Fast and Secure Decentralized Optimistic Rollups Using Setchain

TL;DR

This paper introduces Setchain-based decentralized optimistic rollups that enhance blockchain scalability and security by combining decentralization, formal correctness, empirical scalability evidence, and incentive mechanisms.

Contribution

It presents a fully decentralized arranger system integrating sequencers and data availability, with proven correctness and scalable empirical results.

Findings

Decentralized arranger system is correct and scalable.

Empirical evidence shows improved scalability.

Incentive and fraud-proof mechanisms ensure protocol integrity.

Abstract

Modern blockchains face a scalability challenge due to the intrinsic throughput limitations of consensus protocols. Layer 2 optimistic rollups (L2) are a faster alternative that offer the same interface in terms of smart contract development and user interaction. Optimistic rollups perform most computations offchain and make light use of an underlying blockchain (L1) to guarantee correct behavior, implementing a cheaper blockchain on a blockchain solution. With optimistic rollups, a sequencer calculates offchain batches of L2 transactions and commits batches (compressed or hashed) to the L1 blockchain. The use of hashes requires a data service to translate hashes into their corresponding batches. Current L2 implementations consist of a centralized sequencer (central authority) and an optional data availability committee (DAC). In this paper, we propose a decentralized L2 optimistic rollup based on Setchain, a decentralized Byzantine-tolerant implementation of sets. The main contribution is a fully decentralized "arranger" where arrangers are a formal definition combining sequencers and DACs. We prove our implementation correct and show empirical evidence that our solution scales. A final contribution is a system of incentives (payments) for servers that implement the sequencer and data availability committee protocols correctly, and a fraud-proof mechanism to detect violations of the protocol.