Ethereum‘s blockchain, while revolutionary, has encountered significant scaling challenges due to its growing popularity. However, innovative solutions like ZK-Rollups are now making it possible for Ethereum to handle more transactions per second, reduce gas fees, and improve overall scalability.
This article delves into some of the most exciting projects utilizing ZK-Rollups on the Ethereum network. Each of these projects brings unique attributes to the table, demonstrating the versatility and potential of ZK-Rollups as a layer-2 scaling solution.
What are ZK rollups?
ZK-Rollups are an Ethereum Layer-2 scaling solution that uses zero-knowledge proofs to bundle multiple transactions into a single proof that is then posted on the Ethereum mainnet. Each transaction in the ZK-Rollup is completely valid, and the Ethereum mainnet can trust this without having to validate each transaction individually, thereby reducing the amount of computational resources needed. This greatly increases Ethereum’s throughput, reducing congestion and lowering transaction fees.
In essence, ZK-Rollups move computation off-chain and leave only necessary data on-chain, which results in a drastic decrease in gas fees. Importantly, the technology helps retain a high level of security by maintaining a data availability layer on-chain. This ensures that even if the ZK-Rollup layer goes offline, users can still withdraw their funds.
One of the main advantages of ZK-Rollups over other Layer-2 solutions is that they maintain complete Ethereum compatibility, meaning that developers can leverage their existing knowledge and tools. Additionally, they provide finality, meaning once a transaction is included in a ZK-Rollup, it’s final and can’t be reversed.
Overall, ZK-Rollups are seen as one of the most promising solutions to the scalability issues of Ethereum, offering faster and cheaper transactions while maintaining a high degree of security and decentralization.
The Top ZK Rollup Projects in 2023
Several protocols, such as borrowing and lending protocols and decentralized exchanges (DEXs), have become multi-chain. This means that they support multiple ZK-Rollup based Layer-2s, giving users various choices to lower transaction fees and achieve quicker transaction times and finality.
We have listed some of the leading projects in the market that use ZK-Rollup technology for scaling.
Initially launched in 2017 under the moniker Matic Network, Polygon is the brainchild of Ethereum developers Sandeep Nailwal, Anurag Arjun, Jaynti Kanani, and Mihailo Bjelic.
Polygon capitalizes on ZK-Rollups to enhance scalability, despite conventional ZK-Rollups posing certain limitations such as requiring substantial time. The ingenious application of recursive proofs by Polygon mitigates this challenge. Unlike the average ZK-Rollup-based blockchains that generate proofs for a single transaction at a time, Polygon has the capability to create proofs for each transaction in a batch before dispatching the batch to the Ethereum mainnet.
The unique structure of Polygon’s ZK-Rollups renders the network swifter and more cost-effective than the majority of other ZK-Rollup scaling remedies, removing the need for validators to possess specialized equipment. Indeed, some proofs on the under-development network, Polygon Zero, are as compact as 45kb, placing significantly less pressure on blockchain performance compared to alternative scaling solutions.
Polygon’s ZK-Rollups diverge from most Layer-2 counterparts in that they’re entirely Ethereum compatible, so developers aren’t required to master new languages to script Polygon smart contracts, unlike with Layer-2 alternatives like StarkNet.
Polygon operates by producing multiple “commit chains,” somewhat analogous to sidechains, but with a distinct function, drawing a larger proportion of their security from the Ethereum mainnet.
StarkNet and StarkEx are both creations of Starkware, a company established in 2017 by Alessandro Chiesa and Eli Ben-Sasson.
StarkNet stands as another decentralized ZK-Rollup based Layer-2 blockchain. However, unlike Polygon, developers venturing into StarkNet must master the Cairo programming language instead of Solidity, which can potentially complicate the induction of new developers. Nevertheless, to overcome this hurdle, transpilers from Solidity to Cairo and other popular programming languages are under development.
StarkNet, similar to other ZK-Rollup-based chains, packages multiple Layer-2 transactions into a singular Ethereum transaction, enhancing transaction speed while curtailing gas fees.
The same team that developed StarkNet also created StarkEx, another distinct blockchain. StarkNet facilitates public dApp development, whereas StarkEx serves as a SaaS (software-as-a-service) scalability solution specifically tailored for decentralized crypto exchanges (DEXs), enabling the exchanges to cut costs while elevating speed and liquidity.
StarkEx extends support to ETH, ERC-20 tokens, and tokens on other EVM-compatible chains, as well as the globally popular ERC-721 NFTs. It’s also working on providing off-chain minting support for ERC-1155 semi-fungible dynamic NFTs. StarkEx, having launched on Ethereum since mid-2020, is one of the biggest Layer-2 solutions by TVL (total value locked). It currently powers a wide range of dApps and protocols.
The brains behind ZKSync are Alexandr Vlasov and Alex Gluchowski from Matter Labs, which launched the solution in 2020.
Crafted to deliver high-speed transactions (2,000+ TPS) while maintaining low gas fees and high security, ZKSync is an Ethereum Layer-2 scaling solution. Unlike numerous Layer-2s, ZKSync offers almost instantaneous fund withdrawal to the Ethereum Layer-1 mainnet. It’s worth noting that ZKSync is the only zk-rollup protocol with complete EVM compatibility to date, enabling developers to easily redeploy live smart contracts from Ethereum without the need for rewriting or customizing them for ZKSync. This considerably boosts interoperability and trims down development time.
ZKSync bears similarities to StarkNet and StarkEx in certain respects, with the key differentiation lying in the type of proofing protocols used. ZKSync employs SNARKs (Succinct Non-Interactive ARgument of Knowledge), while StarkEx leverages STARKs (Scalable Transparent ARguments of Knowledge).
