Are zk-rollups a fashion phenomenon, or a new standard in the crypto industry? To understand the potential, let’s first look at the technology.

What are zk-rollups?

Scalability (the number of transactions per second a blockchain is capable of processing) and transaction fees are some of the key blockchain metrics. Despite all its advantages, Ethereum, the leading smart contract platform, is scoring badly on those, with slow throughput (only 10-13 transactions per second) and high cost.

This is why the so-called layer-2 solutions are being actively developed on it: locking the assets in an on-chain smart contract, they allow processing, computations, and data storage on an off-chain platform.

Layer-2 solutions can have different mechanisms, but zk-rollups emerge as some of the most promising ones, with their name describing the technologies used:

ZK stands for zero-knowledge (a method, by which the prover can show that they have access to a piece of information without necessarily revealing it), which allows to verify and submit regular validity proofs to the main chain’s smart contract.

Rollups are a way of bundling millions of transactions into one, easing the load on the base layer and spreading the cost of one transaction across many users.

Existing zk-rollup projects

There are several zk-rollup implementations already up and running, and they have performed impressively since the beginning of the year: 

Loopring ($LRC, +122%), layer-2 for DEXes (decentralized exchanges),

Syscoin ($SYS, +100%), which combines Bitcoin’s PoW with EVM (Ethereum Virtual Machine),

Dusk ($DUSK, +172%), a privacy-focused blockchain,

Mute ($MUTE, +209%), a DEX,

Mina ($MINA, +119%), “world’s lightest blockchain”

Upcoming zk-rollup releases

ZkSync, one of the most backed-up projects with over $480 million raised, is also one of the most discussed now, due to its Full Alpha Launch, expected in Q2 2023.

This layer-2 solution has already gathered over 150 crypto projects, which will all go live at the launch. This ecosystem will include both web3 behemoths like Maker, 1Inch, and Storj, as well as new ventures.

There will most likely be a governance token too, and its expectations are heating the crypto markets.

StarkNet is another permissionless decentralized zk-rollup (also called validity roll-up) layer-2 on Ethereum. StarkNet Alpha is already on the mainnet, but the tokens, deployed last autumn, are still blocked and the company may start releasing them from this autumn (please pay attention to scammers, they usually never miss a token launch).

StarkNet has a slightly different tech from ZkSync, and also a rather developed ecosystem.

Polygon, Ethereum’s most illustrious layer-2, is also getting into the zk-rollups game.

After buying a zk-rollup specialist Hermez two years ago, Polygon has recently announced the launch of Polygon zkEVM Mainnet Beta, scheduled on March 27th. A zkEVM is a virtual machine that executes Ethereum transactions with zero-knowledge-proof validations, which will allow for a more secure and less expensive layer-2. zkEVM will be integrated into the existing network, which will continue using Polygon’s token $MATIC.

New industry standard?

ZK-rollups are a promising solution to Ethereum’s scalability and cost issues, which could help it become a “world computer”, as its creator Vitalik Buterin has once claimed.

However, Ethereum core developers are already working on their own scaling solution called sharding – although it’s still unclear when it’s going to be released. Ethereum increasing its scalability (potentially x100) would make layer-2 solutions less relevant to some extent.

There are also competing layer-1 blockchains that have been built with scalability in mind: Solana, BNB chain, NEAR, Polkadot, Cosmos… Most of them are actively developing their ecosystem by motivating developers to build on them.

All in all, while zk-rollups technology is a promising way for the crypto industry to grow, it may not be the only one.

How to surf on the zk-rollups trend?

There are several ways to profit from a trend in crypto:

  • Qualifying for an airdrop, most often by testing the network before its full release. Beware, scammers are flooding social networks whenever an airdrop is in the air (which is now the case of ZkSync), so always make sure to double-check the addresses and never reveal your seed,
  • Investing in a project’s tokens upon their release,
  • Investing in individual ecosystems, i.e. DApps (decentralized applications) built on networks using zk-rollups.

 

Written by D.Center