The limited transaction throughput and high fees associated with existing blockchains like Bitcoin and Ethereum have spurred the development of various scaling solutions. One approach is the use of payment channels, which enable transactions to occur off-chain between parties, minimizing the need for frequent on-chain settlement. This concept has been implemented in systems like the Lightning Network, creating a network of bidirectional payment channels that allow for efficient value transfer.

Another promising scaling solution is the concept of rollups, which introduce a rollup coordinator to batch transactions and produce validity proofs. In zk-Rollups, the coordinator uses zk-SNARKs to generate succinct proofs attesting to the validity of transaction batches, allowing for substantial compression of data posted on-chain. Optimistic Rollups take a different approach, relying on external validators to detect and provide fraud proofs against invalid coordinator state transitions. Both rollup variants enable the execution of entire smart contracts within the rollup environment, unlocking the possibility of migrating existing decentralized applications (dapps) to these scaled ecosystems.

Rollups also address data availability challenges, ensuring that system state can be reconstructed even if the original coordinator fails. Solutions like zk-Sync record transaction data on the base layer blockchain, while zk-Porter employs an off-chain distributed network of coordinators for cheaper data storage. These scaling solutions offer significant improvements over base layer blockchains, enabling higher throughput, lower fees, and the ability to move assets seamlessly between layer 1 and layer 2 rollup systems. However, trade-offs exist between rollup types in terms of trust assumptions, transaction finality guarantees, and fee structures.