Deconstructing Rollup, Inscription, and SCP

Author: 0xmiddle @ Contributor of PermaDAO

Reviewed by: Kyle @ Contributor of PermaDAO

The backgrounds of these three concepts are completely different and seem unrelated, but their technical principles have much in common. Through this article, you will gain a deeper understanding of the technical essence of these three concepts, including modular blockchains!

Rollup

The L2 form of Ethereum has undergone a long evolution, and ultimately Rollup has become mainstream.

The Sequencer of Rollup collects and orders transactions, packages blocks, forms a soft consensus on the transactions, and then submits them to L1, where they are verified to achieve hard consensus. L1 will validate the data validity of the blocks submitted by L2.

However, it cannot verify by re-running the transactions, as the purpose of L2 is to scale. If that were done, it would contradict the purpose of L2. Therefore, there are lazy verification methods like OP (Optimistic Proof) and ZK (Zero-Knowledge Proof).

OP means: As L1, I default to not verifying personally; any third party can verify. If they find something wrong, they inform me, and I will verify it myself. If I confirm there is indeed fraud, I will execute penalties against the fraudster (the Sequencer's deposit is locked in the contract deployed on L1 by L2). If the window period passes and no one tells me anything is wrong, I assume it is correct.

ZK means: You generate a validity proof, and I will verify this validity proof. If this proof is correct, then the data is valid. In other words, verifying this proof is equivalent to recalculating the entire block, but the overhead of verification is much less than recalculating the block.

Inscriptions

Inscriptions can also be understood as a type of Rollup, which transmits data from off-chain to the blockchain, but this data will not be verified by L1. Taking the Ordinals protocol as an example, if I inscribe a transaction on the Bitcoin chain, transferring 1000 ORDI to someone else, but I do not have a single ORDI in my account, this inscription will still go onto the Bitcoin chain.

{"p":"brc-20","op":"transfer","tick":"ordi","amt":"1000"}

Whether you inscribe valid data or invalid data, Bitcoin L1 will accept it without any verification. This means that the Ordinals inscriptions stored on Bitcoin are a "dirty ledger" containing both valid and invalid data.

So why can the Ordinals protocol ensure the orderly operation of the ledger? This is because of "client-side validation." Your wallet and browser will read the "dirty ledger" locally and then filter out invalid data to produce a clean ledger. Therefore, the essence of inscriptions is off-chain consensus.

Since it is off-chain consensus, is it centralized? Are there security issues? I think it is actually fine because the code of the Ordinals protocol is open source, and anyone can run a consistent state record based on the "dirty ledger" using this code. For users who cannot run the code, they can compare with several wallets or browser clients to confirm whether the inscription is valid.

The Ordinals protocol can actually be understood as a set of rules defining data validity. You can remember this formula: dirty ledger + data validity rules = clean ledger. Inscriptions have a long history; early examples like Onmi-BTC and RMRK on Polkadot are also inscriptions. The popularity of BRC20 is not due to technological innovation, but rather because it resonates with people's emotional points regarding Fair Launch and the results of multi-party interest games.

SCP

SCP is an L2 paradigm proposed by Arweave, fully known as Storage-based Consensus Paradigm. The original intention of this paradigm is to separate computation and storage in blockchains, which is already a modular design approach, but it was proposed earlier than the concept of modular blockchains. Looking back now, SCP is very similar to inscriptions.

In the SCP paradigm, the blockchain serves solely as a storage layer for state data; it does not perform any computation and, of course, does not verify the data submitted by L2. However, under the SCP paradigm, L2 needs to put the rules for data validity on-chain. In other words, the blockchain stores the "dirty ledger" + "data validity rules," allowing everyone to run a clean ledger based on the on-chain records.

Compared to inscriptions, the SCP paradigm differs in that the data validity rules are placed on-chain. This completely transforms the off-chain consensus of inscriptions, or in a sense, "social consensus," into on-chain consensus.

We find that Rollup, inscriptions, and SCP, although concepts from different origins, have many similarities. The essence of all three is off-chain computation. Rollup and SCP aim to scale, allowing the expensive L1 blockchain to perform less computation or none at all, while inscriptions enable L1, which lacks complex computation capabilities, to carry out complex computations in another way. All three reflect the idea of modular design.

At this point, we can gain a deeper understanding of inscriptions. Bitcoin inscriptions are essentially a way to extend L2 using Bitcoin as a DA layer, even though it is not a complete L2 blockchain form. If the inscription protocol is complex enough, it can also achieve Turing completeness and be expressed in the form of a chain.

Whether it is inscriptions or SCP, this dirty ledger + off-chain verification model is actually more suitable for storage-based public chains, especially those specifically designed for DA (Arweave, Celestia). The awkwardness of Bitcoin inscriptions lies in the fact that Bitcoin itself is not designed for storage. Inscriptions are fine for playing around with memes, but creating a complete ecosystem will be very expensive and difficult.

You can have a Tibetan mastiff pull a millstone, but wouldn’t it be better to have a donkey do it? Let something be used for its intended purpose. Of course, I am not as extreme as @ Luke Dashjr; it is also important for everyone to enjoy playing with memes, but we should not expect Bitcoin inscriptions to create a DeFi ecosystem. This viewpoint has also been expressed in my article “Developing an Ecosystem on Bitcoin is Like Fishing for Wood.”