What Is a Based Rollup and Why It Inherits Ethereum’s Liveness?

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The successful completion of the Cancun upgrade has significantly reduced L2 gas fees, bringing Layer 2 solutions back into the spotlight. Among the various L2 scaling approaches, Optimistic Rollups and ZK Rollups currently dominate the landscape. While Optimistic Rollups have gained widespread adoption due to their maturity, both architectures face inherent limitations in efficiency, security, and decentralization.

To overcome these challenges, a new paradigm—Based Rollup—has emerged. Designed to streamline infrastructure and enhance trust assumptions, Based Rollup is the only known Rollup architecture that fully inherits Ethereum’s liveness. At present, Taiko is the only major project actively developing a Based Rollup solution using ZK technology.

The Limitations of Current Rollup Architectures

Despite their popularity, both Optimistic Rollups and ZK Rollups come with trade-offs that affect user experience and system efficiency.

Optimistic Rollups: Security at the Cost of Speed

Optimistic Rollups operate under the assumption that transactions are valid by default. To ensure security, they implement a challenge period—typically lasting seven days—during which fraud proofs can be submitted if malicious activity is detected. While this mechanism provides strong security guarantees, it introduces significant delays, especially during fund withdrawals from L2 to L1.

Moreover, during periods of high network congestion on Ethereum, submitting fraud proofs can become prohibitively expensive due to soaring gas costs. This not only affects dispute resolution but also undermines the reliability of the "escape hatch" mechanism users rely on in emergencies.

ZK Rollups: Fast but Computationally Intensive

In contrast, ZK Rollups use zero-knowledge proofs to validate transactions off-chain before posting them to Ethereum. This allows for near-instant finality and improved data efficiency. However, generating these cryptographic proofs requires substantial computational power, increasing operational costs and limiting transaction throughput (TPS).

Additionally, the complexity of maintaining proof generation infrastructure introduces centralization risks—many ZK Rollup operators still rely on centralized sequencers, which contradicts Ethereum’s ethos of decentralization.

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Both models require complex systems for sequencing, data availability, and fraud/validity proof handling. These layers of complexity increase costs, reduce agility, and create potential attack surfaces.

Introducing Based Rollup: A Paradigm Shift in L2 Design

Proposed by Ethereum researcher Justin Drake in March 2023, Based Rollup (also known as L1-sequenced Rollup) represents a fundamental shift in how Rollups handle transaction ordering.

Unlike traditional Rollups that manage sequencing independently on L2, Based Rollups outsource transaction sequencing entirely to Ethereum’s base layer (L1). This means that Ethereum validators—not separate sequencers—are responsible for ordering transactions and including Rollup blocks directly within Ethereum blocks.

This architectural choice results in a simplified stack:

Crucially, Based Rollup addresses scalability from the sequencing angle, whereas Optimistic and ZK Rollups focus on verification. These dimensions are complementary—meaning an Optimistic or ZK Rollup can also be a Based Rollup if it delegates sequencing to L1.

Key Advantages of Based Rollup

1. Full Inheritance of Ethereum’s Liveness

Liveness refers to the guarantee that honest users can always make progress on the network—even under adversarial conditions. Based Rollups are the only Rollup design that fully inherits Ethereum’s liveness because they eliminate the need for escape hatches or external consensus mechanisms.

In traditional Rollups with escape mechanisms, users must wait through lengthy challenge windows to withdraw funds during outages. With Based Rollups, since sequencing is secured by Ethereum itself, users don’t need to “escape”—they are already on the most secure path.

2. Reduced Technical Complexity

By offloading sequencing to L1, Based Rollups remove the need for:

This dramatically simplifies the L2 architecture, reducing attack vectors and maintenance overhead.

3. Lower Latency and Faster Confirmation

With Ethereum validators directly including transactions, confirmation times improve significantly. There's no dependency on third-party sequencers or batch submission delays. This leads to faster user feedback and better UX for applications like DeFi and gaming.

4. Lower Operational Costs

Since L1 handles sequencing, L2 operators can focus on efficient batch processing and proof generation (in the case of ZK-based systems). This reduces computational load and associated costs—especially beneficial during high-traffic periods.

