The problems with new technologies like blockchain take some time to shape up. You need to learn about the best practices for resolving the problems so that you can make the most of blockchain. What type of problems do you have with existing blockchain networks? The answer points to scalability, and zero-knowledge rollups offer a flexible solution for scalability issues.
People experience various difficulties in terms of scalability on blockchain networks. How? The rising popularity of Ethereum as a trusted blockchain network for developing decentralized apps is one of the biggest reasons for pursuing scalability issues. Will ZK rollups solve the problem? The following discussion helps you find out more details about zk-rollups and how they work.
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Why Do You Need ZK Rollups?
The first thing you need to know before the answer to “What is a zkRollup?” is the definition of layer 2 Ethereum scaling solutions. You can find many layer 1 solutions for scalability, such as Ethereum 2.0, or layer 2 chains such as Arbitrum and Optimism. In addition, side chains also qualify as scaling solutions for Ethereum, with popular examples such as xDai and Polygon.
Web3 developers could explore a wide range of options in layer 2 scaling solutions, such as state channels, zero-knowledge rollups, and optimistic rollups. ZK-rollups have emerged as one of the most popular scaling solutions for Ethereum. They can serve unique benefits in reducing costs as well as the time required for transaction processing. An overview of the different layer 2 scaling solutions can help you identify the effectiveness of zk-rollups in comparison to others.
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Ethereum Layer 2 Scaling Solutions
The arrival of ZK rollup projects has been a crucial intervention in the blockchain and crypto space. As one of the popular layer 2 scaling solutions, zk-rollups have successfully drawn attention to the demand for layer 2 in blockchain networks. The Ethereum layer 2 is basically blockchain networks tailored for speed and cost-effectiveness in comparison to transactions on the main Ethereum chain.
It can also help in capitalizing on the benefits of security evident only in the Ethereum execution layer. The primary focus of layer 2 scaling solutions rests on solving the problem of high transaction fees and lower transaction speeds. Layer 2 solutions become mandatory in cases where many users try to use the Ethereum network at once, leading to congestion of the network.
The importance of zk rollups crypto becomes evident as the popularity of cryptocurrencies keeps growing. The majority of layer 2 solutions like these depend on off-chain processing of transactions. Subsequently, the layer 2 solutions batch all the processed transactions into a simple transaction to be published on the Ethereum blockchain. On the other hand, layer 2 scaling solutions use efficient mechanisms for secure processing, batching, and publication of off-chain transactions to Ethereum. Interestingly, the underlying mechanisms differ according to the type of scaling solution used for the relevant case.
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Types of Layer 2 Ethereum Scaling Solutions
The three distinct types of layer 2 Ethereum scaling solutions can provide a ZK rollup example along with two other prominent entries. You can find state channels and optimistic rollups alongside ZK-rollups as the important entries among layer 2 scaling solutions. How are these layer 2 scaling solutions different from zk-rollups? The only way to find the answer is an overview of the layer 2 scaling solutions.
The first entry among layer 2 Ethereum scaling solutions would refer to state channels. State channels are basically Ethereum scaling solutions that help users carry out unlimited off-chain transactions. Interestingly, state channels require users to submit only two transactions on the Ethereum blockchain.
The working of state channels begins with the first transaction opening a state channel alongside locking the concerned state. Users can perform unlimited transactions off-chain, and the state after all the off-chain transactions is documented in a second transaction. The second or last transaction basically closes the state channel. Some of the notable layer 2 solutions that use state channels include Radien, Connext, and Perun.
Optimistic rollups might seem similar to zero-knowledge rollups from various perspectives. They are focused on processing humongous volumes of transactions while ensuring off-chain computation management. Optimistic rollups bundle up off-chain transactions into smaller and simpler transactions you can publish on the Ethereum execution layer. The ‘optimistic’ in the term shows that the transactions are assumed as valid until proven false.
