Let's examine the detailed mechanics of how rollups function:

Step 1: Transaction aggregation

Rollups begin by aggregating multiple transactions into a single bundle (or batch). This aggregation process allows for the consolidation of transaction data, reducing the volume of information that needs to be processed on the main Layer-1 chain.

Step 2: Off-chain computation

Once transactions are aggregated, rollups utilize off-chain computation to execute smart contracts, validate transactions, and update account balances. They process transactions this way to significantly reduce the computational burden on the principal blockchain, enabling faster transaction throughput and lower fees for users.

Step 3: Data availability

Crucial to the functioning of rollups is the availability of transaction data. Participants in the rollup network must maintain copies of this data to ensure its accessibility and integrity. In the event of data unavailability, mechanisms such as fraud proofs or data availability checks may be employed to mitigate risks and ensure the security of the system.

Step 4: Cryptographic proofs

Once Layer-2 processing is complete, rollups generate cryptographic proofs that attest to the validity and correctness of the transactions. These validity proofs serve as a compact representation of the processed data and are subsequently submitted to the Layer-1 blockchain for verification.

Step 5: Layer-1 verification

Upon receiving the cryptographic proofs, the main chain validates their authenticity and correctness. This verification process involves confirming the validity of transactions, checking for double-spending attempts, and ensuring adherence to the protocol rules.

Step 6: Commitment to main chain

Once verified, the cryptographic proofs are committed to the Layer-1 chain, typically in the form of a transaction or block. This action finalizes the state transitions and updates resulting from the processed transactions, effectively incorporating them into the immutable blockchain ledger.

Step 7: Dispute Resolution (for Optimistic Rollups)

In optimistic rollup implementations, a challenge period follows the submission of cryptographic proofs to the main chain. During this period, participants have the opportunity to dispute the validity of transactions by providing counterproofs or evidence of fraud. This mechanism ensures the integrity of the rollup despite the reliance on off-network processing.