What Are the Security Trade-Offs between Optimistic Rollups and ZK-Rollups for Financial Applications?

Optimistic Rollups assume transactions are valid unless challenged, offering simplicity and EVM-compatibility, but they have a long withdrawal period (around 7 days) to allow for fraud proofs. This delay can be a significant liquidity and capital efficiency issue for financial applications.

ZK-Rollups use complex cryptography to generate validity proofs for every batch of transactions, allowing for near-instant withdrawals and higher security as they don't rely on a challenge period. However, they are more computationally intensive and have historically been more difficult to make EVM-compatible, which can limit their flexibility.