There’s Movement in Ethereum’s Layer 2 Landscape: Base Takes the Lead, Unichain Surges Ahead, World Chain Introduces Decentralized IDs, and L2Beat Issues an Ultimatum for Rollups to Fix a Security Weakness.

Ethereum is a magnificent demonstration of how blockchains can scale at higher levels. No other cryptocurrency has implemented this principle so impressively.

At the core, the Beacon Chain—known as the “consensus layer”—spins. Here, validators agree on the valid state, which refers to the status of all smart contracts on this main hub.

“Rollups” connect to the Beacon Chain. They process transactions on their own separate blockchain and only record the results in a smart contract on the Beacon Chain. You don’t have to understand all the details—what matters most is: It works!

Meanwhile, the Ethereum ecosystem processes up to 300 operations per second (UOPS) or 250-260 transactions per second (TPS). This means rollups scale the Beacon Chain by almost twentyfold; only about five percent of all Ethereum operations now take place on the mainchain.

Rollup activity according to l2beat.com

The website L2Beat lists more than 50 rollups. Of these, 17 currently process more than one transaction per second; 18 store a TVL (Total Value Locked) of more than $100 million.

The ecosystem of rollups is vibrant. We’re witnessing the internet of value develop before our eyes. Ethereum is now much more than just its price—which, as has rather underperformed in recent years, anyway.

TVL and UOPS

Today, we’re looking at the top five rollups according to L2Beat. A few things stand out:

First of all, Base has taken the lead. Both in terms of TVL and UOPS, Base has significantly overtaken the previously leading rollup, Arbitrum. The two top rollups command the vast majority of the capital—about $30 billion of the $39 billion total; Base also stands out with an extremely high transaction throughput.

Secondly, two relatively young rollups have risen to the top five: Unichain, which has only been live since mid-April but has already hit the billion-dollar TVL mark, and World Chain, which launched in October 2024 and already logs 24.5 UOPS.

Before we get into these two new rollups, let’s briefly introduce the more established Base and Arbitrum, as well as the underlying technologies.

Optimistic Rollups

A rollup stores the results of transactions—but not their full history (i.e., their execution and signature)—on the Ethereum blockchain. Instead of executing transactions directly on-chain, the rollup maintains a list of accounts in a smart contract, which it updates every few minutes. This greatly scales the main chain by saving validators both data and computation.

The underlying smart contract ensures that the rollup operators—the sequencers—cannot, or can scarcely, cheat. There is often a central party involved, but it cannot misappropriate funds; the core design makes it possible to decentralize this party or to put it under decentralized governance. Many rollups are already moving in that direction.

Technologically, the leading rollups are exclusively “optimistic rollups,” in four out of five cases following the OP ($0.43) (Optimistic Stack) model.

As the Ethereum Foundation explains, an optimistic rollup “generates state updates” in the smart contract on the Beacon Chain, where the users maintain a sort of account, “optimistically, with the possibility for fraud proofs to be generated to revert invalid state roots.”

When the rollup operator updates the smart contract on the Beacon Chain, no proof is added at first. Users are expected to trust the operator to act correctly. However, users always have the ability to request a proof if they’re in doubt and, in the event of an error, revert to a previous state. This design reduces the amount of data involved.

By contrast, “ZK rollups” (zero knowledge rollups) provide cryptographic proof for state updates—a zero-knowledge proof—though this requires a bit more data. Among the top ten rollups, only Starknet, ZKSync Era, and Linea use this model. They have much less usage compared to the major optimistic rollups. Despite the high hopes that developers placed in ZK rollups (“the final stage of scaling”), these still play only a niche role in the broader Ethereum ecosystem.

Base and Arbitrum

Base, the new king among rollups, was launched by major US exchange Coinbase and enjoys its active support. While Coinbase plays a significant role in operating the rollup, it doesn’t have more rights than the operators behind other optimistic rollups.

Base is integrated into every relevant major DeFi app. With Aerodrome, it has its own decentralized exchange that boasts a TVL of $1 billion, offering considerable market depth. With more than 100 UOPS, Base is by far the most used rollup.

Furthermore, during my research into both DeSci (decentralized science) and DeFAI (the merging of AI and DeFi), I repeatedly ran into Base. Many tokens—and thus DAOs (Decentralized Autonomous Organizations) and dApps (decentralized applications)—in these sectors run on Base. The rollup could, as a kind of experimental lab, become one of web3’s main innovation drivers.

Arbitrum, alongside OP, is the only other major protocol for optimistic rollups. Upon going live in 2021, it improved upon the fraud proofs system compared to Optimistic. Both protocols have since developed significantly.

