What Are Zero-Knowledge (ZK) Rollups And How It Works?

What Are Zero-Knowledge Rollups?

Zero-knowledge rollups, also known as zk-rollups, is a layer-2 scalability solution that enables blockchains to validate transactions faster and keep gas fees low. Zk-rollups perform better than traditional layer-1 blockchains by combining on and off-chain processes.

Although the Ethereum mainnet relies on on-chain activities for transaction processing and block validation, layer-2 zk-rollup solutions also incorporate off-chain functionalities. Merkle Trees are one of the primary components that enable zk-rollups to validate transactions faster than layer-1 blockchains.

Merkle Trees is an important mathematical structure that ensures that no one can tamper with on-chain records in a zk-rollup. Typically, a zk-rollup consists of two Merkle Trees that are stored on a smart contract, or on-chain: one tree stores accounts, while the other stores balances. Any other type of data generated and used by the zk-rollup is stored off-chain.

Zk-rollups are gaining popularity among developers looking to enhance usability, as well as investors and traders seeking faster and more affordable transaction processing.

How Does ZK Rollups Works?

ZK rollups are based on the concept of zero-knowledge proofs (ZKPs), a type of cryptographic proof that allows a prover to demonstrate to a verifier that a statement is true without ever revealing it.

For instance, let's say a math teacher (verifier) wants to confirm whether a student (prover) has the same answer as everyone else without actually looking at their answer. This is where the term "Zero-Knowledge" comes from. "The Ali Baba's cave" and "Two balls and the color-blind friend" are two abstract examples of the concept of zero-knowledge proofs that can be found here.

Understanding zero-knowledge proofs is akin to understanding hash functions. Hash functions are mathematical functions that produce a unique value for every input. Thus, if the prover and verifier obtain the same unique hash value by inputting their statements in the same hash function, it would indicate that the inputs were the same.

This is the crux of zero-knowledge proofs. In addition to ZK rollups, an application of zero-knowledge proofs is to maintain data privacy in industries such as healthcare and financial services, where user data needs to be accessed frequently but raises concerns about customer privacy. Zero-knowledge proofs can enable companies to retrieve and utilize information from the data without actually viewing it.

Top 5 ZK Rollup Projects

Polygon (MATIC)

Polygon is a solution for Ethereum that aims to make transactions faster and cheaper. The Hermez ZK protocol is a technology that makes use of ZK rollups in Polygon. A ZK rollup is a type of solution that combines many transactions into one, larger transaction recorded on the Ethereum blockchain.

Through the acquisition of the Hermez ZK protocol, Polygon has added ZK technology to its platform. This allows for the use of ZK rollups and improves the efficiency and scalability of the network. This can enhance the experience of developers and users building and using dApps on Polygon.

Immutable X (IMX)

Immutable X is a decentralized exchange (DEX) built on the Ethereum network that uses ZK-rollups technology to offer fast, secure, and cost-effective trading and minting of digital assets and NFTs. By leveraging zero-knowledge proofs (ZK-Snarks), it ensures transaction privacy and reduces load on the Ethereum network, allowing for quick trades at lower costs compared to other DEXs.

Immutable X provides several features that make it an attractive investment. It enables near-instant trading without deposit or withdrawal fees, which appeals to traders. Moreover, its use of ZK-Snarks technology enhances security and privacy for users. The platform prioritizes user experience with a user-friendly design accessible to both seasoned traders and new investors.

Mina Protocol (MINA)

Mina Protocol is a layer 1 blockchain that utilizes ZK-Snarks for privacy and scalability. The goal of the project is to be the lightest blockchain in the world, allowing for quick and cost-effective transactions due to its small size and efficient design. By using ZK-Snarks, Mina enables efficient and private transactions, making it an attractive option for various use cases.

Furthermore, its small size allows for easy full node operation and participation in consensus, leading to increased decentralization and security. Overall, Mina's combination of privacy, scalability, and user-friendliness make it a highly promising project in the blockchain space and one to keep an eye on.

Dusk Network (DUSK)

Dusk Network is a blockchain platform that prioritizes privacy. It employs various cryptographic techniques, including zero-knowledge proofs (ZK-Snarks), to ensure secure and confidential transactions. The platform is well-suited for decentralized finance (DeFi) and other use cases that require privacy and security.

To achieve its goals, Dusk Network uses a consensus mechanism called Segregated Byzantine Agreement (SBA), which offers high levels of security and decentralization. The platform is highly scalable and efficient, enabling fast and low-cost transactions. Furthermore, Dusk Network places great emphasis on regulatory compliance, making it an attractive option for organizations seeking to implement blockchain technology in a manner that conforms to existing regulations.

Loopring (LRC)

Loopring is a protocol on the Ethereum blockchain that enables the creation of decentralized exchanges. It utilizes Zero-Knowledge (ZK) technology to ensure private trades, lower fees by a factor of 100, and improved platform security.

In Loopring, ZK proofs are used to verify trade validity without revealing the trade details, such as amounts and identities of the parties involved. This guarantees user privacy while preventing potential fraud or manipulation. Furthermore, the use of ZK technology in Loopring reduces gas fees and increases platform efficiency.