We all know that Ethereum is a highly matured and broader Layer1 ecosystem, but a lot of Ethereum-based high-traffic decentralized applications (dApps), from gaming, DeFi, NFTs, or media dApps, are shifting frequently to Layer2 rollups. The reason for this can be different for each dApp. For example, some applications might just need to enhance scalability, whereas some dApps may seek scalability, customizability, and interoperability altogether. Among all these, ‘achieving massive throughput’ is the main reason behind the majority of high-traffic dApps moving to the rollup ecosystem.
In today’s article, we will discuss the role of rollups for high traffic dApps. We will dive into the core concept of how rollups boost the throughput capacity of high-traffic dApps at a significantly lower cost compared to Layer1
Challenges of High-traffic dApps in managing throughput and cost
Challenge:1 Limited scalability:
Decentralized applications running on blockchain with limited scalability, for example- Ethereum, will have to face scalability challenges. That’s because Ethereum is doesnot offer very TPS, and it currently offers a TPS of 27. In the future, Ethereum claims to offer around 100,000 TPS after its EIP-4884 sharding upgrade.
High-traffic Apps often face network congestion issues on Ethereum as they handle thousands of daily active users and millions of transactions created by their users. For example, if we talk about Oasis App, it sees 10K+ unique users a day, and transactions generated from those users are around 15K. To handle such huge traffic and to avoid congestion, Oasis App has implemented native support to rollups into their network’s consensus layer.
Challenge:2 Slow transaction processing
High-traffic dApps have to process millions and even billions of transactions on a daily basis. However, the way Layer1 blockchain (Ethereum) has to manage a range of such high-volume dApps, which issues like increased traffic on their network and thus slows down transaction confirmation. Plus, transactions on the Layer-1 blockchain are required to be validated by all the nodes in the network. Again, this approach can be important from a security point of view, but it causes slow processing of transactions and reduces overall response time for dApps. For example, high-traffic dApps will face challenges in offering in-game transactions, NFT trading on high-volume marketplaces, or high-frequency trading will be highly impacted due to slow transaction processing.
Challenge:3 High transaction cost
Transaction fees are high on Layer-1 blockchains like Ethereum because of their overly congested network and limited transaction processing (throughput) capacity. Further, when the transaction volume increases, it require too many validators. In response, users are required to pay higher fees so that validators can be incentivized fairly. According to YCharts’ data, the average gas price on Ethereum is 16.36 Gwei (One Gwei is equivalent to 0.000000001 ETH), while the average gas limit is 30.00M. Speaking about high traffic, dApps have to cater up to ten thousand transactions a second, which is usually beyond the gas limit. This increases transaction cost and therefore, switching to L2 rollups is an ideal solution. Tansactions in rollups are computed off-chain, requiring very minimal cost per transaction.
Challenge:4 Lack of modularity/customizability
Building a dApp on any public chain; whether Layer1 or Layer2 will lack modularity for your dApp, not enabling you to customize the ecosystem or add/optimize relevant modules for faster speed and execution. For example, if your dApp runs on Ethereum or Polygon, you have to abide by the existing network structure like TPS, Consensus, speed, etc. In such a situation, you cannot optimize your dApp to offer higher TPS to accommodate growing traffic.
Challenge:5 Operational challenges
Deploying a dApp on top of Layer1 blockchain can be cheaper, but maintaining it can be a challenge. Like if we talk about Ethereum, it is already congested. Hence, high-traffic dApps require specialized hardware & software resources to run seamlessly with good response time. The resources can range from high-end GPUs, extremely advanced processors, RAM, storage solutions, etc. Managing all these infrastructures and keeping them updated is complex, even for matured dApps, because their traffic can suddenly increase anytime, and there can be situations where underlying infrastructure need immediate upgrade to cater the required speed and scalability.
How blockchain rollups boost throughput in high-traffic dApps at lower cost?
Using rollups for high traffic dApps has a significant impact on throughput improvement, but how? Let’s discuss it below:
Instant settlement and infinite scalability:
Transactions on a rollup network are computed off-chain where network congestion is almost nil, and hence, settlement is done instantly. Also, high-traction dApps with their own independent rollup chain can adjust the TPS capacity of the ecosystem to achieve hyper-scalability whenever their traffic goes beyond a certain level. This means, dApps can achieve infinite scalability by building their own rollup chain instead of deploying on a public L1 or L2 blockchain.
Cheaper transactions:
Rollups for high traffic dApps implement ‘rollups’ technology, which allows batching of hundreds and thousands of transactions in a single transaction, imposing only a fraction of the average cost of Ethereum. This cost is then shared across all the transactions, which makes the price extremely cheaper and even free sometimes.
Ease of offering gasless transactions:
Having a fully customizable L2 rollup ecosystem allows high-traffic dApps to offer gasless transactions to the users, which reduces the friction for an enhanced user experience. For example, Immutable– the largest gaming platform has built Immutable X, a zkEVM L2 chain that offers gas-free trades like NFT minting, trading, collecting, and earning– all at zero gas cost and meanwhile, the platform offers high scalability of up to 9,000+ transactions per second.
