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Layer 2 Solutions

Defination

Rollups are solutions that perform transaction execution outside the main Ethereum chain (layer 1) but post transaction data on layer 1. As transaction data is on layer 1, rollups are secured by layer 1. Inheriting the security properties of layer 1 while performing execution outside of layer 1 is a defining characteristic of rollups.
Three simplified properties of rollups are:
transaction execution outside layer 1
data or proof-of-transactions is on layer 1
a rollup smart contract in layer 1 that can enforce correct transaction execution on layer 2 by using the transaction data on layer 1
Rollups require "operators" to stake a bond in the rollup contract. This incentivises operators to verify and execute transactions correctly.

Useful for:

reducing fees for users
open participation
fast transaction throughput
There are two types of rollups with different security models:
Optimistic rollups: assumes transactions are valid by default and only runs computation, via a fraud proof, in the event of a challenge
Zero-knowledge rollups: runs computation off-chain and submits a validity proofto the chain

Bibliography:
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