What do you trust in exchange for cheaper fees?
Transacting directly on Ethereum can be expensive, so many users turn to layer 2 (L2) networks, where the same swap is much cheaper and faster. Using an L2 safely means understanding what changes in exchange for those lower costs.
Here we cover how rollups bundle transactions, what data and proofs do, and why withdrawing back to Ethereum can involve a wait. It also covers operational risks such as sequencers and upgrade permissions, and the checks a user should make.
Execution and settlement are different
Ethereum.org describes layer 2 as networks that execute transactions off Ethereum to increase throughput while relying on Ethereum for security. A rollup executes many transactions on the L2, then posts the results and transaction data to Ethereum (layer 1) in a batch. Execution happens on the L2; final settlement happens on L1.
Batching many transactions into one L1 submission sharply reduces the L1 cost per transaction. But a transaction that looks complete on the L2 takes time to be recorded and finalized on L1, and in between users rely on how the L2 is operated.
Two kinds of rollup
Rollups fall into two broad types, depending on how they guarantee that the results posted to L1 are correct.
| Type | Why results are trusted | Withdrawing to L1 | Main risks to check |
|---|---|---|---|
| Optimistic rollup | Assumed valid unless a fraud proof is submitted during a challenge period | Wait for the challenge period (roughly seven days) | Whether fraud proofs actually work and who can submit them |
| Zero-knowledge (ZK) rollup | A validity proof is verified on L1 for each batch | After the proof is verified (usually shorter) | Bugs in the proof system or verifier contract |
Ethereum.org notes that withdrawals from optimistic rollups must wait out a challenge period of roughly seven days. Exact times vary by rollup.
Withdrawal delays and fast bridges
Withdrawing from an optimistic rollup through the official route means waiting until the challenge period ends, because the system must be able to reverse an incorrect result if someone proves it wrong during that window.
Fast bridges exist for users who do not want to wait. The bridge operator pays out on L1 immediately and recovers the funds once the official withdrawal completes. Consider a hypothetical case: paying 0.1% to move 10 ETH quickly costs 0.01 ETH and saves a week, but adds the risk of the bridge operator and its contracts.
Sequencers and upgrade permissions
Most rollups rely on a sequencer, run by one or a few operators, to order and batch transactions. If the sequencer stops, L2 activity stalls, and in theory it could also leave out specific transactions. That is why it matters whether users have a forced-inclusion path to submit transactions directly through L1.
Check who can upgrade the rollup's L1 contracts as well. If an admin can change them without notice, users' funds ultimately depend on that admin, however strong the proof system. Look for upgrade delays long enough for users to exit first.
Where readers go wrong
"L2s are as secure as Ethereum" holds only under conditions: data posted to L1, a working proof system, an open forced-withdrawal path, and limited upgrade powers. Rollups are at different stages on each of these.
"An L2 wallet balance is the same as an Ethereum balance" is not quite right either. ETH on an L2 is a claim on assets locked in a bridge contract, and reclaiming it on L1 has its own route and timing.
Check the whole user journey
Before using an L2, check the way out as carefully as the way in.
- Find out whether the rollup is optimistic or ZK and how long an official withdrawal takes.
- Get the official bridge address from the project's documentation, and if you use a fast bridge, check its fee and operator.
- See whether there is a path to force transactions or withdrawals through L1 if the sequencer stops.
- Check who controls upgrades to the L1 contracts and whether upgrades are delayed.
- Start by testing both a deposit and a withdrawal with a small amount before moving more.
Limits of evaluating L2s
Rollup technology and operations change quickly, so a risk assessment made today may be out of date in a few months. When a proof system is announced, check separately whether it is actually live and open to anyone.
The fast-bridge fee above is hypothetical. When using an L2, rely on Ethereum.org and each rollup's official documentation with their dates, and make sure you understand both the route in and the route out.