Rollup
A Layer 2 scaling solution that processes transactions off-chain and posts compressed data back to the main chain, improving throughput while inheriting security from Layer 1.
Why It Matters
Rollups are scaling solutions that bundle multiple transactions into a single batch for more efficient processing on the blockchain. They aim to reduce congestion and fees, making the ecosystem more scalable.
Example
For example, if you have 100 transactions occurring on the Ethereum network, a rollup can combine them into one transaction, speeding up processing time and reducing costs for all users involved.
Beginner Context
For beginners, grasping rollups helps highlight innovations aimed at improving blockchain performance. They serve as practical solutions to challenges like slow transaction speeds and high fees in the crypto landscape.
Mike Starr
Founder, CryptoWizardTools · M.S. Organizational Management
Last reviewed: August 2026
Related Terms
Utility Token
A type of cryptocurrency designed to be used within a specific platform or application to access services, pay fees, or participate in a protocol. Unlike security tokens, utility tokens represent access rights rather than investment contracts.
Impermanent Loss
The temporary loss experienced by liquidity providers when the price ratio of deposited assets changes compared to when they were deposited.
On-Chain
Transactions or data that are recorded directly on the blockchain, as opposed to off-chain activities that occur outside the main network.
Arbitrage
The practice of buying an asset on one market and simultaneously selling it on another to profit from a price difference. In crypto, arbitrageurs help keep prices consistent across different exchanges.
Multi-Sig
Multi-Signature. A wallet security feature requiring multiple private keys to authorize a transaction, reducing the risk of unauthorized access.