Scroll

Scroll is a cutting-edge Layer 2 solution that aims to scale Ethereum using zero-knowledge rollups. Built with zkEVM (zk-rollup technology optimized for Ethereum Virtual Machine compatibility), Scroll’s mission is to provide faster, cheaper, and more efficient transactions while maintaining the security, decentralization, and compatibility of Ethereum. It is designed with developers in mind, offering full compatibility with existing Ethereum dApps, tooling, and infrastructure, making it easier to scale Ethereum's ecosystem while preserving its core principles.

With a growing need for scaling solutions, Scroll stands out as an advanced and innovative technology that helps Ethereum reach its potential without sacrificing security or decentralization. Scroll’s zero-knowledge rollups make it possible to bundle multiple transactions and process them off-chain, only posting the final result on-chain. This results in lower costs and faster processing times while benefiting from the trustlessness and security of Ethereum itself.

Key Features of Scroll EVM

1. zkEVM Compatibility: The defining feature of Scroll is its zkEVM design, which ensures compatibility with Ethereum’s existing ecosystem. Unlike some other Layer 2 solutions that require code adjustments, Scroll’s zkEVM allows Ethereum dApps to operate on Scroll without needing any changes to their architecture. This makes it easy for developers to scale their applications to Layer 2, benefiting from reduced transaction fees and faster speeds without losing access to Ethereum’s base layer security.
   
   

2. High Transaction Throughput: Scroll is designed to improve Ethereum’s transaction throughput. Ethereum's Layer 1 currently handles around 30 transactions per second (TPS), which can lead to congestion during peak times. Scroll’s Layer 2 zk-rollups significantly boost this number, allowing thousands of TPS without overloading the network. This increase in throughput is crucial for applications such as DeFi, NFTs, and gaming, which require fast and affordable transactions to operate effectively.
   
   

3. Reduced Gas Fees: By processing transactions off-chain and only submitting final proof to the Ethereum mainnet, Scroll greatly reduces the cost of transactions. For users, this means a reduction in gas fees, which have historically been a major pain point for Ethereum users. DeFi traders, NFT buyers, and other dApp users benefit from this more affordable fee structure, increasing Ethereum's accessibility for everyday use cases.
   
   

4. Security: Scroll inherits Ethereum’s security model. While it processes transactions off-chain, the zero-knowledge proofs ensure that these transactions are fully verifiable and secure. Scroll uses zk-rollups, which batch many transactions together and produce a cryptographic proof that can be verified on Ethereum’s mainnet. This method maintains the decentralized nature of Ethereum, ensuring that security is not compromised even when transactions occur off-chain.
   
   

5. Trustless and Decentralized: One of the most critical aspects of Scroll is its adherence to Ethereum’s ethos of decentralization. Unlike some scaling solutions that introduce centralized elements or require trust in third parties, Scroll is fully trustless. This is made possible through zero-knowledge proofs, which allow transactions to be verified without revealing sensitive information and without needing to trust any intermediary.
   
   

6. Compatibility with Ethereum Ecosystem: Scroll’s design ensures that existing Ethereum smart contracts, dApps, and developer tools like Solidity, Hardhat, and MetaMask will work seamlessly on the Scroll network. Developers can deploy their projects on Scroll with minimal friction, reducing the cost and complexity of scaling their applications. This broad compatibility helps drive the adoption of Scroll as a viable Layer 2 scaling solution.
   
   

7. Low-Latency Transaction Finality: Unlike Layer 1 Ethereum, which can take several minutes to finalize transactions during times of congestion, Scroll’s zkEVM architecture allows for faster transaction finality. This low-latency finality is particularly beneficial for applications that require quick confirmation times, such as decentralized finance (DeFi) protocols, where fast trades are critical.
   
   

8. Eco-Friendly Scaling Solution: zk-rollups are more energy-efficient compared to other scaling solutions that require multiple nodes to validate and process transactions. Scroll’s zkEVM reduces the computational resources required to secure the network, making it a more eco-friendly option as Ethereum seeks to reduce its environmental impact.

Accounting and Compliance Challenges

From an accounting perspective, Scroll introduces several complexities that need to be managed. These arise primarily from the interaction between Layer 1 (Ethereum) and Layer 2 (Scroll) transactions, and understanding how to reconcile financial records across these layers is crucial for businesses using Scroll in their decentralized finance operations. Key accounting challenges include:

• Transaction Reconciliation: As transactions are bundled and processed off-chain, accurate reconciliation of funds between Layer 1 and Layer 2 becomes critical. This is especially true for projects engaging in high-frequency trading, DeFi, or other financial activities where accurate records are necessary for both operational and regulatory purposes.
  
  

• Gas Fee Accounting: One of Scroll’s main advantages is its ability to reduce gas fees, but this also introduces new considerations for accounting departments. Businesses using Scroll will need to accurately track gas savings and understand how to account for Layer 2 gas fees compared to those on Ethereum’s mainnet.
  
  

• Regulatory Compliance: As with any Layer 2 solution, businesses using Scroll must ensure that they remain compliant with evolving regulatory standards. This includes anti-money laundering (AML) and know-your-customer (KYC) regulations, which may require tracking transactions across both the Layer 1 and Layer 2 networks.

Use Cases and Industry Applications

Scroll’s zkEVM architecture makes it an ideal solution for a wide range of applications within the Ethereum ecosystem. Some notable use cases include:

1. DeFi: Decentralized finance is one of the most prominent sectors on Ethereum, and the demand for fast, low-cost transactions has driven the need for Layer 2 scaling solutions. Scroll enables DeFi protocols to scale efficiently, allowing for higher transaction throughput, reduced gas fees, and faster trade executions.
   
   

2. NFT Marketplaces: NFTs often require fast and cheap transactions, especially when minting or transferring tokens. Scroll’s low-cost transaction model is perfect for NFT platforms that want to enhance user experience by reducing transaction costs and providing a seamless trading experience.
   
   

3. Gaming: Blockchain-based games, particularly those using NFTs and in-game economies, benefit from Scroll’s high throughput and low fees. Gaming dApps can handle a large number of transactions per second without incurring prohibitive costs, making Scroll an attractive option for developers seeking to build large-scale games on Ethereum.
   
   

4. Decentralized Autonomous Organizations (DAOs): DAOs rely on efficient governance systems that often require voting mechanisms with many participants. Scroll’s low-latency finality and reduced transaction fees make it an ideal solution for DAOs to manage governance processes more effectively and affordably.