However, you can note that possibly invalid transactions must be disputed through fraud proof before confirming the transactions on the main chain of Ethereum. Once the dispute period ends, all the transactions are documented on the Ethereum main chain. Therefore, the time required for confirming transactions can be a bit longer with optimistic rollups. Some of the notable examples of layer 2 solutions using optimistic rollups include Optimism, Arbitrum, and Metis.
The reputation of ZK rollups has been growing stronger as layer 2 scaling solutions take the forefront in crypto space. ZK-rollups are basically layer 2 scalability solutions that help in faster transaction validation alongside reducing transaction fees. They can outperform the layer 1 solutions by facilitating a combination of on-chain and off-chain processes.
The working of zk rollup projects is almost the same as optimistic rollups as they combine many layer 2 or off-chain transactions and submit them as one transaction on Ethereum. However, zk-rollups do not assume that the transactions are valid until proven otherwise. On the contrary, zk-rollups utilize validity proofs to offer instant verification regarding transaction validity.
The unique highlight of zero-knowledge rollups refers to the challenges revolving around the development of EVM-compatible rollups. Why? The important reasons point to the complexity of the technology alongside the ability to execute arbitrary code. The concept of zk-rollups is important when you are trying to develop a layer 2 blockchain rather than an EVM-compatible blockchain. Some of the popular highlights in ZK roll-up example platforms include zkSync and Starknet.
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Working of Zero-Knowledge Rollups
If you want to learn how zk rollups work, you must prepare with an in-depth understanding of the underlying concept of zero-knowledge proofs or ZKPs. Zero-knowledge proofs basically offer a cryptographic mechanism wherein you can prove that you have specific information without actually revealing the information. For example, you can prove that you know the password to a Facebook account by sending a screenshot of the Facebook feed of the concerned account without revealing the password. Interestingly, ZKPs is one of the most dominant forces in the evolution of the blockchain landscape.
ZK Rollups leverage ZKPs by bundling up a wide range of layer 2 transactions into one transaction. The one transaction is published on the Ethereum mainnet for mining purposes. Rather than mining for hundreds of individual transactions, ZK-rollups can help in rolling them up into one transaction. Now, the single transaction would qualify as a validity proof, also referred to as a zk-SNARK or Succinct Non-Interactive Argument of Knowledge or a zk-STARK, also known as Succinct Transparent Argument of Knowledge.
The role of SNARKs and STARKs in any zk rollup projects would be almost the same as cryptographic transaction hashes. You can find multiple components in a general Ethereum transaction. However, it is possible to represent all of them in a unique transaction hash without revealing any transaction data. Finally, mining the one transaction with zk rollups rather than the hundred transactions makes them considerably cheaper in comparison to the layer 1 chain.
At the same time, zk-rollups also provide the assurance of better time savings in comparison to optimistic rollups. ZK-rollups don’t wait for the time to obtain fraud proofs. On the contrary, they use a zk-SNARK so that the receiving smart contract can verify the validity of the proof on-chain. The instant verification of zk-SNARKS ensures faster withdrawal of funds on zk-rollups immediately after mining the zk-SNARK transaction on Ethereum.
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Difference between Optimistic Rollups and ZK-Rollups
The first and foremost difference between optimistic rollups and zk-rollups is evident in how zk rollups work and offer value advantages. Let us reflect on the various highlights in the difference between optimistic rollups and zk-rollups. First of all, it is important to note that ZK-rollups create a cryptographic proof with each bundle of transactions featuring a validity proof. On the other hand, optimistic rollups assume that all transactions are valid unless disputed. Therefore, the optimistic rollups submit transaction bundles without any verification.
The optimistic rollups can offer better scalability due to the limited need for computation. On the other hand, the challenge period or dispute period is a formidable setback with optimistic rollups. The dispute period generally translates into extended withdrawal periods. However, optimistic rollups have some plausible advantages over zk rollups, such as the support for smart contracts. On top of it, optimistic rollups are cost-effective in comparison to zk-rollups which require higher off-chain costs for creating validity proofs. Ultimately, zero knowledge rollup comes at the top for supporting users with better speed than optimistic rollups.