Cross-rollup interoperability and Ethereum-compatibility
L2 rollups are interoperable with all other rollup chains running inside their ecosystem. Plus, they are interoperable with Ethereum-based dApps due to Ethereum compatibility. For example, rollups built with Polygon CDK are, by design, interoperable with all the CDK chains. Similarly, Optimistic rollups built with OP stack can interoperate with each other seamlessly. When different blockchains interact with each other, they can offload transactions and computational tasks to different chains, reducing congestion and enhancing overall network scalability.
Greater degree of security with Zkproofs:
Without security, high-traffic dApps cannot function smoothly thus they will struggle to achieve the desired scalability. Good thing is that security is not an issue for rollups as it already inherits security from Ethereum, plus couple it with the reliable security coming from zkProofs. Zero-knowledge proofs allow network participants to validate statements without even revealing additional information about them, thereby maintaining security and confidentiality in high-traffic dApps.
Which dApps have shifted to rollups for higher throughput and cost benefits?
Several Ethereum and other public blockchain-based dApps have shifting to rollups rapidly. Down below, we have listed some of the high-traction, popular dApps that have launched their own rollup chains to achieve benefits such as higher throughput, low latency, and lower transactions costs:
Gaming dApps: Palm Network, Aavegotchi, Gameswift.
Aavegothi, the leading gaming platform with over 14,000 unique daily active users and $807,332, has successfully launched a custom Zkrollup-based blockchain, Gotchichain, that offers instant transaction finality, minimal gas fee, and hyper-scalability to improve the network’s throughput significantly.
Palm Network, the popular NFT gaming platform with more than 1.7 million registered wallets (as of sept, 2023) has recently transitioned to a Zk-powered L2 to expand its existing operations and launch a range of innovative use cases. Regarding features, Improved throughput, security, better speed, and EVM-compatibility are main benefits that Palm Network leverage from its L2 rollup network.
Gameswift, with a current base of 40,000 players and a target market of 1.8 billion gamers, has implemented zkEVM rollups as their execution layer to achieve modularity and higher scalability. This will further enhance the players’ experience by offering them gasless transactions in a purely decentralized way and meanwhile being able to capture staking rewards for the native tokens of every rollup network within their modular gaming network.
Payment dApps- Wirex, Gnosis pay.
Wirex, the leading payment dApp with over 5 million active users, has launched its one-of-a-kind non-custodial crypto debit card service; W-Pay by harnessing the power of ZK-powered rollups. Faster transactions, reduced gas costs, and enhanced user experience are the main benefits that W-pay gets from rollups. Other benefits include highest level of security, endless customization, cross-network interoperability, EVM-compatibility, and native support for account abstraction (AA), infinite scalability.
Gnosis Pay, the decentralized payment network with 2,057,424 total active addresses, 11,314 daily active address, and $251.03M TVL, has launched a custom L2 rollup chain to manage its self-custodial visa card; Gnosis card. Self-custodial nature, universal acceptance, 0.00% fees for early users, complete EVM support, high security, and Onramp & offramp payments are some of the advanced features that L2 rollup unlocks for Gnosis pay.
dApps for Loyality pogram- Flipkart Firedrops
Flipkart, the widely-renowed digital e-commerce platform is building a dedicated chain powered to manage and scale its FireDrops loyalty program. Having a customized ZK-powered L2 chain will enable Flipkart to maintain high throughput, choose a variety of customization options and fine-tune the user onboarding experience. Since its launch, the network has amassed more than 3.6m active wallets.
Trading dApps- IDEX, Uniswap.
Uniswap, the leading trading app with a trading volume of a whopping $489B+, has launched Uniswap v3– an Optimistic rollup-based chain for scaling DeFi applications while delivering a superior user experience. Instant transaction confirmation, up to 10x cost saving, battle-tested security, integration of smart contract EOAs, and decentralized sequencer are the main benefits Uniswap reaps by building an L2 rollup chain.
IDEX, the popular decentralized exchange platform with a volume of $25,863.49 (24-hour statistics) created a zkEVM validium L2– XCHAIN. The chain will offer next-level features such as zero gas, instant transaction settlement, high security with Zk-proof, seamless cross-chain interactions, and ultra-fast bridging.
How Zeeve helps in dApps’ migration to L2 rollups?
Zeeve offers an expert team of rollups and DevOps engineers to make high-traffic dApps’ migration to rollup ecosystem a seamless process. Your dApp’s interface, features and everything else will remain the same; only the underlying infrastructure will be upgraded to a rollup-based network without any impact on user experience and with zero risk of data loss. This approach of Zeeve will also reduce your dApp’s migration cost significantly, making the process economical for all kinds of web3 enterprises, startups, and scaleups.
Also, Zeeve offers modular RaaS that enables you to build custom rollup chain from scratch. The RaaS stack at Zeeve includes one-click deployment Sandbox along with a range of rollup integration options such as DA layer from Avail, Eigen Layer, and Celestia, Biconomy and Halliday for Account Abstraction (AA), Chainlink for decentralized oracles, Espresso and Radius for Decentralized Sequencer, Subgraph for data indexers, and LayerZero and Router Protocol for interoperability layer. For more information on Zeeve’s blockchain-related services and solutions, talk to our experts. Schedule one-to-one call or drop your queries via email on this page.
