The ZK narrative is heating up, and this article comprehensively sorts out the ZK projects worthy of attention
Compilation of the original text: Deep Tide TechFlow
Compilation of the original text: Deep Tide TechFlow
In this article, I will introduce:
In this article, I will introduce:
What is ZK-rollups
The ZK narrative (and why it's heating up)
Issued ZK projects
Unissued ZK projects (including airdrop opportunities).
What are ZK-rollups?
ZK-rollups are second-layer blockchain protocols that process transactions, perform computations, and store data off-chain while keeping assets in on-chain smart contracts.
Ethereum has inherent scalability issues due to its design. While there is a roadmap to eventually addressing these issues, the process will take a long time.
ZK-rollups help alleviate congestion by "rolling up" transactions into batches executed off-chain.
Zk-rollups store all addresses and their respective balances in a Merkle tree. this"balance tree"The root of is stored in an on-chain smart contract.
They have 3 main tasks: process deposits, transfers and withdrawals. This picture represents a (simplified) ZK-architecture.
In summary, ZK-rollups are "hybrid scaling solutions" (off-chain protocols) that operate independently but gain security from the Ethereum network.
Why is the ZK narrative gaining traction?
There have been a few major catalysts for a surge in interest in the sector this year:
The zkSync token is coming soon.
StarkWareLtd is launching @Starknet Token soon.
Polygon's zkEVM is coming soon.
This leads to the outperformance of ZK-related protocols such as $MINA, $LRC, $IMX, and $DUSK.
Hosseeb, managing partner at Dragonfly, calls ZK-rollups the narrative to watch in 2023.
However, the recent rise is likely driven by speculation, as key on-chain metrics (active users, transactions, cross-chain deposits) have not risen with price.
So, is this short-term rally unsustainable? Maybe.
However, a sustained rally is more likely to occur before (and after) the releases of ZkSync, Polygon zkEVM, and StarkNet. The addition of new users and new liquidity flowing into the ecosystem will help achieve this.
So, to prepare, I've put together a list (in no particular order) of announced and unannounced ZK-related crypto projects.
Issued ZK projects
$MINA
MinaProtocol is"The lightest blockchain in the world", which uses zk-SNARKs while using a PoS consensus mechanism.
Mina drastically reduces the amount of data each user needs to download, and ZK-Rollups allow nodes to store smaller proofs instead of the entire chain.
$IMX
Immutable is a second-layer scaling solution designed to provide near-instant confirmation and near-zero gas fees for NFT transactions and minting.
IMX relies on StarkWare ZK-rollups for scalability and plans to support multiple L2/L3 ZK-rollups for different use cases. they describe themselves as"A developer platform for Web3 games", Illuvium, Gods, Kongregate and other popular Web3 games are built on IMX.
$LRC
Loopring is a Layer-2 designed for scaling and building decentralized cryptocurrency exchanges. They leverage ZK proofs to allow anyone to build a high-throughput, non-custodial DEX.
The combination of two powerful narratives, ZK and DEX, makes Loopring an interesting project to watch in the future.
$SYS
Syscoin combines Bitcoin's POW architecture and $ETH's EVM into one network. Its two-tier approach allows for the creation of scalable smart contracts while maintaining network security.
Syscoin uses a modified version of the EVM, called NEVM, which uses ZK proofs to facilitate "up to 210,000 transactions per second (TPS)." The diagram below defines Syscoin's architecture.
$DUSK
Dusk is a privacy-focused layer-1 blockchain built for trading programmable, confidential, and compliant securities. Think of it as a privacy blockchain for financial applications.
Dusk Network uses a ZK Proof (ZKP) system called "PlonKup" to secure data in an affordable way.
$MUTE
Summarize
Summarize
It’s worth noting that much of this rally (like many cryptocurrency narratives) is based on speculation. Just because a project implements ZK technology doesn't automatically make it a winner. Look for projects that are using the technology to innovate, or learn to trade on the hype.
For these projects, like most altcoins, price action depends heavily on Bitcoin. However, if your market outlook is bullish, the strongest narratives will undoubtedly outperform (ZK may be one of them).
How you approach deals for these items depends on your personal strategy, but consider a DCA-oriented approach and strictly define a) your time horizon, and b) financial goals before investing.
While some of the currently released projects utilizing ZK have been covered, I am more interested in the upcoming unreleased protocols which are some of the most heavily supported projects in cryptocurrency (and have airdrop potential too).
Unissued ZK project
zkSync
zkSync is a ZK Rollup that represents the"finale"。
It is one of the most well-backed projects in the crypto space, having raised over $450 million from a16z, Dragonfly, Lightspeed, and more.
Their full mainnet hasn't even launched yet and the ecosystem is already huge. It will become a giant in the ZK field.
The next phase of zkSync is the "Fair Onboarding Alpha" phase, where deployments on zkSync 2.0 can begin in a closed environment.
StarkWare
StarkWare is a secondary scaling solution that utilizes STARK proofs to reduce the amount of information sent to the Ethereum blockchain, alleviating blockchain congestion.
SnarkNet, like zkSync, utilizes ZK-Rollup technology to achieve this goal.
Starkware has also received significant support, raising over $285 million from Paradigm, Pantera, Sequoia, Ethereum Foundation, and more. Also their ecosystem is impressive.
Scroll
Scroll is a zkRollup based on zkEVM, enabling native compatibility with existing Ethereum applications and tools.
In the forthcoming L2, Scroll has the fourth-highest pre-IPO valuation.
There may be airdrop opportunities here as tokens are launched. They recently hinted at an airdrop, saying they were “creating an incentive to participate.”
Aztec
Aztec is a privacy-first ZK-rollup on Ethereum, bringing confidentiality and cost savings to the Ethereum ecosystem.
They recently raised $100 million led by a16z. They may also have airdrops in the future.
Polygon (zkEVM)
Recently, Polygon acquired Hermez Network (a ZK-rollup) to work on their own zkEVM product.
zkEVM is a virtual machine that transparently executes Ethereum transactions, including smart contracts with zero-knowledge verification. zkEVM adds to an already expanding ecosystem that is growing rapidly.
Since Hermez has merged with Polygon, the $MATIC token will power the network.
Axiom
Axiom is a ZK coprocessor for Ethereum.
While not strictly a ZK-rollup, I wanted to include Axiom on this list because it gives us a good representation of how the technology can be leveraged in a practical sense.
Summarize
Summarize
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