The evolution of blockchain changes our understanding of the financial system by facilitating decentralized and cross-border transactions within a short period. This applaudable feature became a leading and unique selling point for every blockchain-based project. However, growth in adoption significantly reveals the need for a more scalable and seamless decentralized system.
Introducing ZK, Zero Knowledge protocols, creates a more efficient way of facilitating blockchain transactions. While this tool does not in any way reduce the impact of blockchain, it renders it a more practical and scalable alternative to traditional chains.
Given that ZK is a new invention in the blockchain space, users are interested in understanding its effectiveness. This article gives an exhaustive explanation on how ZK enhances blockchain efficiency, improves DeFi (decentralized finance,) and gives an insight into the current benefits and probable improvements.
What is ZK (Zero-Knowledge)
ZK is a layer-2 scaling protocol that proffers existing blockchain platforms with more secure and effective processing of transactions. This impressive tool enhances the ability of blockchain to facilitate high throughput transactions without delay.
Zero Knowledge technology was first expounded in 1989 by MIT researchers in a paper called “The Knowledge Complexity of Interactive Proof Systems.” In this work, the researchers proposed a more secure way of proving the existence and trueness of a fact without having to reveal the fact itself. However, the system requires a system both the prover and the verifier can easily trust.
The development of Zero Knowledge was brought to the spotlight again in 1991 when Manuel Blum, Paul Feldman, and Silvio Micali published their work titled “Non-Interactive Zero-Knowledge and Its Applications.”
Essentially, the system allows the creation of a key known only to the prover and the verifier and must be sound enough to ensure that no invalid key can verify this fact. Think of it as a uniquely created public or private key on the blockchain. This cryptographical key is used to prove the fact without revealing the knowledge of the fact itself.
ZK scaling systems are currently available in different forms and applications, presenting blockchain platforms with a more reliable infrastructure that can be integrated seamlessly for superior scalability while maintaining the security of users’ data on the ledger.
While traditional blockchains have repeatedly shown the inability to perform heavy transactions without system-congestion, ZK enhances users’ participation on the blockchain through a robust and censorship-resistance system and applications designed with effective smart contract dedicated towards extensive usability and help facilitate a trustless financial system
Adopting ZK has also empowered blockchains with a proper decentralized and scalable protocol that is not susceptible to a 51% attack and requires no intermediaries. With the increasing adoption of these tools, it is safe to say that the adoption of blockchain is moving toward the era of Zero Knowledge programmability.
The ZK-rollups: Benefits for Blockchain
ZK-rollup is a revolutionizing system presenting blockchains with a more accessible and secure means of facilitating transactions. Several blockchains, including Polygon, Loopring, and Minna, use this tool as an alternative to traditional chains with improved scalability.
Transactions through ZK-rollup are carried out using two components. First is the on-chain contract, where the smart contract for computation runs and transactions are verified. The off-chain virtual machines are secured and independent systems that bundle transactions for execution off the blockchain, reducing the transaction level on blockchain and gas fees.
How it works?
- Step 1: User sign and submit the transaction to validators.
- Step 2: Validators then roll up the transactions to create a single block. After this, the validator also submits a cryptographic commitment (a root hash) of the new state of the smart contract on the mainnet with cryptographic proof. The cryptographic proof shows that the new state is a result of the application of the correct transaction in the old state.
- Step 3: The new state (a small amount of data for every transaction) is published over the mainchain network to allow anyone to reconstruct the state at any moment.
- Step 4: The proof and the state are verified by the smart contract, thus verifying the validity of all the transactions in the block and the block data availability.
ZK-rollup presents users with a more secure system dApps (Decentralized Applications) on blockchain and reasonably prevents constant hacking and loss of assets. The system verifies transactions through cryptographical details with minimal knowledge of the rollup data.
Efficient and cost-effective
ZK-rollup is a more efficient alternative to traditional blockchains. While traditional chains record each transaction on the blockchain, leading to system congestion, blockchains with ZK-rollup can process cryptocurrency and related transactions off-chain and record only the final result on the blockchain. This consequently reduces heavy traffic on the blockchain while enhancing system scalability.
Also, high transactions on traditional blockchain require an excessively high gas fee and are relatively slow; transactions using ZK-rollup-enhanced blockchain are cheaper and swift.
With the traditional system and the requirement for intermediaries to run nodes, there is a constant reduction in the level of privacy users enjoy. Transactions on a blockchain with ZK-rollup are more secure and ensure users’ anonymity since only the final result is recorded on the blockchain. This effectively protects the input and output data and eliminates the traceability of transactions.
Another good thing about the ZK-rollup is the ability of this infrastructure to confirm transactions within seconds. When this feature is combined with the ZK-rollup’s ability to perform higher throughput, it becomes an apparent and efficient option for users’ experience.
Available with different features
ZK-rollup is the heading for all Zero Knowledge tech tools that uses a proof system to verify data on blockchains. The adoption and development of these tech tools have witnessed high adoption and enhanced blockchain capability. However, we are still at an early stage; hence one can expect more inventions to capture the current lapses and create more significant disruption.
ZK-rollup is not compatible with all systems yet
Using ZK-rollup is not yet compatible with all the tools on the blockchain. While this constitutes a significant issue in adoption, more research into this tech tool may introduce more compatible protocols with time. Also, some ZK-rollups, like Aztec, require using an external wallet or interface for interaction.
Difficult to implement
While the ZK-rollup protocols offer a worthy alternative to traditional blockchain, it is a complex system that requires high technical know-how, complex mathematics, and time for proper implementation. Even though the process of verifying on-chain data is easy, the execution of data off-chain is more complicated and can reduce adoption.
Since blockchain operates on the activities of transaction validators, there is a need to ensure that the system is highly accessible for efficiency. However, ZK-rollup requires expensive hardware and can eventually limit participation as adoption grows.
The introduction of blockchain technology led to demand for a more sophisticated tech tool and proper utilization to deliver its benefits swiftly. We’ve seen these with the introduction of GameFi in the gaming industry, development of supply chain in several industries and the successful facilitation of financial transactions.
However, while existing blockchains cannot conveniently perform thousands of transactions without delay and high gas fees, the introduction of ZK tech has completely changed the narrative.
By providing dApps and blockchains with a more secure, trustless, and decentralized system, ZK tech tools are equipped with structures that improve blockchain utility competently.