Ethereum vs Dymension
How do Ethereum smart contracts work with rollups, and why is Dymension more scalable and secure?
TL;DR
Innovation strives to create free markets, and the question is how technology can accelerate this journey.
Dymension offers an alternative to Ethereum, scaling both the cost of having your own blockchain and ensuring security—thus, Dymension inherently scales security.
How do Ethereum rollups work?
First, understand that rollups are scaling solutions that process batches of transactions and post the result to Ethereum, relieving it of computing power and storage.
Here's what typically happens when you move liquidity to an Ethereum rollup:
Tokens are locked on Ethereum via bridging smart contracts to be minted on a rollup.
Consensus of the contract occurs to verify the change.
The rollup block producer (sequencer) confirms the locked-up tokens, allowing minting on the rollup.
When moving liquidity from rollups to Ethereum:
Tokens are burned on the rollup via a bridging smart contract for unlocking on Ethereum.
Ethereum doesn’t run a node on each rollup, so it relies on the posted changed chain state from rollups for verification.
Rollups employ proof mechanisms—optimistic rollups use fraud proof, while zk rollups use validity proof—to finalize settlement.
Ethereum's settlement contract awaits the bridge contract from the rollup before unlocking the tokens.
Rollups utilize multisig (multi-signature) technology in bridging for multiple independent actors to jointly control rollup funds, serving as a safety feature. For instance, 2 of 3 rollup wallet keys are required to confirm a transaction for rollup tokens to be burned.
However, multisig has its weaknesses:
Third parties can steal private keys for multisig bridges, leading to vulnerabilities such as the Ronin Network hack in 2022 for a record $624M, and more recently when Munchables was exploited for $63M in March this year.
Rollups, as custodians of liquidity, are susceptible to bridge hacks or malicious logic within the app.
Where does Dymension fit in?
Dymension makes rollups non-custodial by holding assets like a safety deposit box, thereby mitigating multisig bridge hacking risks (don’t worry, Dymension doesn’t have custody either, it’s decentralized, and that’s the beauty).
If Dymension were hacked, it would require breaching battle-tested infrastructure like Cosmos SDK, IBC, and Google’s Go language (in contrast to Ethereum’s susceptible Solidity), making it less likely.
On Ethereum, a multisig controls access to funds in a rollup, while in Dymension, funds are held in 'escrow' within the Dymension blockchain, requiring network consensus for access. Using a rollup on Dymension should be almost as safe as using a decentralized blockchain.
From a developer’s perspective, it's easier to hack bridge contracts than application code or a blockchain like Dymension. RollApps in Dymension are not built within Dymension itself but as individual blockchains using Dymension tools.
Conclusion
Dymension offers an alternative to Ethereum, scaling both the cost of having your own blockchain and ensuring security—thus, Dymension inherently scales security. Settlement becomes the point of trust in a multi-chain world, with Dymension providing an underlying trust assumption that supports transitions between chains.
Housekeeping: If it appears that I have overlooked anything or any information is incorrect, please do get in touch. Happy to take feedback, discuss, rethink, and edit accordingly.
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This document shows an incorrect understanding of how rollups in Ethereum work. Rollups do not rely on multisigs for the security of their funds as a general rule.