zkSync is an Ethereum Layer 2 chain that uses zero-knowledge rollup (ZK rollup) technology to solve Ethereum’s current scalability issues. Let’s take a deep dive into this exciting project and understand the impact zkSync will have on the crypto industry.

Overview

Developed by Matter Labs in 2019, zkSync is currently in the Baby Alpha stage, undergoing internal mainnet testing.

Thanks to ZK technology, zkSync should be able to handle over 20,000 TPS, making it one of the most efficient L2 EVM compatible. The implementation of Layer 3 technology and account abstraction will allow the project to achieve its ultimate goal of mass adoption.

To achieve such results, zkSync raised $458 million from the most prestigious venture capital and angel investors. The team was also able to leverage its community of over 500,000 members to meet mass adoption and conduct comprehensive stress tests.

Let’s take a deep dive into this exciting project and understand the impact zkSync will have on the crypto industry.

Project introduction

Ethereum is the most used and trusted chain in the crypto ecosystem. Thanks to its thousands of dApps and DeFi protocols, it managed to outperform all other chains. Ethereum is also known for its security and decentralization, but unfortunately, it also faces the blockchain trilemma.

To address Ethereum’s scalability issues (speed and transaction costs), many layer 2 protocols have been built on top of this chain in an attempt to scale it.

zkSync, one of the contenders in this race, was created in 2019 with one goal: to bring about mass adoption.

To this end, zkSync uses ZK Rollup technology to improve transaction throughput, cost, and privacy.

Currently, in its second version, zkSync stands out through several features, including low transaction costs (a few cents per transaction) using ZK SNARK technology, security benefiting from Ethereum’s security, and decentralization.

zkSync also offers interoperability thanks to its V2 launch in February 2022, making it the first EVM-compatible ZK-Rollup, an achievement that should have taken years.

The protocol is not yet fully deployed so as much as possible, continue to improve and test the technology before it is fully operational. The mainnet is actually in the Baby Alpha stage, which is the period when the team tests the chain with real assets and funds.

To stand out from other chains, zkSync focuses on 5 main Ethereum-related properties such as:

  • As a general agreement

  • EVM compatibility (support for Solidity language)

  • Gas fees are paid in ETH

  • Open source and decentralized

By focusing on these 5 elements, zkSync aligns not only with the goals of the Ethereum community but with the market and cryptocurrency as a whole.

In order to bring innovation, the chain also hopes to adopt tools for mass adoption, such as account abstraction, which will reduce the onboarding complexity for users.

Layer 3 is also part of the project, a new way of building and communicating across chains while centered around privacy and scalability.

zkSync will be governed by a DAO called zkDAO, an organization that aims to foster the growth of its ecosystem by funding various projects and initiatives. By partnering with BitDAO, the entity will focus on 5 main areas such as:

  • Strategic capital for protocols in the ecosystem

  • Allocate grants to develop chains and tools for nonprofits

  • Continue to improve the protocol and ecosystem research and development

  • Education by organizing events and workshops to increase awareness of ZK technology

  • Security continuously enforces the highest standards in the ecosystem

Attracting and retaining users in the ecosystem will be one of zkSync’s main growth challenges, and BitDAO’s experience will be greatly appreciated.

The next key challenge will be the implementation and development of zero-knowledge technologies, let’s dive into that.

Technology

zkSync has managed to attract attention by implementing and developing cutting-edge mechanisms. The main innovation of the chain is still the use of zero-knowledge technology combined with roll-up functionality. Compared with other L2 technologies, it has higher security and efficiency, and the performance is expected to exceed 3,000 TPS.

Achieving mass adoption remains complicated due to practical UX/UI and onboarding issues. The chain must improve the process by implementing the account abstraction, thus reaping many benefits such as improving user experience. Account abstraction makes it easier to manage new users and wallet creation by getting an email-like connection. As shown in the diagram below, by improving the transaction flow and routing, the user experience will also be improved.

Going a step further, zkSync will develop a Layer 3 or “fractal hyperchain” designed to extend L2 and provide new features such as privacy and anti-MEV transactions.

Each L3 will have a local and secure bridge (which is responsible for billions of hacks every year). While keeping the underlying chain secure, the scalability of the blockchain becomes infinite.

The main challenge for ZK rollups is to be EVM compatible, meaning that developers can communicate and develop under similar conditions as on the Ethereum main chain. The EVM was considered impossible until years of development, but in 2022 zkSync released the first Type 4 ZK EVM compatible rollup with 99% compatibility using Yul and Zinc compilers.

Once the compiler is complete, they plan to focus on making Zinc more expressive and feature-rich and then build a Rust compiler to allow the programming of smart contracts using native Rust.

zkSync developed ZKPorter, which can be considered the main innovation, and will allow users and developers to choose between validity rollup (on-chain data availability) and validity (off-chain data availability). This allows each project to choose the format they prefer based on their needs, for example, a game project might not need to have the same level of security compared to a DeFi project and choose validity over validity.

By definition, zkPorter will become more efficient than Optimistic and zkRollups because their data is stored off-chain and does not need to be transacted on Ethereum. Stakeholders of the protocol will be invited by the protocol to run a form of proof-of-stake (PoS) consensus and form a group called Guardians. This will drastically reduce transaction fees incurred on zkPorter and allow up to 20k+ TPS.

Earlier we mentioned the concept of the blockchain trilemma, which is that it is difficult to achieve scalability, security, and decentralization at the same time. However, according to zkSync, there is another important aspect to consider when scaling Ethereum: programmability.

Programmability refers to the possibility and ease of coding and creating smart contracts and, therefore, developing dApps and ecosystems.

All current scaling solutions trade off some degree of security, decentralization and programmability for scalability and zkSync 2.0 aims to overcome this tradeoff by leveraging ZKporter and zkEVM to achieve full scalability.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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