Mainnet has limited shared capacity. When demand is high, users compete for that capacity and fees rise. A Layer 2 is a separate system that extends Ethereum while using Ethereum's security guarantees; its purpose is to increase speed and throughput without casually giving up the security and decentralization of the base layer.

Rollups are one kind of Ethereum Layer 2. Their basic idea is to handle many transactions away from Mainnet, then combine the result into a smaller set of Layer 1 submissions.

What happens in a rollup?

Rollups separate execution from some of the work Ethereum Mainnet performs. Users send transactions to the rollup environment, where they are processed and grouped into batches. The rollup then submits the transaction data needed for a batch to Ethereum, along with the commitments or proofs required by its design. That division lets one Layer 1 submission represent activity from many Layer 2 transactions.

Steps

1. 1

   Execute on Layer 2

   The rollup processes transactions and updates its own state outside Ethereum Mainnet's direct execution path.

2. 2

   Submit a batch to Layer 1

   The rollup posts the transaction data, plus any commitment or proof required by its design.

3. 3

   Settle through Ethereum rules

   The Layer 1 rollup contract provides the settlement point for the batch and its associated verification method.

Ethereum's official documentation describes two broad proof approaches. An optimistic rollup treats transactions as valid unless a fault proof challenges them; a zero-knowledge rollup submits a validity proof. The exact mechanism is important because it affects how and when the Layer 1 contract accepts a batch.

Why do data and settlement on Layer 1 still matter?

Batching does not mean Ethereum is irrelevant after a transaction is executed. For a rollup to be independently checked, the data behind a claimed state change must be available to verifiers. Ethereum can serve as the place where that data, the batch, and the settlement rules meet.

For example, Ethereum's documentation explains that rollup batches compress many offchain transactions into a Layer 1 transaction. It also explains that data availability is necessary for others to verify a proposed summary rather than simply trust an operator's claim.

How are a rollup, a sidechain, and a bridge different?

These names answer different questions. A rollup describes an Ethereum scaling design and its relationship with Layer 1. A sidechain is an independent chain with its own security model. A bridge is a connection that carries assets, messages, or data between networks; it does not by itself determine the security model of the destination.

What new trade-offs should you look for?

Rollups can lower a user's share of Layer 1 costs by batching, but they add a new system to understand. Different Layer 2s have different trade-offs and security models, so the right beginner question is not only “Is it cheap?” but also “Where is this executed, where is it settled, and what does it depend on?”

What comes after the two Layer 2 routes?

Lightning and rollups both respond to pressure on a base layer, but they do so for different networks and workloads. Lightning focuses on Bitcoin payment channels; rollups focus on Ethereum transaction execution and settlement. The next lesson compares another response to scaling: an independent Layer 1 with its own validators, rules, and native asset.