Cryptocurrency Ethereum, in early 2021 processed over one million transactions a day, a figure that stayed relatively stable in recent years. It is a meteoric growth, given its humble beginnings in August 2015. The use of digital tokens and decentralised systems powered by blockchain technology has exploded over the years, giving rise to issues like congested networks, increased gas fees, slower confirmations, and subpar user experience. Scaling the operations efficiently while managing the rising costs is the only choice for Ethereum. Starknet, a permissionless decentralised Zero Knowledge Rollup (ZK Rollup) operating as a layer-two (L2) network on top of Ethereum, was founded in 2017 and launched in November 2021. It was the first system to take steps in this direction to mitigate these challenges.
By definition, ZK Rollup is a layer-2 scaling solution for Ethereum’s blockchain networks that combines the concept of Rollups with Zero-Knowledge Proofs (ZKPs). It enables the aggregation of multiple transactions into a single proof, which is then submitted to the main chain, reducing congestion and increasing scalability. It reduces the main chain’s computational load and storage requirements, significantly increasing transaction throughput. By utilising Zero-Knowledge Proofs, ZK Rollup achieves transaction privacy and maintains the security guarantees of the underlying blockchain.
Secure, scalable systems remain challenging for industries such as finance, supply chain, and decentralised applications (dApps) that have already adopted blockchain. They leverage ZK Rollup’s off-chain computation and transaction verification while guaranteeing the underlying blockchain’s security. With this, it becomes easier to scale while quickly and efficiently handling large transactions.
As we move further in the blog, we will explore ZK Rollup in depth and uncover how it works and its benefits.
How ZK Rollup Works
To understand ZK Rollup’s workings, one must comprehend two primary concepts: Rollups and Zero-Knowledge Proofs (ZKPs), that work together to give ZK Rollup its capabilities. The former helps the blockchain network scale and remain cost-effective, and the ZKPs ensure transaction privacy and security. To understand it better, let’s dive into more details.
Rollups are layer-2 scaling solutions for blockchain networks that improve scalability and reduce transaction costs. Rollups do that by aggregating multiple transactions into a single transaction or a compressed representation, often called a “Rollup block.”
ZKPs are cryptographic protocols that allow a party (the Prover) to validate the user transactions to another party (the Verifier) without revealing additional information. They are cryptographic proof for the Rollup block, which is shared with the main chain along with state and transaction roots through smart contracts as a single transaction. The smart contract aids in verifying and updating the state accordingly in the main net.
ZK Rollup combines the concept of Rollups with Zero-Knowledge Proofs. In ZK Rollup, the cryptographic proofs validate the Rollup block submitted to the main chain instead of individual transactions, significantly reducing the size and cost and ensuring its integrity. It enables high scalability, low latency, and privacy features.
Now that we have some know-how of ZK Rollup’s workings, we can dive deep into its benefits and how businesses leverage them.
Benefits of ZK Rollup
In the blog, we have already been talking about the various benefits of ZK Rollup. Here they are in finer detail:
- Scalability: ZK Rollup provides significant scalability benefits to blockchain networks. ZK Rollup reduces the main chain’s computational load and transaction processing requirements by aggregating multiple transactions into a single Rollup block. It substantially increases transaction throughput, allowing the network to handle an increased volume of transactions. Scalability improvements result in faster confirmation times, reduced congestion, and enhanced user experience.
- Cost-saving: ZK Rollup offers cost-saving advantages by reducing gas fees. With the ability to process multiple transactions within a single rollup block, users can avoid paying gas fees for each transaction. The transaction cost is significantly lower than directly executing transactions on the main chain. This cost efficiency makes blockchain technology more accessible and viable for a broader range of use cases, including microtransactions and applications with high transaction volumes.
- Security: ZK Rollup maintains the security guarantees of the underlying blockchain while achieving scalability. By leveraging Zero-Knowledge Proofs, ZK Rollup ensures that the Rollup block only submits valid transactions to the main chain. The main chain receives the cryptographic proofs, and through smart contracts, it validates the correctness of the transactions. It assures robust security, as the main chain remains the ultimate authority for the integrity of the Rollup blocks. Additionally, ZK Rollup benefits from the security properties of the underlying blockchain, such as decentralisation and immutability, ensuring the system’s overall security.
- Speed and Stability: ZK rollup is a multi-level system created to mitigate the flaw in the Ethereum network, which is slow network operation due to reduced availability during periods of peak demand. As the verification of the transactions, bundling happens in a different layer than the main net. It frees up all the space on the main net, which these processes initially used to occupy. With better management of resources and streamlined processes, the networks operate faster and much more stably.
Overall, ZK Rollup offers a powerful combination of scalability, cost-saving, and security benefits. It enables blockchain networks to handle a higher transaction volume, reduces user costs, and maintains the integrity and security guarantees of the underlying blockchain. These advantages make ZK Rollup a compelling solution for addressing the scalability challenges faced by blockchain platforms and expanding their practical applications in various industries.
How do businesses leverage ZK Rollup?
With its scalability and security features, ZK Rollup has the potential to revolutionise various sectors and applications. Here are some prominent use cases of ZK Rollup:
ZK Rollup is a technology that can significantly improve the scalability of Ethereum-based cryptocurrency networks. It means that transactions can be processed faster and with lower costs, making it more practical for everyday use. Users can enjoy the benefits of decentralised finance applications with reduced fees and an improved user experience.
Decentralised exchanges can also benefit from ZK Rollup. Aggregating multiple trades into a single rollup block can increase transaction throughput, lower fees, and reduce latency. It can enhance efficiency and liquidity, making them more competitive with centralised exchanges while maintaining the security and privacy of on-chain transactions.
Gaming platforms and NFT marketplaces can leverage ZK Rollups, where transaction scalability is crucial. It can enable seamless and cost-effective transfers of in-game transactions and NFT trading. This technology can improve the gaming experience by reducing transaction costs and ensuring secure asset ownership.
In supply chain management systems, ZK Rollup can improve efficiency and transparency. It facilitates fast and secure goods tracking, product authenticity verification, and seamless ownership transfer. With ZK Rollup, the supply chain can revolutionise processes, mitigate fraud and counterfeiting and improve overall visibility.
Voting systems and governance protocols can use ZK Rollup to ensure votes’ integrity, prevent double-spending, and maintain privacy by leveraging Zero-Knowledge Proofs. This technology can use decentralised decision-making processes to improve efficiency and inclusivity in various governance frameworks.
Finally, ZK Rollup can enable efficient and secure micropayments and transactions in IoT networks. With seamless and secure machine-to-machine transactions, IoT devices can autonomously and efficiently exchange value. It’s scalable and cost-effective, which makes it an ideal solution for handling large low-value data exchanges in IoT ecosystems.
These use cases demonstrate the wide-ranging potential of ZK Rollup in various industries and applications. By addressing the scalability challenges of blockchain networks while maintaining security and privacy, ZK Rollup opens up new possibilities for adopting and practically implementing blockchain technology in real-world scenarios.
What has the future in store for ZK Rollups
Many industries have already started using decentralised systems, and many will soon follow to start using ZK rollups more frequently. These rollups are a superior layer-2 solution as they do not need conflict resolution mechanisms. ZK rollups offer better security by leveraging Ethereum’s security. As Ethereum’s prominence increases, the reliance on rollups may also rise. These rollups can be integrated with future upgrades of the Ethereum blockchain, making it more affordable and user-friendly for regular users.
