Blockchain technology has revolutionized all walks of life, enabling secure and transparent transactions without intermediaries. Despite its transformative impact, integrating real-world data into blockchain systems remains a persistent challenge. Oracles play a key intermediary role in this process, seamlessly connecting the blockchain with external data sources. However, traditional oracles often rely on trusted third parties, raising concerns about reliability and security.

Therefore, a new and promising solution emerged, namely the ZK oracle. It fully leverages the power of Zero-Knowledge Proofs (ZKP) to meet these challenges. This innovative approach cleverly combines the advantages of ZKP and oracles to ensure a higher level of data privacy in the blockchain space.

What is an oracle?

Oracles act as trusted external sources of information, providing information from multiple databases to the chain, including token prices, transaction activity, wallet balances, etc. Oracles provide an application programming interface (API) that allows calculations to be performed based on real-world events and data. In a nutshell, oracles collect, query, verify, and verify data from multiple sources and pass it to smart contracts.

However, traditional oracle networks, such as Chainlink or The Graph, often rely on staking mechanisms, requiring nodes to stake assets in order to participate. There are inherent limitations to this approach, particularly around trust and susceptibility to manipulation.

This is where ZK oracles come into play. By innovatively integrating ZKP, it is expected to revolutionize the efficiency and credibility of oracles.

So what is a ZK oracle?

ZK Oracle, short for zero-knowledge oracle, cleverly integrates ZKP with smart contracts to build a flexible on-chain/off-chain solution. This innovative approach improves the efficiency and security of oracles in the blockchain ecosystem, enabling cost-effective off-chain computing and storage.

To deal with the challenges of traditional oracles, ZK oracles provide several solutions:

1. Build an autonomous network.

2. Improve the security of the base layer.

3. Adopt a 1-of-N trust model to ensure that as long as at least one node performs as expected, system functions can be guaranteed.

4. Enhance decentralization.

5. Efficiently allocate computing power to minimize waste.

The significant advantage of ZK oracles is to protect data privacy while ensuring the integrity and authenticity of transmitted information. Unlike traditional oracles that publicly broadcast data to the blockchain, ZK oracles bring unique advantages by providing evidence of the data without exposing the data itself. This makes it particularly good in use cases that require a careful balance between transparency and privacy.

The architecture of ZK oracle

According to Gu and Nawab, the architecture of the ZK oracle includes the following unique components:

1. Data sources: These entities collect or generate raw data from various sources (such as IoT devices) and serve as the starting point for the computing process.

2. Off-chain provers: These entities receive raw data from the data source and perform calculations. By using zk-SNARK (zero-knowledge succinct non-interactive proof of knowledge) computations, they generate evidence used to prove their computations.

3. Consumer: Interacting with the blockchain through smart contracts, consumers submit read and write requests. They rely on data and evidence provided by off-chain provers to make informed decisions.

4. 智能合约：负责验证和维护与计算结果和ZK证明数据相关联的摘要，智能合约确保ZK证明的完整性。如果发现无效的证明，它们还执行惩罚策略。

Accelerate ZK proof generation with advanced batch processing algorithms

Gu and Nawab proposed a batching algorithm designed to accelerate ZK proof generation, which uses both horizontal and vertical batching techniques. Horizontal batching combines multiple proofs into a single proof, while vertical batching combines similar computations into a unified proof. These strategies significantly improve the efficiency of zk proof generation, with performance improvements up to 550 times compared to standard methods.

Practical application areas

The ZK oracle has demonstrated its versatility in various fields. The specific applications are as follows:

1. Price information source: In DeFi applications, ZK oracles simplify the operation of price information sources, eliminating the need for continuous updates and expensive storage on the blockchain.

2. Secure data source: ZK Oracle provides a secure way to obtain data sources from non-cooperating parties. For example, users can generate zero-knowledge proofs of their bank balances without revealing sensitive details. This is used as collateral for obtaining loans in the decentralized finance sector, enhancing trust in financial transactions.

3. Confidential voting system: ZK oracles can be applied to confidential voting systems to achieve verifiable results without exposing individual votes.

4. Identity verification: In the identity verification scenario, ZK oracle provides valuable support for identity verification. They authenticate users without revealing complex details of their records, ensuring a security and privacy-focused approach.

5. Supply chain system: ZK oracle facilitates the verification of product authenticity without leaking proprietary information. This application ensures trust and transparency in supply chain processes.

Overview of the project to build ZK Oracle

Hyper Oracle

Hyper Oracle focuses on building an exclusive ZK oracle network for the Ethereum blockchain. The system efficiently extracts data from each Ethereum block, uses zkPoS for retrieval, and utilizes programmable zkGraphs powered by zkWASM for data processing. The approach adopted ensures secure and trust-minimized off-chain computation through ZK technology. This innovative approach not only creates the possibility to extend Ethereum smart contracts, but also gives them the ability to handle complex tasks such as automation and machine learning.

Mina Protocol

(0)1Labs, as a partner of the Mina Protocol ecosystem, is actively building a ZK oracle. What makes Mina's ZK oracle unique is its unique two-step execution model, coordinated by zkApps. The initial steps involve off-chain verification, confirming the existence of specific information and completed calculations. This off-chain verification makes it possible to perform localized computations on individual machines.

Take price information sources as an example - users can flexibly query multiple trusted APIs, calculate average prices, and perform complex off-chain operations. Through the ZK oracle, users can query prices without incurring fees until the desired result is achieved. Only after the desired results are achieved, on-chain execution occurs, allowing for a more streamlined and cost-effective architecture design. This unique two-step execution model is unique to ZK Oracle on Mina and provides a powerful method for secure and efficient interaction with off-chain data.

Nil Foundation

In August 2023, Lido Finance, a pioneer in the field of liquidity staking, announced an important plan. The company revealed that it will use the Lido Grant to fund the Nil Foundation, an Ethereum research and development company, to develop ZK oracles. The explicit goal of this strategic collaboration is to establish trust-minimizing sanity checks on Lido Finance's accounting reports, ultimately strengthening Lido Finance's liquidity. Notably, proofs of ZK oracle calculations will be signed directly from the Ethereum Virtual Machine (EVM) using Proof Market, a recently launched gateway interface that ensures provable computational composability for all EVM applications , marking significant progress in this field.

The future prospects of ZK oracles

As ZK oracles make their mark in the oracle world, there are still some challenges that need to be addressed. The complexities involved between sources, nodes, and users in the three-way handshake protocol require further research and development to optimize the system. Some teams, like Mina, are actively working to address these challenges, but it will take time.

With its unique advantages and wide range of application scenarios, ZK oracles are at the forefront of revolutionizing the blockchain system. They have the potential to support trustless and decentralized applications that rely on accurate and verifiable off-chain data, marking a major leap forward in the field of blockchain technology. The development path of the ZK oracle not only represents innovation, but also redefines the way we understand and interact with the blockchain system.