What are ZK Rollups (Zero Knowledge Rollups)?
- Blockchain faces a trilemma in its quest for mass adoption, struggling to balance security, decentralization, and scalability. ZK Rollups offer a solution by processing transactions off-chain.
- ZK Rollups work by bundling transactions, and using zero-knowledge proofs for transaction verification. This improves blockchain speed and lowers transaction costs.
- Various rollups exist, including ZK-SNARKs, ZK-STARKs, and Optimistic Rollups, each with unique benefits and trade-offs.
- ZK Rollups are vital for Web3’s growth. They offer fast transaction processing, security, and reduced costs. Their role in improving decentralized applications and lowering fees makes them essential for the future of blockchain.
Have you ever heard of the blockchain or scalability trilemma?
Well, blockchain has been trying to create harmony among its three core pillars: security, decentralization, and scalability. Prioritizing security and decentralization slows down the network and limits transaction capacity while emphasizing scalability and decentralization exposes the network to potential attacks. A focus on security and scalability risks centralizing control, undermining blockchain’s decentralization.
The blockchain community developed ZK Rollups, zero knowledge implementations on the blockchain, to maintain decentralization, achieve excellent speeds, and ensure robust security. ZK Rollups reduce the strain on blockchains, allowing blockchain to overcome its trilemma.
This guide simplifies everything you need to know about ZK Rollups as layer 2 solutions for mainnets.
What Are ZK Rollups (Zero Knowledge Rollups)?
Think of Zero Knowledge Rollups as a clever way to make blockchains faster and cheaper. They work by moving the heavy lifting, like calculations and data storage, off the main blockchain to an off-chain network. ZK rollups keep the blockchain from getting too crowded so it can handle more transactions without slowing down.
Here’s how it works: ZK Rollups take a bunch of transactions, process them off the main blockchain, and then bundle them into one neat package. This blockchain receives the package, where zero-knowledge proof verifies its data. These proofs ensure every transaction meets the blockchain’s criteria. Zk rollups help blockchains handle more transactions efficiently and at a lower cost.
What is Zero- Knowledge proof anyway?
We’d be remiss not to expand a little here on what zero-knowledge actually means.
Zero-knowledge proof is a type of cryptography that allows you to verify a fact without revealing any other data. In ZK-rollups, they allow the layer-1 network to know that all transactions in a block have been validated off-chain, without needing to see the details of those transactions.
The technology behind zero-knowledge proofs is finding use cases in healthcare, finance and other sectors, and is worth getting familiar with.
How Do ZK Rollups Work?
ZK Rollups have two main parts:
- First, you have on-chain smart contracts. There are two types of contracts here: the main and verifier contracts.
- The main contract is responsible for vital tasks like storing rollup blocks, tracking deposits, and making necessary updates.
- The verifier contract checks the validity of the cryptographic proofs (zero-knowledge proofs) created.
- Next are off-chain virtual machines. These machines take care of processing transactions, but they do this away from the main blockchain, in a layer 2 network. They run separately from the mainnet, freeing up space on the blockchain itself.
ZK Rollups connect to the main network, however, they operate and validate transactions in a different layer. Instead of overwhelming the main network with every minor detail of each transaction, ZK Rollups summarize the data into bundles, keeping the blockchain organized and efficient.
What are ZK Rollups For?
Picture a busy highway during rush hour. Cars crawl, and journeys take forever. Blockchain, like the Ethereum network, behaves similarly when processing too many transactions simultaneously. Congestion builds up, delaying transactions and increasing costs.
ZK Rollups combat this congestion by combining multiple transactions and processing them outside the main blockchain. The Zk-rollup solution resembles using a carpool lane to bypass traffic. By decreasing the main blockchain’s workload, ZK Rollups maintain network efficiency and lower transaction costs. Essentially, ZK Rollups accommodate increased usage without slowing down or pricing users out.
Types of Blockchain Rollups
Depending on the validity proof type, ZK rollups use either ZK-SNARKs or ZK-STARKs. In addition to zero knowledge rollups, there are Optimistic Rollups.
ZK-SNARK
Zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge) are a type of cryptography proof used in ZK Rollups.
Let’s break down what this means:
- Zero-Knowledge: No extra information about the transactions is needed, just a yes or no answer about their correctness.
- Succinct: The proof is short and easy to check.
- Non-Interactive: The prover and verifier don’t need to communicate.
- Argument of Knowledge: The proof confirms the prover’s knowledge of correct transactions.
ZK-SNARKs advantage is that the cryptographic proof is small, making it quicker to verify. It helps the blockchain process many transactions faster. The proof also hides the details of the transactions, keeping them private.
While ZK-SNARKs are great for security and privacy, they have some downsides. Creating the proof can be slow. It also requires a sensitive setup process. Despite these challenges, ZK-SNARKs are a powerful tool for improving blockchains.
