Originally titled: "Make Ethereum feel like Ethereum again: Based rollups explained"
Author: Yohan Yun
Compiled by: Luffy, Foresight News
The Fragmentation Problem in Ethereum Layer 2
Ethereum's Rollup-centric Layer 2 roadmap has successfully alleviated congestion on the base layer (Ethereum mainnet) and reduced gas fees. However, this achievement comes at the cost of creating a fragmented liquidity ecosystem.
Layer 2 networks were designed to scale Ethereum, but each has effectively become an isolated island with its own systems, rules, and barriers. Liquidity is trapped within individual Layer 2s, users struggle with cross-chain bridges, and developers must choose between building on Base, Arbitrum, Starknet, or other competing platforms.
The Promise of Based Rollups
Over the past year, the Ethereum community has increasingly discussed Based Rollups as a potential solution to this fragmentation. These rollups aim to restore:
- Interoperability between Layer 2 networks
- Composability of DeFi protocols (reviving the "money legos" concept)
- Native Ethereum experience by leveraging mainnet for transaction ordering
Instead of relying on centralized sequencers (which currently operate most Layer 2s), Based Rollups delegate transaction ordering to Ethereum's base layer - exactly how Ethereum originally handled transactions before Layer 2 scaling solutions emerged.
👉 Discover how Based Rollups could revolutionize Ethereum scaling
How Based Rollups Work: Technical Breakdown
Centralized Sequencers: The Current Layer 2 Model
Most existing Rollups use:
- Single-entity sequencers that process transactions rapidly
Optimized for performance but vulnerable to:
- Censorship risks
- MEV (Maximal Extractable Value) exploitation
- Single points of failure
Based Rollups: The Alternative Approach
Key characteristics:
- Ethereum mainnet handles sequencing (returning to Layer 1's original role)
- Enhanced security by leveraging Ethereum's validator network
- Improved interoperability between participating Layer 2s
Taiko Labs has implemented the first production-ready Based Rollup, generating 5x more revenue for Ethereum compared to traditional Rollups.
Benefits and Challenges of Based Rollups
Advantages:
- Stronger ecosystem cohesion
- Native cross-chain composability (assets move seamlessly between Based Rollups)
- Increased Ethereum validator rewards (boosting network security)
- Reduced liquidity fragmentation
Limitations:
- Slower transaction times (bound by Ethereum's 12-second block time)
- Adoption barriers (existing Layer 2s may resist forfeiting sequencer revenue)
- Early-stage technology (requires widespread implementation for full effect)
The Future of Ethereum Scaling
Critical Questions:
- Can Based Rollups achieve sufficient adoption among existing Layer 2s?
- Will the Ethereum community prioritize interoperability over short-term profits?
- How will competitors like Solana (with its unified Layer 1 approach) impact Ethereum's roadmap?
👉 Explore the latest developments in Ethereum Layer 2 solutions
FAQ Section
Q: How do Based Rollups differ from traditional Rollups?
A: Based Rollups use Ethereum mainnet for transaction sequencing instead of centralized sequencers, enabling better interoperability between Layer 2 networks.
Q: What's the main tradeoff with Based Rollups?
A: Transaction speeds are currently limited by Ethereum's 12-second block time, though solutions like pre-confirmations are being developed.
Q: Why aren't all Layer 2s adopting Based Rollups?
A: Many existing Rollups generate significant revenue from sequencer operations (millions in ETH), creating financial disincentives to switch.
Q: How do Based Rollups benefit Ethereum's security?
A: By increasing validator rewards through additional sequencing fees, they encourage more ETH staking and strengthen network security.
Q: Can Based Rollups fully solve Ethereum's fragmentation?
A: They represent a major step forward, but widespread adoption across Layer 2 ecosystems is necessary for complete liquidity unification.