Current Status and Future Outlook of ZK Technology

Zero-Knowledge Proof ( ZK Proof ) technology and its applications are rapidly developing in the encryption world. This article will provide an overview of the latest developments in ZK technology.

Development Trends of ZK

Ethereum is transitioning from a monolithic architecture to a modular design. An increasing number of external third-party solutions are being used to expand Ethereum's data and execution capabilities. In terms of data availability, some projects are competing. In terms of execution, layer 2 networks (L2) such as Arbitrum and zkSync provide a faster and cheaper user experience by executing transactions off-chain and aggregating the results to the Ethereum mainnet.

The Ethereum mainnet can currently only process about 30 transactions per second ( TPS ). To cope with global-scale activities without causing severe network congestion, Ethereum increasingly relies on scaling innovations to optimize its execution capacity. There are mainly two types of solutions: on-chain scaling and off-chain scaling.

On-chain scaling directly modifies the blockchain to improve transaction processing capacity, such as Ethereum's sharding technology. Off-chain scaling, on the other hand, builds an execution environment outside of Ethereum, namely L2, to achieve cheap and fast transactions, and then batches the transaction data to submit to the Ethereum mainnet.

ZK rollups: Leading ZK-based off-chain scaling technology

The most popular L2 solution currently is zero-knowledge rollup ( ZK rollup ). This L2 can achieve about 2,000 TPS, which is a 65-fold improvement over the Ethereum mainnet. ZK rollup uses zero-knowledge proof ( ZKP ) technology to cryptographically verify batches of transactions and publish them to Ethereum.

Currently, larger ZK rollup projects include:

• dYdX: cryptocurrency and derivatives exchange, TVL 375 million USD
• Loopring Protocol: L2 for trading and NFTs, TVL 121 million USD
• zkSync Lite: L2 for trading and NFTs, TVL of $65 million
• ZKSpace: L2 for transactions and NFTs, TVL 49 million USD
• Aztec Connect: L2 for privacy DeFi, TVL 15 million USD

These leading ZK rollup projects are mainly built on StarkEx or zkSync technology.

Validiums and Volitions

In addition to ZK rollup, Validium and Volition are also noteworthy ZK-based scaling solutions.

Validium executes transactions off-chain and maintains data through off-chain zero-knowledge proofs. This is different from ZK rollups, which publish data on-chain. Validium has higher performance, achieving over 20,000 TPS, but sacrifices some degree of trustlessness.

Notable Validium projects include:

• Immutable X: An NFT-centric scaling solution with a TVL of $123 million
• Sorare: Fantasy Sports NFT Game, TVL 21 million USD

Volition is a combination of ZK rollup and Validium, allowing users to choose on-chain or off-chain data availability. This provides more flexibility for applications. The zkPorter mechanism of zkSync is a notable Volition system.

zkEVM: The Scalable Holy Grail

zkEVM is a ZK rollup that is compatible with the Ethereum Virtual Machine (EVM). This makes it easier for applications to migrate from L1 to L2. Multiple projects are developing their own zkEVM implementations, representing a significant advancement in ZK rollup technology.

Vitalik Buterin proposed a tiered approach to zkEVM from Type 1 to Type 4. Type 1 is fully equivalent to EVM, while Type 4 is only partially compatible with certain Ethereum applications. Currently, multiple projects are developing Type 2 zkEVM.

Main zkEVM project progress:

• Polygon zkEVM: is evolving from Type 3 to Type 2
• Scroll: Building Type 2 zkEVM
• zkSync Era: Custom Type 4 zkEVM
• Kakarot of Starknet: Currently in Type 3 status

Latest Developments of zkEVM

• The Polygon zkEVM mainnet testnet will launch on March 27.
• zkSync Era has just opened its mainnet to developers, and the version for ordinary users is about to be launched.
• Scroll has just launched the Goerli zkEVM testnet.
• Starknet's Kakarot zkEVM is accelerating development.

In the future, Ethereum itself may upgrade to Type 1 zkEVM. Meanwhile, external Type 2 to Type 4 zkEVMs will continue to evolve, providing developers and users with unique customization and enhanced experiences. The year 2023 will be an important year for zkEVM technology to enter a practical stage.