Key takeaways

  • Validiums are scalable solutions for Ethereum that process transactions off-blockchain while using zero-knowledge proofs to ensure their validity.

  • Validiums enable efficient transaction processing by leveraging operators to aggregate and validate transactions, thereby reducing data storage on the blockchain and gas fees.

  • While offering benefits such as increased transaction speed and privacy, validiums also face challenges, such as data availability risks and potential centralization issues. 

Introduction

Over the years, blockchain technology has improved significantly, but scalability remains one of the main issues. In this article, we will look at validiums, how they work, and how they can improve the scalability of Ethereum.

What are validiums?

Validiums are scalable solutions for Ethereum that use data availability and off-blockchain computation to process transactions more efficiently. Unlike zero knowledge rollups (zk-rollups), which store certain data on the blockchain, validiums keep transactions off the blockchain while using zero-knowledge proofs (ZKP) to verify their validity.

How validiums work

Validiums work by executing transactions outside of Ethereum's mainnet (mainnet), leveraging smart contracts to ensure their validity and their integrity. Let's review some of the key aspects of validiums.

Transactions

When a user wants to make a transaction using a validium, they send it to an operator. Operators are nodes responsible for executing transactions on the validium blockchain. This can be a single entity or a group of entities chosen via a proof of stake system (PoS). 

The operator collects transactions in a batch and processes them off the blockchain. Once the batch is ready, the operator uses a special system called a verification circuit to create proof that the transactions were completed correctly.

State commitments

Imagine the state of Validium (the record of all accounts and their balances) as a large tree, known as the Merkle tree. The root of this tree, called the state root, is like a fingerprint that represents the entire state. This state root is stored on Ethereum. 

When the operator processes transactions, it updates the state root to reflect the new account balances and states. Then it sends this new state root with proof that everything was done correctly on the Ethereum mainnet. 

Unlike zk-rollups, block producers on a validium do not need to publish all transaction details on Ethereum. If Ethereum verifies the proof, the new state is accepted and the validium is updated.

Deposits and withdrawals

Users can deposit their funds from Ethereum to a validium by sending ETH or other tokens to a special contract on Ethereum. The contract communicates this deposit to the validium outside the blockchain and credits the user's account outside the blockchain. 

When withdrawing funds to Ethereum, users submit a withdrawal request to the operator. The operator includes the request in a batch, and once the batch is verified on Ethereum, users can withdraw their funds.

Validiums and EVM compatibility

Applications simples 

Validiums are effective for simple applications, such as token swaps and payments, because they can quickly process many transactions without having to store all the data on the Ethereum mainnet. This makes validium ideal for applications where transactions are simple and do not require complex calculations. 

Challenges with smart contracts 

smart contracts are programs that run on the blockchain and often involve complex operations. Validiums have difficulty handling them because proving that complex operations have been performed correctly requires more computing power. This makes it more difficult for validiums to support the wide range of functionality that smart contracts can offer. 

Possible solutions

Some projects are working on ways to make validiums more compatible with Ethereum's smart contract capabilities. One approach is to create special versions of programming languages ​​like Solidity (used to write Ethereum smart contracts) that are optimized for validiums. However, this can be limiting because this language may not support all the features of the Ethereum programming environment.

Advantages of validiums

Efficiency

Validiums can process up to 9,000 transactions per second (TPS) by offloading data storage and computation from the Ethereum mainnet. This is crucial for applications such as decentralized exchange platforms (DEX), where speed and profitability are important.

Cost reduction

Validiums can significantly reduce gas fees by not publishing transaction data on the blockchain, allowing users to benefit from reduced transaction costs.

Enhanced security

By storing data off-blockchain, validiums can provide increased privacy for transactions and an additional layer of security without compromising scalability.

Challenges of validiums

The dependence of a validium on the availability of data outside the blockchain also presents risks. If operators or data availability officers withhold transaction data, it may be impossible to generate the proof necessary to withdraw user funds.

Risk of centralization

The need for specialized hardware to produce validity proofs can potentially lead to centralization. If only a few entities can afford the necessary resources, they could dominate the network, undermining its decentralized nature.

Conclusion

Validiums are scalable solutions designed to improve the Ethereum network by processing transactions off-blockchain while ensuring transaction integrity through zero-knowledge proofs. By addressing the limitations of data storage on the blockchain, validiums can improve transaction throughput, marking an important step toward solving the blockchain scalability problem.

For more information

Disclaimer and Risk Warning: This content is presented to you “as is” for your general information and educational purposes only, without any representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, or as a means of recommending the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Where the article is written by a third party contributor, please note that the opinions expressed are those of the third party contributor and do not necessarily reflect those of Binance Academy. Please read our full disclaimer here to find out more. The price of digital assets can be volatile. The value of your investment may fall as well as rise and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not responsible for any losses you may incur. This material should not be construed as financial, legal, or other professional advice. For more information, see our Terms of Use and our Risk Warning.