zkRollups stands for “zero-knowledge” rollups. As a protocol, they are a way of interacting with the Ethereum main chain that sidesteps common issues with transaction cost and speed, as well as providing a solution to scalability.
They are one of many “layer 2” solutions being developed for Ethereum to help overcome its core issue with scaling. The need for scalability is crucial for certain applications, such as micro-transactions or blockchain gaming to be viable. It also helps reduce the unnecessary expense associated with some blockchain applications, a cost which can occasionally render a protocol unviable, even more so in times of significant network usage.
How Do zkRollups Work?
zkRollups work by processing calculations off-chain then sending them to the Ethereum network for validation in “batches” or “blocks”. As such, this allows for multiple transactions to happen and be verified by a single validating transaction that confirms what has taken place off-chain and integrates them on-chain at one fell swoop.
They do this by generating a cryptographic proof called a SNARK. This stands for succinct non-interactive argument of knowledge. Another form of cryptographic proof is a STARK, known as a “scalable transparent argument of knowledge”. This is what validates the transactions coming through from the bundle. The zkRollup smart contract is responsible for governing the transactions within it, and it can only be updated once Ethereum validates it.
What Are the Advantages of zkRollups?
It means that only the validity proof is required for processing, rather than the full spectrum of data associated with all the transactions. This significant decrease in data that needs validation by the Ethereum mainnet makes transactions far cheaper and quicker to process. It also has an added benefit of zero delays when moving funds from layer 2 to layer 1, as the validity proof has already confirmed that the funds are in place. Vitalik Buterin, has already said that zkRollups “will win out in all use cases.”
They are superior to optimistic rollups as they are not validating every single transaction, and are not as susceptible to fraud. Optimistic Rollups are just that, optimistic, sending only the bare minimum of data to be validated, and relying on fraud-spotters collecting bounties to manage the process, hence the use of “Fraud Proofs” within an Optimistic Rollup. Without careful jurisprudence, they could be susceptible to fraud and various economic attacks where users are overwhelmed by aggregators producing false blocks.
The downside to zkRollups, however, is that the validity proofs are not simple to compute – and nor should they be, as they are the operators of a huge multitude of transactions at once.
Which Companies Are Using zkRollups?
Several companies are utilizing zkRollups. This includes Polygon Hermez, who has helped Tether come to Ethereum, Loopring, which is supporting the creation of non-custodial AMMs and order books, StarkWare, who are building StarkEx & StarkNet, and of course, Numio, the first mobile application natively supporting zkRollups, which allows you to transact, store and deploy your ERC-20 tokens in the same manner as you’d expect to use a traditional payment currency. Numio is actively building on a zkRollup implementation, being developed by Matter Labs. zkRollups are the most secure layer 2 scaling solution to be developed yet, with a consistent role in the success of the Ethereum-based economy.