ZK-SNARKs require a one-off setup in which a handful of developers need to be trusted to create code correctly and securely, leading to increased centralization and reduced trustlessness. In contrast, ZK-STARKs use publicly verifiable randomness to establish trustless verifiable systems. STARKs are also perceived to be quantum-resistant, whereas SNARKs are not. STARKs further promise enhanced scalability. Therefore, ZKSync does exhibit some drawbacks in comparison to StarkNet.
Some notable projects deployed on the ZKSync blockchain include Argent, Gitcoin, Yearn Finance, Gnosis Safe, Snapshot, Tally, and the 1inch Network.
Immutable is a platform that offers layer-2 solutions built on Ethereum. It provides developers with APIs and developer tools to facilitate the development of applications on layer-2.
Developers can utilize Immutable X to create fast, scalable, and secure applications for non-fungible tokens (NFTs) and blockchain games. For instance, game developers can leverage Immutable X to implement sophisticated in-game economies that ensure true ownership of in-game assets. They can also take advantage of features like free minting of game assets, fast and affordable in-game transactions, self-custodial wallets to empower users with ownership of their in-game items, and a global order book for trading in-game items on the open market.
Additionally, Immutable X caters to token and asset trading platforms by enabling fast, secure, and cost-effective trades between users. It provides a global order book that ensures maximum liquidity. Also, blockchain transaction analysis tools can access Immutable X’s APIs to obtain easily accessible data on past transactions, trades, and user behaviors.
Immutable chose to build its solutions on Ethereum due to its reputation as the most decentralized, secure, and widely-used blockchain, resulting in significant network effects. Ethereum allows the creation and execution of smart contracts and decentralized applications without any downtime, fraud, control, or interference from third parties.
Immutable X offers two execution layers, both utilizing the ZK rollup batching mechanism. ZK roll ups consist of two main components: an off-chain batching mechanism (virtual machine) that generates a compressed cryptographic proof from a batch of transactions, previous state root, and new state root, and an on-chain contract that stores the current state root and verifies the consistency of the batch.
Here’s how ZK rollups work within Immutable X: A collection of Layer 2 transactions is sent to the batching mechanism, which generates a cryptographic proof based on the transactions, previous state root, and new state root. This proof is then sent to the Layer 1 smart contract for verification. The smart contract checks if the previous state root in the proof matches its current state root. If they match, the smart contract updates its current state root to the new state root of the batch.
Immutable currently offers two Layer 2 solutions: StarkEx, which provides a service for batching specific types of transactions created and maintained by Starkware, and Immutable zkEVM, a smart contract platform that allows any developer to write and deploy smart contracts to zkEVM. Developers can access these solutions by signing up or utilizing the API endpoints provided by Immutable X. Immutable zkEVM, specifically designed for games, delivers low-cost, high-throughput, Ethereum-compatible smart contracts within an EVM zk-rollup framework.
Loopring is a Layer-2 scaling protocol built on the Ethereum blockchain, specifically designed for decentralized exchanges (DEXs). It enables the settlement of thousands of trades per second while offering various functionalities. In addition to serving as a protocol layer for DEXs, Loopring provides Loopring Exchange, a non-custodial trading platform that facilitates secure and high-speed trades without gas fees.
The key technology behind Loopring is Zero-Knowledge Proofs (ZKPs), which are blockchain innovations that bundle transactions together for improved efficiency. By leveraging ZKPs, Loopring enables the development of high-throughput, non-custodial DEXs. The protocol also introduces its native LCR token, which is utilized to reward Zero-Knowledge Rollup (zk-Rollup) operators and liquidity providers.
Loopring’s approach involves implementing Zero-Knowledge Rollups (zk-Rollups), a Layer-2 solution that enhances scalability by working alongside the Ethereum network. zk-Rollups can consolidate numerous transactions into a single, lightweight Zero-Knowledge Proof, which is then confirmed as a batch on the Ethereum network. This substantially increases transactional throughput compared to Ethereum’s standalone capabilities. The zk-Rollup computation process occurs off-chain, while the underlying data and transactions remain on the Ethereum blockchain. By integrating zk-Rollups with DEX protocols, Loopring enables complex computations, leading to reduced transaction fees and significantly improved liquidity.
When compared to conventional order book-based centralized exchanges (CEXs), DEXs typically offer lower transaction fees and support for a broader range of digital assets. However, centralized exchanges still outperform DEXs in terms of liquidity and transaction speeds. Loopring aims to bridge this gap by incorporating zk-Rollups, bringing the advantages of centralized exchanges to the decentralized ecosystem.
Within the Ethereum network, zk-Rollups offer faster and more cost-effective validation of transaction blocks. They involve less data inclusion and only require a smart contract to verify the final cryptographic proof, resulting in improved efficiency. Transactions processed through zk-Rollups are stored on the Ethereum blockchain as call reference data, which requires less computation compared to retrieving data from the network. By combining these functionalities into a single open protocol, Loopring accelerates the adoption of blockchain technology by enhancing efficiency across the entire Ethereum ecosystem.
The scalability issues on Ethereum’s blockchain are being met head-on with innovative technologies like ZK-Rollups. As we’ve explored, several prominent projects are already leveraging this technology to improve transaction speed, reduce costs, and ensure security on the Ethereum network.
As these solutions continue to evolve and mature, they hold the promise of unlocking the full potential of Ethereum, making it more accessible and efficient for users and developers alike. The future of Ethereum, it seems, is bound to be intertwined with the evolution and application of ZK-Rollups.