ZK-STARK
ZK-STARKs are similar to ZK-SNARKs but have some key differences. ZK-STARKs and ZK-SNARKs bundle up transactions, verify them, and then send proof to the blockchain network. However, ZK-STARKs are newer and can handle more transactions faster.
Here’s a breakdown of Zero-Knowledge Scalable Transparent Argument of Knowledge:
- Scalable – ZK-STARKs can process more transactions than ZK-SNARKs. They use advanced methods to create proofs quickly.
- Transparent – Unlike ZK-SNARKs, ZK-STARKs don’t rely on specific people or groups to set them up. ZK-STARKs are more open and trustworthy.
- Argument of Knowledge – Like ZK-SNARKs, but uses different calculations.
While ZK-STARKs are faster at creating proofs, these proofs are larger and take longer to check than ZK-SNARKs. Also, ZK-STARKs are still new and require more testing to determine their efficiency.
Optimistic Rollup
Optimistic rollups work differently from ZK Rollups. Instead of assuming transactions are invalid, they start by believing all transactions are correct. They post transaction data to the main blockchain and only check for errors if someone challenges a transaction.
Optimistic rollups are easy to build because they don’t require complex cryptographic proofs. However, there’s a risk: someone can dispute a transaction within a set period.
If someone finds an inaccurate transaction and proves it’s wrong, the rollup system redoes the calculations and punishes the person who made the error.
While easier to build, optimistic rollups rely on the blockchain network for security. The optimistic rollup system can be insecure without enough honest validators checking transactions.
Zk-Rollup vs. Optimistic Rollup
Zero-Knowledge Rollups (ZK Rollups) and Optimistic Rollups aim to scale Ethereum by processing transactions off-chain. They approach their common goal differently.
ZK Rollups are more secure as they rely on mathematical proofs, making fraud nearly impossible. Optimistic Rollups depend on active validators to detect and challenge fraudulent transactions. Inaccurate transactions that go unnoticed by validators might result in the system accepting a fraudulent transaction.
ZK Rollups are ideal for applications requiring high security and privacy, while Optimistic Rollups suit those prioritizing easier integration and faster processing with the caveat of potential delays. Both solutions have unique benefits. Choosing between them depends on a specific project and its goals.
| ZK Rollups | Optimistic Rollups | |
|---|---|---|
| Verification | Uses zero-knowledge proofs for immediate validity | Assumes validity; uses fraud proofs if challenged |
| Privacy | High, as transaction details are hidden | Low, as transaction details are public |
| Complexity | High; requires advanced cryptographic skills | Moderate; easier to implement |
| Latency | Finality is fast, but proof generation takes time | Fast for users, but finality is delayed |
| Security | High, due to cryptographic proofs | Moderate; depends on vigilant validators |
| Scalability | Moderate; high computational cost for proofs | High; handles more transactions but uses more gas |
| Developer Friendliness | Requires special skills and tools | Compatible with existing Ethereum tools |
Pros and Cons of ZK Rollups
Below are the advantages and disadvantages of ZK Rollups as seen in the Ethereum blockchain.
| Pros | Cons |
|---|---|
| Validity proofs ensure transaction correctness, preventing invalid actions. | Computing and verifying validity proofs is costly, leading to higher user fees. |
| Faster transaction finality as state updates are approved once validity proofs are verified on L1. | Building EVM-compatible ZK Rollups is complex due to the intricacies of zero-knowledge technology. |
| Security relies on cryptographic methods, not the honesty of actors. | Producing validity proofs needs specialized hardware, which could lead to centralization. |
| Data required for recovery is stored on L1, ensuring security and decentralization. | Centralized operators (sequencers) can influence the order of transactions. |
| Users can withdraw funds quickly, improving capital efficiency. | Hardware demands might limit participation, risking malicious operators freezing the rollup or censoring users. |
| No reliance on liveness assumptions, so users don’t need to validate the chain to protect funds. | Some proving systems need a trusted setup, and mishandling this could compromise security. |
ZK Rollups and the Future of Web3
ZK Rollups presents a solution to a common challenge in Web3: balancing the need for rapid transaction processing with robust security. These systems handle many transactions quickly, a crucial feature as Web3 platforms like decentralized finance and NFT marketplaces grow in complexity and popularity.
Beyond speed, ZK Rollups prioritize user privacy. Transactions are verified and recorded without exposing sensitive details, protecting user data in Web3 dApps.
Another advantage of ZK Rollups is cost reduction. Processing many transactions off-chain and only recording essential data on the main blockchain lowers transaction fees. Lower fees make Web3 more affordable.
ZK Rollups are poised to be essential for Web3’s expansion. Their ability to handle transactions efficiently, protect user privacy, and reduce costs positions them as a cornerstone of the decentralized web’s infrastructure. As the demand for decentralized applications rises, solutions like ZK Rollups will become even more critical.
