An article to understand how ZK-Rollups solves the scalability problem of Ethereum

Block unicorn

特邀专栏作者

2021-11-30 14:44

This article is about 3553 words, reading the full article takes about 6 minutes

High gas fees have become a major problem for Ethereum.

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High gas fees have become a major problem for Ethereum.

Key Takeaways:

Key Takeaways:

Ethereum's high gas fees highlight the dire need for scaling solutions.

While today's scaling solutions are successful, they suffer from composability and fragmentation issues.

As the cost of using Ethereum increases, the need to scale the network has become more apparent than ever. Zero-knowledge rollup technology promises to reduce gas costs without compromising decentralization and security.

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Ethereum's scalability problem

High gas fees have become a major problem for Ethereum.

Since transaction fees are paid in ETH, when the price of an asset rises, the cost of using the network goes up. ETH is up 460% this year, which means that transaction costs in U.S. dollar terms are also up 460%.

The high cost of using the network prevents many users from participating in DeFi, NFTs, and even participating in DAOs. Many crypto enthusiasts have migrated to other layer 1 blockchains such as Solana and Avalanche due to fees on Ethereum.

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Ethereum: Intermediate transaction Gas price (source: Glassnode)

While Polygon has successfully attracted users by offering low fees, it is often criticized for not being a true scaling solution. Polygon uses a Proof-of-Stake consensus mechanism governed by its own set of node validators. This means it does not use the Ethereum mainnet to verify transactions and is therefore generally considered less secure and decentralized. Only 100 validators manage Polygon. According to Polygonscan, the top validator addresses account for over 27% of the network.

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Top 25 Polygon validators by block (Source: Polygonscan)

Rollups provide a way to outsource computing data and sending proofs of validity back to the Ethereum mainnet. This saves block space and allows transactions to be bundled together, further reducing the amount of data committed to the mainnet. When transactions are bundled together, gas costs are shared among many users. Rollups provide users with near-instant transaction speeds and can reduce fees by 50 to 200 times while maintaining the security and decentralization of the Ethereum mainnet.

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What is Zero Knowledge Rollup?

There are two forms of Rollup: Optimistic Rollup and ZK-Rollups. Optimistic rollups assume that transactions sent back to the base chain are legitimate. Only when someone proves they are fraudulent by submitting proof of fraud will the transaction be rejected. In other words, Optimistic Rollups takes a "not guilty until proven guilty" approach to validating transactions.

Instead, zero-knowledge rollups, also known as ZK-Rollups, generate cryptographic proofs that transactions were legitimate when sent back to the mainnet. Ethereum accepts transactions only after verifying cryptographic proofs. Unlike Optimistic Rollups, ZK-Rollups use a "guilty until proven innocent" approach to verification.

Currently, Optimistic Rollup has the highest adoption rate, partly due to the ease of developing applications on it. Optimistic Rollups can directly support complete smart contracts functionally, and developers can use Ethereum's native programming language Solidity to write applications. Data from L2beat shows that today’s largest Optimistic Rollup Arbitrum has attracted more than $2.5 billion in total value locked in DeFi applications. It hosts many of the most popular DeFi applications on Ethereum.

However, Optimistic Rollups face some challenges. Funds sent back to the Ethereum mainnet are subject to a week-long dispute period due to their method of verifying transactions. This inconveniences users and breaks composability.

While Optimistic Rollups offer improvements over Plasma-based solutions such as Polygon, they are generally considered inferior to ZK-Rollups. Optimistic Rollup has a controversial period with up to 77x scalability improvement. ZK-Rollups have no dispute period and they provide up to 500x improvement.

However, ZK-Rollups have not reached the same level of compatibility as their Optimistic counterparts. Because ZK-Rollups have a proof of validity for each transaction, their technology is harder to build. ZK-Rollups have been developed to handle simple tasks like direct transfers and transactions. While it is possible to integrate smart contract functionality, it has proven to be much more difficult.

Just this year, Ethereum co-founder Vitalik Buterin predicted that the development of fully composable ZK-Rollups would take several years. However, the developers were ahead of schedule. Some ZK-Rollups are preparing to deploy solutions that are composable and interoperable with each other, even across rollups.

The development of ZK-Rollups will allow for a shared communication framework between the Ethereum mainnet and multiple layer 2 networks that can share liquidity and overcome the biggest adoption challenges facing layer 1 blockchains. Instead of competing for liquidity in order to provide efficient transactions through decentralized exchanges, ZK-Rollup-based networks are able to cooperate to scale Ethereum.

While Ethereum still faces scalability issues, some developers are already deploying a layer 2 ZK-Rollup network, promising full composability and compatibility between smart contracts, other layer 2 solutions, and the Ethereum Virtual Machine .

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Types of ZK-Rollups

Two different types of ZK-Rollups are currently used in Ethereum scaling solutions. The first and most widely used type of ZK-Rollup uses ZK-SNARKs — succinct non-interactive arguments of knowledge. SNARKs were the first discovered zero-knowledge proofs; early blockchain project Zcash used them back in 2016. SNARKs make up most of the ZK-Rollup developer base and published code, and are seen as a strong option for Ethereum scaling projects.

A big disadvantage of SNARKs is that they require an initial creation event of a key, which is used to create the proofs needed for transactions. If keys in trusted setup events are not destroyed, they can be used to create new tokens out of thin air or forge transactions.

The most well-known SNARK-based scaling solution right now is Matter Labs' zkSync project. Launched in June 2020, zkSync promises to handle 2,000 transactions per second in the current iteration, and hopes to achieve even higher throughput in the future. In May, with the launch of the zkEVM testnet, the platform began working on deploying smart contracts in an EVM-compatible environment.

The main focus of zkSync is to make the transition from the Ethereum mainnet as easy as possible. Those who want to develop on zkEVM can write smart contracts using Solidity, Ethereum's programming language. Matter Labs recently raised $50 million in a Series B round led by Andreessen Horowitz to aid in the development of zkSync. Additionally, the company has partnered with several Ethereum DeFi blue chips such as Curve Finance, Aave, and 1inch.

Another type of ZK-Rollup uses STARKs - scalable transparent knowledge parameters. STARKs have an advantage over SNARKs because they rely entirely on hash functions and do not require a trusted setup. This means STARKs are theoretically more secure than SNARKs, making them a favorite of the Ethereum Foundation.

StarkEx is an application-specific scaling solution currently used by several Ethereum projects, including dYdX, Immutable X, Sorare, and DeversiFi. StarkWare is about to release StarkNet, a permissionless ZK-Rollup network that will allow developers to build and launch applications directly on layer 2. StarkNet aims to be a true, decentralized, multi-application scaling solution.