# Operational Model: Optimistic Rollups

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Optimistic Rollups are the core of  SFI’s L2 architecture. Based on the Optimism Superchain, this architecture enables scalable transaction processing by offloading computation and state storage offchain while retaining Ethereum as the settlement layer.

Key Components of Optimistic Rollups in Singularity Finance:

* Transaction Batching: Multiple transactions are grouped and processed offchain, reducing gas costs and increasing throughput.
* Fraud Proofs: In case of disputes, a fraud-proof mechanism ensures that the Ethereum mainnet can verify and correct malicious behaviour. This process leverages game-theory principles, wherein validators can challenge incorrect transactions within a specific window.
* Rollup Contracts: Smart contracts deployed on Ethereum serve as the bridge between offchain operations and onchain commitments.

Enhancements:

* Scalability: By processing transactions offchain, the system achieves significantly higher throughput than Ethereum’s base layer.
* Cost Efficiency: Gas fees are significantly lowered as only essential proofs and minimal data are submitted to Ethereum.
* Security: SFI L2 preserves the strong security framework of Ethereum while ensuring trustless execution.

SFI L2 is built on top of the Optimism chain. This decision was taken after carefully examining the competing technologies and their market adoption. The launch of Coinbase’s L2 Base via OP and the upcoming launch of Kraken’s Chain further strengthened the case for Optimism.

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