5. Stronger Economic Alignment

Miners and validators on Ethereum gain additional incentives by including L2 transactions in blocks. This creates a win-win scenario: L2s benefit from robust security and ordering, while L1 participants earn extra fees. This alignment strengthens the overall economic security of the ecosystem.

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Challenges Facing Based Rollup Adoption

Despite its advantages, Based Rollup is not without hurdles.

Limited MEV Capture for L2s

Most Maximal Extractable Value (MEV) generated from transaction ordering flows directly to Ethereum validators rather than the Rollup itself. This limits revenue opportunities for L2 protocols that might otherwise monetize sequencing rights.

Projects may need to explore alternative monetization strategies or layer additional services (e.g., private mempools via EigenLayer) to retain value.

Reduced Sequencing Flexibility

Delegating sequencing to L1 reduces control over transaction ordering policies. For example, implementing a strict First-Come-First-Served (FCFS) model—as used by Arbitrum—becomes more complex when Ethereum miners prioritize transactions based on tips.

Specialized middleware or restaking protocols may be required to enforce specific ordering rules without compromising decentralization.

Projects Building Based Rollups: The Case of Taiko

As a relatively new concept (introduced less than a year ago), there are few active implementations of Based Rollup. The most prominent is Taiko, a ZK Rollup aiming to deliver a Type-1 zkEVM—fully equivalent to Ethereum’s execution environment at the opcode level.

Taiko adopted the Based Rollup model early, leveraging Ethereum for:

This allows Taiko to focus purely on execution and proof generation while inheriting Ethereum’s security model.

In January 2025, Taiko launched its Katla testnet, introducing Based Contestable Rollup (BCR)—a variant where dispute resolution (similar to fraud proofs) is integrated into the validation workflow. This hybrid approach combines the efficiency of ZK proofs with fallback mechanisms for edge cases, further enhancing trust guarantees.

Future Outlook: Can Based Rollup Become the Standard?

While still in its infancy, Based Rollup offers a compelling vision for the future of Ethereum scaling. Its ability to:

...positions it as a strong candidate for long-term dominance in the L2 ecosystem.

In particular, DeFi applications stand to benefit greatly from faster confirmations, lower costs, and stronger security assumptions. As restaking and middleware solutions evolve (e.g., EigenLayer), we may see more sophisticated ways for L2s to regain sequencing control while preserving decentralization.

Over time, Based Rollup could become the default architecture for new L2s—especially those prioritizing trust-minimization and alignment with Ethereum’s core principles.

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Frequently Asked Questions (FAQ)

Q: What does “inheriting Ethereum’s liveness” mean?
A: It means that even if the L2 fails or is attacked, users can still get their transactions processed on-chain through Ethereum’s base layer without relying on complex escape mechanisms or long waiting periods.

Q: How is Based Rollup different from Optimistic or ZK Rollup?
A: Optimistic and ZK Rollups differ in how they verify transactions (fraud proofs vs. validity proofs). Based Rollup differs in sequencing—it uses Ethereum for transaction ordering. A Rollup can be both ZK and Based, depending on its design.

Q: Does Based Rollup eliminate the need for sequencers?
A: Yes—it removes standalone sequencers by letting Ethereum validators include L2 transactions directly in L1 blocks.

Q: Why isn’t every Rollup adopting Based Rollup?
A: Because it sacrifices some control over MEV and sequencing policies. Teams that want to monetize sequencing or offer premium ordering services may prefer independent sequencers.

Q: Is Taiko the only Based Rollup project?
A: Currently, yes—Taiko is the most advanced implementation. However, other teams may adopt this model as awareness grows and tooling improves.

Q: Will Based Rollup work with account abstraction or ERC-4337?
A: Yes—since it operates at the sequencing layer, it’s fully compatible with higher-level innovations like account abstraction, smart wallets, and paymasters.

Based Rollup represents a significant step toward simplifying Ethereum’s scaling stack while strengthening its foundational guarantees. As the ecosystem matures, expect increased adoption of this elegant, secure, and future-proof architecture.