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ZK Rollups: What They are, What They do and why Zero Knowledge can Lead to Ultimate Scalability

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When Vitalik Buterin came up with the idea for Ethereum he envisioned a decentralised platform on which developers could make apps and users could access and use them with ease. He had this idea after understanding how Bitcoin and it’s underlying technology worked. In his mind Ethereum was the decentralised OS and App Store where all these decentralised applications (dApps) would live and run. He believed this to be a good idea.

But what happened when every developer that came across Ethereum also thought this was a good idea? What happened when a plethora of dApps ranging from DeFi to NFT hit the network? The Ethereum network was a massive success and was now flooded with users. It flooded faster than it could scale. This lead to one massive problem – hello, congestion!

Due to the high amount of transactions that were now being processed, the Ethereum network was becoming very slow and expensive to use. The price to use the network is counted in Wei and is called gas. Gas fees could sometimes be higher than the amount you were trying to transfer.

This in turn created a need for scaling solutions for the Ethereum network. Vitalik and his team created a plan and a roadmap that would eventually lead to the ETH 2.0 network. ETH 2.0 would move from a PoW (Proof of Work) to a PoS (Proof of Stake) consensus method. It would also include other upgrades to the network (like Sharding).

But these upgrades would not happen overnight. They would take time. And the devs and users needed a solution.

Ethereum Layer 2 (L2) blockchains

Layer 2 blockchains came in to help Ethereum scale. The most well known L2 for Ethereum is the Polygon blockchain. It has up until now mostly worked as a side chain. To use the side chain, users deposit and lock their funds in to a smart contract on the Ethereum network and then have access to these funds on the Polygon network. But now Polygon is focusing its attention on something else – ZK Rollups.

ZK Rollups

ZK stands for Zero Knowledge. ZK Rollups act as a third party that process and verify transactions. They then let the Layer-1 blockchain know that these transactions have been processed correctly and verified by uploading a certificate to the L1. When the L1 wants to see what transactions took place it needs only rely on this certificate. It doesn’t need any more information (knowledge) of the transactions. Hence the term “Zero Knowledge”.

Let’s look at Polygon as an example. The idea here is simple. Polygon (L2) processes transactions and then bundles these transaction up using ZK Rollups. It then transfers a certificate to Ethereum (L1) to prove that these transactions took place and are indeed correct. Ethereum stores this certificate and accesses it to see what transactions took place.

So essentially a L1 blockchain does not need to process the transactions itself, but at the same time knows that they are correct. By only needing the certificate, the L1 can have less total transactions taking place on it and hence be faster and less expensive to use.

This idea has begun a new kind of space-race, a race for ultimate scalability. Now all eyes are on the projects that are utilising ZK Rollups. Let’s have a look at some of these that are gaining the attention of both devs and users.

Polygon

As mentioned above, Polygon is now taking a deep dive into ZK Rollups. They recently held an event all about the future of Polygon and ZK Rollups. They announced that they had acquired the MIR protocol (a groundbreaking ZK startup) for $400m and would use it to create Polygon Zero, stating:

“Mir’s amazing team developed the world’s fastest ZK scaling tech; we are joining hands to utilise it and build Polygon Zero – a highly-scalable, Ethereum-compatible ZK Rollup.”

They also announced a $1B strategic fund that would focus on ZK Technology.

Already the go to Layer-2 for Ethereum, could this new ZK Tech investment on Polygon’s side be the ultimate move to lead the way for all other projects?

The price of the native Polygon token, MATIC, recently hit new all time highs, suggesting a massive increase in interest for the network. 

ZKSpace (Formerly ZKSwap)

ZKSpace describes itself as an “All-Featured Layer-2 Protocol using ZK-Rollups. Users are able to transfer their funds from Ethereum Layer-1 to the ZKSpace Layer-2 network by connecting their wallets to the ZKSpace DEX. They can then utilise the Layer-2 for their transactions before transferring funds back to the Layer-1 at any time.

ZKSpace is gaining momentum fast with the Total Value Locked (TVL) on ZKSpace currently sitting at just over $30m and the accounts created so far being just shy of 6k. ZKSpace promises Low Gas Fees, Extremely Fast Transactions, a Trust-Free user experience and Unlimited Scalability. And they have even launched their own Layer-2 NFT Marketplace.

The theoretical transactions per second that ZKSpace states it can achieve is 10000+.

zkSync

zkSync is another scaling solution for Ethereum that uses ZK Rollups, and is also already live on the Ethereum mainnet.

As mentioned on their project’s website, they put Security and User Experience above all else.

You are currently able to connect your wallet to zkSync and get set up in order to move your funds to their network. As with ZKSpace you can then move your funds back to Layer-1 whenever you desire.

zkSync boasts a current 2000+ transactions per second.

Immutable X

Immutable X describes itself as the first Layer-2 for NFTs on Ethereum. 

Immutable X is built as a ZK-rollup in partnership with StarkWare (more on StarkWare below). 

They boast multiple features including:

  • Zero gas fees for peer to peer trading.
  • A Layer-2 secured by Ethereum.
  • 100% carbon neutral NFTs

Immutable X currently says it is scalable up to 9000 transactions per second.

Starkware

StarkWare was founded in 2018 and one of its products is StarkNet, a permissionless decentralised ZK-Rollup. It operates as an L2 network over Ethereum for maximum security and allows any dApp to scale unlimitedly.

Many other projects are starting to notice StarkWare and StrakNet and it is gaining traction in the blockchain world very fast.

ZK, KYVE, and Arweave

KYVE is an initiative that aims to store data streams with built-in validation, and utilises Arweave to permanently store that data. 

We had a brief chat with KYVE founder John Letey who told us he was toying with the idea of building a layer on top of the KYVE network that would utilise ZK Rollups. This would create a super lightweight layer on top of the network that would be backed up to Arweave. 

“An idea I had would utilise both the KYVE protocol and standard zk algorithms to build a lightweight chain – with all history backed on Arweave” – John Letey, founder of KYVE network

When talking about just how lightweight this would be, he compared it to the Mina network that boasts a small total blockchain size of just 22kb.

The Future

ZK Rollups are definitely here to stay. They will help scale Layer-1 blockchains. But what other protocols could be born from this emerging tech? Might we see some similar tech being used by blockchains with other use cases, like decentralised storage for example. Might we see Arweave or IPFS utilising a similar type of scaling solution? Time will tell.

ZK tech is being looked at as the ultimate answer to the scaling problems that Ethereum has had since it became the most used Layer-1 blockchain. There was recently a paper posted for a proposal for a ZK VM on ethresear.ch that gained the interest of Vitalik himself.

On top of that, other blockchains are being built from the get-go using ZK Rollup protocols. 

This is the beginning of a new era for the entire blockchain industry on its ever expanding horizon. With the growing momentum this tech is seeing, it is very possible that 2022 will be the year of the ZK Rollup narrative.

“The Ethereum ecosystem is likely to be all-in on rollups as a scaling strategy for the near and mid-term future”. Vitalik Buterin, co-founder of Ethereum


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