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Key Takeaways
- Zero-Knowledge rollups (ZK rollups) are still at a nascent stage, with the Layer-2 landscape currently dominated by optimistic rollups, such as Optimism and Arbitrum. Nevertheless, ZK rollups like zkSync Era have been increasing in total value locked (TVL), reaching US$668 million as of 30 June 2023, up by 660% from $88 million on 1 April 2023.
- One of the obstacles blocking ZK rollups adoption is lack of full compatibility with the Ethereum Virtual Machine (EVM). However, as the technology evolves, various methods have emerged to achieve zkEVMs.
- Zero-Knowledge rollups (ZK rollups) are a class of Layer-2 solutions that bundles transactions together to be executed off-chain, which reduces the amount of data to be posted on-chain. The key feature of ZK rollups is producing validity proofs to prove that the proposed changes to Ethereum’s state are correct.
- Unlike optimistic rollups, which have to post all transaction data on-chain, ZK rollups only need to provide validity proofs to finalise transactions (states) on Ethereum. This leads to several benefits, such as having no delays when withdrawing funds from a ZK rollup to Ethereum since exit transactions are executed once the validity proof is verified. In contrast, users of optimistic rollups have to wait at least seven days to confirm their funds are successfully withdrawn.
- There are four types of zkEVMs, and each has their advantages and disadvantages. Type 1 zkEVMs generally require complex engineering to parallelise the prover in order to mitigate the long prover times. To date, Type 1 zkEVMs have not yet launched on the mainnet. Currently, the most commonly used types of zkEVMs include Type 4 (zkSync Era, Starknet) and Type 2 (Polygon zkEVM). Type 3 zkEVMs are considered a transitional stage, where most projects will subsequently move towards Type 2.
- During the past three months, both zkSync Era and Polygon zkEVM saw significant growth on TVL, which surged by around 14.5x and 91x, respectively.
- Type 1 zkEVMs are fully and uncompromisingly Ethereum equivalent. The key features of Type 1 zkEVMs are provided in the table below:
- Type 2 zkEVMs are fully EVM equivalent but do not meet the Ethereum-equivalent criterion. In general, they are fully compatible with existing applications; however, there are small modifications compared to Ethereum (such as changes to data structures like the block structure and state tree) in order to enable easier development and faster proof generation.
- Polygon zkEVM (previously Polygon Hermez) is a Type 2 zkEVM. Since its mainnet beta launch on 27 March 2023, it has experienced considerable growth in TVL, increasing from $0.47 million on 28 March 2023 to $39.18 million on 30 June 2023. It uses the Polygon Zero ZK proof technology to achieve fast network finality with frequent validity proofs. Polygon Zero is distinguished from other ZK scaling solutions due to its Plonky2 prover system, which supports efficient recursive proof generation.
- Type 3 zkEVMs are almost EVM equivalent but sacrifice full EVM equivalence in order to shorten prover times, as well as make the EVM easier to develop. In general, Type 3 is a transitional stage, and projects typically do not aim to permanently stay as Type 3. In general, Type 3 zkEVMs transition to Type 2 by incorporating outstanding features such as precompiles, thereby aiming to achieve full EVM equivalence.
- Type 4 zkEVMs work by compiling smart contract source code written in a high-level language (such as Solidity or Vyper) into a language that is ZK-SNARK friendly. The main advantage of Type 4 zkEVMs is very fast prover times, while the main disadvantage is higher incompatibility.
- zkSync is a Type 4 ZK rollup that utilises cryptographic validity proofs to provide scalable and low-cost transactions on Ethereum. With zkSync, the smart contracts are written in Solidity or Vyper (same as Ethereum) and can be called using the same clients as other EVM-compatible chains. Amongst the ZK rollups, zkSync Era has the highest TVL, totalling US$668 million as of 30 June 2023.
- It has been projected that Web3 services will require almost 90 billion Zero-Knowledge proofs to be executed in 2030, with market-wide completion of 83,000 transactions per second. For comparison, the Visa network processes up to 65,000 transactions per second. In addition, the market for generating Zero-Knowledge proofs is estimated to reach $10 billion by 2030.
Read the full report: The Development of ZK Rollups
Authors
Crypto.com Research and Insights team
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