What are Zk-Rollups? Layer-2 scalability technology analysis

Original title: What is Zk summary? Layer 2 Scalability Technology

Summary

• The low scalability of blockchain results in slower speeds, higher transaction fees, and poor user experience. This problem can potentially be fixed with corresponding solutions such as Layer 1 (e.g. sharding) and Layer 2 (e.g. rollups).
• Layer 1 solutions aim to upgrade the blockchain itself, while Layer 2 solutions create a framework based on the existing chain.
• Rollups are a popular Layer 2 solution, they package transactions off-chain for faster computation.
• Zk-rollups is a rollup implementation using zero-knowledge proofs.
• Zero-knowledge proof allows verification without revealing the underlying data, ensuring transaction privacy and security.

The race for blockchain scalability

With the widespread adoption of cryptocurrencies, solving the scalability issue of blockchain networks has become crucial. A crowded blockchain can lead to slower speeds and higher transaction fees. To solve this problem, we have two main frameworks: Layer 1 and Layer 2 solutions.

• Layer 1 Solutions: These solutions directly improve the infrastructure of the blockchain to enable the entire system to achieve higher throughput. Sharding is a typical example. By dividing the blockchain into different blocks, it increases the capacity of the system and allows transactions to be processed simultaneously.
• Layer 2 Solutions: These solutions run on top of the underlying blockchain. In Layer 2, transactions are processed off-chain and submitted together to the underlying chain. Key technologies include state channels, sidechains, and rollups. Zk-rollups are a form of rollups utilizing zero-knowledge proofs.

What are Zk-Rollups?

To understand Zk-rollups, it is important to understand rollups and zero-knowledge proofs.

What are rollups?

Rollups allow the blockchain to package transaction data together and process it off-chain. After processing, the final result will be submitted to the underlying chain. Processing so many transactions simultaneously eliminates the potential for blockchain bloat and enables faster, cheaper computation. Rollups are divided into two categories: Optimistic and Zk-rollups.

• Optimistic rollups: Optimistic rollups operate under the assumption that all transactions it packages are legitimate. Before these transactions are committed to the blockchain, they go through a waiting period. During this waiting period, the network raises objections to question suspicious transactions. Optimism, Arbitrum and opBNB are examples of Optimistic rollups.
• Zk-rollups: Unlike Optimistic rollups, zk-rollups verify each transaction through zero-knowledge proof. Although more complex to implement, zk-rollups are designed to bypass the dispute resolution period seen in optical rollups, theoretically processing transactions faster.

Now, let’s understand zero-knowledge proofs.

What is zero-knowledge proof?

Zero-knowledge proof (ZKP) is a cryptographic tool that allows one party (the prover) to prove to another party (the verifier) ​​that a certain statement is true without revealing any details about the statement.

ZKP must have three characteristics:

• Completeness: If a statement is true and both parties are true, a proof will always confirm its authenticity.
• Reliability: An untruthful prover should not be able to convince an honest verifier that the false statement is valid in rare circumstances.
• Zero knowledge: the most defining feature. At the end of the process, the verifier only learns about the validity of the statement, but not about its content.

So, how does ZKP work? The method can be divided into three steps:

• Witness: In the first stage, the prover provides a secret message, or "witness" to the verifier. The idea here is to prove to the verifier that the prover has access to specific data without explicitly mentioning it. A testimony establishes a set of questions about the information that only a legitimate attestor can answer.
• Challenge: In this phase, the verifier issues a challenge to the prover by selecting a random question from the set.
• Response: The prover successfully answered the verifier’s question to prove their trustworthiness.

Now we know what rollups and ZKP are. Let's put it all together and understand how zk-rollups work.

How do Zk-Rollups work?

Zk-rollups has two core components:

• Smart contracts on the chain: Smart contracts define the operating rules of the zk-rollup protocol. It includes main contract and verification contract. The main contract stores rollup blocks, tracks deposits and makes important updates. The verification contract verifies the generated ZKP.
• Off-chain virtual machines: These machines are responsible for handling transaction execution in L2. Off-chain virtual machines operate independently of the Ethereum main chain.

Zk-rollups are closely intertwined with the Ethereum blockchain, albeit at a unique level. They don’t flood Ethereum with the details of every transaction. Instead, they cleverly provide packaging digests, ensuring that the underlying chain remains clean and efficient.

Pros and cons of using Zk-Rollups

So, what are the benefits of using zk-rollups? let's see.

Advantages of zk-rollups

• Increased throughput: zk-rollups moves transaction execution from the underlying chain to a more efficient computing environment. Since transactions are not processed one-by-one on the chain, it increases overall throughput.
• Reduce congestion: By reducing blockchain bloat, zk-rollups help enable efficient Layer 1 operations. Additionally, full nodes only need to store zero-knowledge proofs instead of the entire data.
• Reduced fees: zk-rollups help reduce overall fees due to reduced congestion.
• Security Measures: zk-rollups include security measures that allow users to withdraw funds in the event of problems with the rollup network, which is a clear advantage compared to sidechains, which can compromise funds during network failures.
• Faster transaction challenge period: Using zk-rollups, you only need to verify the validity proof within the rollups to speed up the transaction challenge period.

Disadvantages of zk-rollups

• Complexity: The biggest drawback of zk-rollups is their inherent complexity. They are more complex to perform than optimistic rollups.
• Limited by the underlying chain: Despite their efficiency, zk-rollups are still limited by the underlying base layer.
• Liquidity fragmentation: Any Layer 2 will lead to the dispersion of liquidity in the ecosystem. Shallow liquidity in the underlying chain protocol can lead to potential problems.

OptimisticRollups vs Zk-Rollups

Summary

Scalability is often touted as the “holy grail” of blockchain technology. If the system doesn't run optimally, there's no point in using it. Rollups, including optimistic and zk, provide an elegant solution to this long-standing problem. Zk-Rollups promises faster speeds, less traffic, and strong security with its unique approach. Yes, they have complexities, but their potential is enormous. For anyone concerned about the future of digital currencies, understanding zk-rollups is essential. As we continue to push for better blockchain performance, now is the time to become familiar with zk-rollups and their promise for the future.

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