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Zero-Knowledge Rollups (ZK-Rollups)

What Are Zero-Knowledge Rollups (ZK-Rollups)

Zero-knowledge rollups (ZK-rollups) are a type of Layer-2 scaling solution designed to enhance the throughput and efficiency of Layer-1 blockchain by leveraging Zero-Knowledge Proofs (ZKPs). 

ZKPs, specifically ZK-SNARKs (Zero-Knowledge Succinct Non-interactive ARgument of Knowledge), and ZK-STARKs (Zero-Knowledge Scalable Transparent ARgument of Knowledge) are cryptographic proofs that allow one party to prove to another that a statement is true without revealing any confidential information (i.e., the secret witness). 

ZK-rollups use ZKPs to bundle multiple transactions into a single batch off-chain, then post the digest on-chain which is verifiable by validators without replaying the transactions. Through this approach, the computation and storage overhead on the main blockchain is reduced, allowing for greater scalability.

How Do ZK-Rollups Work

Bundling Transactions

The process begins with aggregating multiple transactions into a single batch. The off-chain component (i.e., the ZK provers) handles most of the transaction processing and validation, reducing the computational burden on the Layer-1 blockchain. A zero-knowledge proof, specifically ZK-SNARKs or ZK-STARKs is generated to validate the correctness of the entire batch. This proof ensures that all transactions within the bundle are valid without revealing any sensitive details.

State Changes

The ZK-Rollup tracks the state changes resulting from the bundled transactions. Each transaction modifies the state of the rollup, such as account balances or contract states. Once the batch is processed off-chain, the aggregated state change is represented by a Merkle root, which summarizes the new state of the rollup. The Merkle root is included in the proof submitted to the Layer-1 blockchain, ensuring that the state changes are verifiable and tamper-proof.

Data Availability

While the computation happens off-chain, the data required to reconstruct the rollup state must be available to all participants. Typically, ZK-Rollups publish the transaction data or state changes to the Layer-1 blockchain, ensuring that anyone can access and verify the rollup’s operations. Ensuring transparency maintains the integrity and security of the system, as participants can independently validate the state of the rollup.

Settlement

Settlement involves finalizing the state changes on the Layer-1 blockchain. The zero-knowledge proof, along with the new Merkle root, is submitted to a smart contract on the Layer-1 blockchain. The smart contract verifies the proof, ensuring that all transactions in the batch are valid. Once verified, the contract updates the Layer-1 blockchain with the new state root, and after such a state update transaction is finalized in Layer-1 chain, the transactions and newest state from Layer-2 can be considered as “settled”. Through this process, the rollup’s state changes are recognized and recorded on the main blockchain securely.

Pros of ZK-Rollups

Higher Throughput

By processing transactions off-chain and only recording the proofs on-chain, ZK-rollups can achieve a higher transaction per second (TPS) rate compared to the main blockchain. Congestion is alleviated and the cost of transactions is lowered, making the network more efficient and accessible to users.

Reduced Transaction Fees

High gas fees in the Ethereum network have been a persistent issue. ZK-rollups mitigate this problem by minimizing the amount of data that needs to be recorded on-chain, leading to lower gas costs. ZK-rollups thus support applications that require frequent and low-cost transactions, such as decentralized finance (DeFi) platforms and non-fungible token (NFT) marketplaces.

Faster Finality

Since the validity of transactions is verified off-chain and only the proofs are submitted to the main blockchain, the time required to achieve transaction finality is reduced. The user experience is enhanced through the provision of quicker confirmation times and a reduction in the latency associated with on-chain transactions.

Cons of ZK-Rollups

Complex & Hardware requirements

The complexity of zero-knowledge proofs require much computational resources to generate, which can lead to high initial costs for proof generation. Ongoing advancements in cryptographic techniques and hardware acceleration seek to mitigate this issue.

Integration

Another challenge is the need for widespread adoption of ZK-rollups within the existing blockchain ecosystem. While ZK-rollups offer substantial scalability benefits, their effectiveness depends on the support from wallets, exchanges, and dApps. Ensuring compatibility and interoperability with the broader ecosystem is important for the successful implementation of ZK-rollups.

Zk-Rollup vs. Optimistic Rollup

ZK-rollups are part of a broader category of Layer-2 scaling solutions, which also includes optimistic rollups. While both approaches aim to enhance scalability, they differ in their methods of transaction verification. Optimistic rollups assume transactions are valid by default and only perform verification if fraud is suspected, whereas ZK-rollups use zero-knowledge proofs to verify each transaction batch. This distinction leads to different trade-offs in terms of security, efficiency, and complexity.

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    A separate blockchain that is built on top of the existing Layer-1 blockchain, to extend its capabilities and improve scalability.