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Examples of Zero-Knowledge Rollups
The introduction of zero-knowledge rollups is incomplete without a point at the top examples of the same. If you want to know more about the functioning of zk-rollup platforms, you must learn about the top players in the sector. Some of the notable examples of ZK rollup projects you should look up right now include the following mentions.
zkSync is one of the popular entries among Ethereum layer 2 scaling solutions developed on the foundations of zk-rollup technology. The zk-rollup solution provides important value advantages such as lower costs and faster transactions. As the best ZK roll-up example, it helps in off-chain transaction processing at unbelievable speeds of almost more than 2000 transactions per second.
The other important highlight of zkSync is how it does not compromise security. Most important of all, you can get all these advantages with extremely low gas costs. The security advantages of the main Ethereum blockchain enable easier and frictionless crypto transfer among layer 1 and layer 2 without any latency.
The next name among discussions on zk rollups crypto would draw the limelight on Loopring or LRC. It provides a layer 2 solution on Ethereum, which can facilitate faster settlement alongside cost-effective transactions. The primary idea underlying the platform focuses on helping users leverage ZKPs for developing their personal non-custodial order book crypto exchange. Loopring uses zero-knowledge rollups to enable exchanges to take care of off-chain transaction validation. As a result, it sends limited transactions to the Ethereum network and opens up the possibilities for faster and more cost-effective trades.
Another top name in a ZK roll-up example list would obviously draw the Immutable X platform into the equation. It is a layer 2 scaling solution suitable for trading Ethereum gaming non-fungible tokens or NFTs. The Immutable X platform leverages zk-rollup technology to ensure instant trade verification with limited gas fees in NFT trading. On top of that, the platform has the capability to process more than 9000 transactions every second. The most striking highlight of Immutable X is the facility for users to set their custom trading fees. Above everything else, NFTs created and traded on Immutable X are completely carbon neutral without any harm to the environment.
Advantages and Setbacks of ZK Rollups
The discussion on “What is a zkRollup?” would be superficial without the mention of advantages and setbacks with them. You should pay attention to the broad range of benefits associated with zk-rollups as scaling solutions. The foremost advantage you can find with zk-rollup refers to finality. Zero-knowledge rollups help in ensuring faster finality due to the limited time required for verifying the state. Once the main chain receives the validity proofs, you don’t have to wait any longer for verification of transactions.
On the other hand, scaling solutions like optimistic rollups feature a dispute time during which disputed transactions are checked for validity. The cryptographic proofs associated with how zk rollups work can show you how zk-rollups are better than optimistic rollups. Rather than assuming the validity of transactions, zk-rollups use cryptographic proofs which safeguard them from manipulation attacks.
The next crucial advantage associated with ZK rollups points to security and decentralization. Zk rollup stores all the data required for recovering a state on the layer 1 blockchain, thereby ensuring security.
While the advantages show favorable prospects for adopting a ZK rollup example, you must also be notified of the setbacks. For example, some zk-rollups do not feature EVM support. At the same time, you can also come across issues of operators influencing the ordering of transactions. Most important of all, validity proofs are considerably intense in terms of computation. Therefore, zk-rollups are not a good choice for applications with limited on-chain activity.
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The final impression regarding zero-knowledge rollups shows that they are an interesting improvement over common scaling solutions. As one of the top Ethereum layer 2 scaling solutions, zk-rollups come with many plausible advantages. First of all, they leverage the functionalities of ZKPs, an interesting innovation in blockchain security.
On top of it, you have many popular examples of zk-rollups serving productive use cases across different blockchain networks. You can find notable value advantages for scalability in modern blockchain networks. At the same time, you should not miss the setbacks in zk-rollups, such as the intensity of the valid proofs for computation. You need to dive deeper and learn more about scaling solutions to figure out the best option for you now.
*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!