Arbitrum quickly became the most important rollup for DeFi after its launch. It found its way into every major DeFi protocol, has its own active derivatives exchange, GMX (for perpetual swaps), and processes a high volume of operations safely and quickly. I have personally had only positive experiences with Arbitrum—it works faster and more reliably than, for example, the sidechain Polygon.

Base and Arbitrum will continue to shape Ethereum’s Layer 2 landscape and are set to dominate for the foreseeable future. Still, they face growing competition from rising new rollups—which brings us to Unichain and World Chain.

Unichain

Unichain is fairly straightforward to explain: It’s the rollup for Uniswap, the biggest decentralized exchange. Unichain promises sub-one-second transactions, passes along part of its revenue to validators, and is optimized for decentralized finance (DeFi).

Unichain is technically based on the OP Stack and is part of the Superchain by Optimistic. The rollup seems to have two innovations: Through LayerZero, Wormhole, and other protocols, it supports “seamless transactions across dozens of chains.” How exactly this plays out in practice, I cannot say. Additionally, it introduces a “trusted execution environment (TEE)” that improves the ordering of transactions and precludes stakers from boosting their income through manipulative (quasi-fraudulent) methods like MEV (Miner Extractable Value, or ways to reorder transactions for profit) which are increasingly a concern for regulators. This could help more honest users earn greater revenues in DeFi.

Nevertheless, Unichain’s success seems to owe less to technology and more to direct support from Uniswap.

World Chain

World Chain also introduces an innovation. As L2Beat describes, it’s an “OP Stack rollup created to scale proof-of-personhood. It offers users with a World ID prioritized blockspace.”

World Chain, according to its own website, is “a blockchain built for real people.” World Chain belongs to Worldcoin, OpenAI founder Sam Altman’s blockchain project, which creates a “World ID” through iris scans—allowing people to prove their humanity via a wallet.

World Chain is a good example of how rollups create incentives to integrate into the Ethereum ecosystem, rather than build a completely separate blockchain. For after launching the WLD ($0.88) token on Ethereum, Worldcoin initially intended to develop its own chain.

The rollup World Chain itself is an ordinary optimistic rollup. Its unique feature is that users who can prove their humanity with a World ID pay no fees, gain access to MiniApps, and can participate in the WLD token airdrop.

World Chain has around 500,000 active wallets and, since its launch in October 2024, a steady number of transactions. Trading volume exploded in May. The rollup appears attractive to users.

Stage 0 and 1 of 2

Alongside “activity” and “TVL,” L2Beat offers another rating: the Stage.

The stage describes how secure rollups actually are. This is important because there are some security gaps in this architecture that not everyone is aware of. Introducing central actors—such as the operators behind rollups—also introduces new risks for users.

Base, Arbitrum, OP Mainnet, and Unichain are Stage 1 rollups, while World Chain is still at Stage 0. The target is Stage 2, which until now has only been reached by the dedicated Degate rollup and Zk.Money v1. Progress here has been meager since the stage system was introduced at the end of 2023.

The stage describes the security of the rollup, as L2Beat explains on its blog:

• Stage 0 still has the training wheels on. The rollup is entirely in the hands of the operator. There is open-source software allowing state reconstruction, but many security holes remain. This stage is acceptable at first, but should be advanced beyond as soon as possible.
• Stage 1 marks the “transformation to operation by smart contracts.” Only a security council remains, to intervene in case of bugs—but this can be a gateway for errors or fraud as well.
• Stage 2 removes all training wheels. The rollup is governed solely by a smart contract. The system is fully permissionless, with no known vectors for fraud, and the security council’s powers are strictly limited.

World Chain currently corresponds to Stage 0. There are unaudited smart contracts that could contain backdoors allowing for theft of funds. Moreover, MEV is permitted, there is no “exit window” for users to leave the rollup in case of unfavorable code changes, and the posting of fraud proofs is limited to a single entity—which almost defeats their purpose.

For this closed design of fraud proofs in particular, L2Beat is threatening to strip World Chain even of Stage 0 status. If World Chain does not remedy this in 21 days, it will enter the “other” category—casting doubt on whether it even deserves to be called a rollup.

But not all is perfect with the other rollups, either. All following the OP Stack model—all except Arbitrum—have likewise received an ultimatum from L2Beat. They have 61 days left to improve, or they will also be demoted to Stage 0.

The reason is that L2Beat has tightened its requirements. For a Stage 1 rollup, “only a 75% takeover of the security council should enable the censorship of posting an L2-to-L1 message (needed for withdrawals) or allow the posting of false messages (for example, to steal funds).”

Currently, only Arbitrum seems to meet this requirement. Unlike others, it protects users from malicious smart contract upgrades through a 17-day upgrade delay; upgrades in OP Stack rollups take effect immediately for users.

All in all, rollups are still far from where they should be in terms of security—but the ecosystem they’ve enabled is already nothing short of impressive.