2022 Prediction: Zero-Knowledge Proofs Become a Killer Feature of Web3

Author: MinaProtocol

Last year, the important role of Zero-Knowledge Proofs (ZKP) in cryptocurrency and Web3 became clearer, particularly in terms of scalability and user-permissioned privacy. This is exciting as it lays the groundwork for the launch of ZK applications across the crypto ecosystem (also aligning with my timeline and predictions from early 2021 :) ) and becomes a killer feature of Web3.

Web3

Web3 is a widely used term, but it is somewhat vague. Optimistically, its best definition is that it will provide the decentralization of Web1 along with the richness of Web2. In doing so, it addresses many issues of Web2.0.

Web2 has many problems—centralization allows for hacking, data breaches, and ruthless profit-making from users—this is beyond dispute. These are systemic issues of the system.

Web3 brings user-centric values, decentralization, and cryptography, all of which hold the promise of addressing some of these problems.

Putting aside the optimistic ultimate definition, I would say that today’s Web3 is actually just the user experience of accessing cryptocurrency from the web, along with the ecosystem built around it. This opens up many exciting possibilities; decentralized finance, NFT marketplaces, decentralized organizations, and so on.

However, it lacks some key building blocks necessary to realize its broader impact.

Web3 and Privacy

With Web2, we have become accustomed to a federated privacy model. In this architecture, we retain personal information privacy from general participants on the web while ceding privacy rights to specific entities we interact with.

While this opens up design space for handling private data, which is good, it brings significant counterparty risk. Data breaches, monetization of private data, and the permanent availability of leaked data are major flaws of this architecture.

On the other hand, Web3 does not have the capability for private data. This means it does not have to deal with the downsides of Web2 privacy, but so far it also lacks this component. In Web3, you are not interacting with a centralized party, but with a decentralized network. While this indeed eliminates the downsides of shared data and counterparty risk, interacting only with decentralized entities also brings the challenge of how to gain trust in this new environment.

If Web3 is to be competitive in a wide range of applications, changing this and introducing privacy features will be essential. It will either be unfeasible for many use cases such as bank accounts, online shopping, identity, social networks, and commerce, or it will create a worse privacy environment than Web2 when transitioning to cryptocurrency for other improvements.

Web3 and Security

Web2 has other obvious issues of centralized power, which, in addition to privacy loss, brings many other negative consequences for users. Theoretically, Web3 has a great opportunity to eliminate this dynamic rather than just declaring its system rules in decentralized code.

However, today’s cryptocurrency has not yet reached this potential. If you are running a full node, you will achieve complete, mathematically guaranteed cryptographic security provided by cryptocurrency. However, for most cryptocurrencies or users, running a full node is not feasible. It requires expensive hardware and downloading and maintaining a connection to a large blockchain of 100 GB. This paradigm is particularly an issue for Web3. Cryptographic clients running in browsers cannot handle these types of demands.

As a result, the work of Web3 today relies on trusted centralized intermediaries that connect relays to the decentralized networks behind Web3. This is concerning as it replicates many of the troubling dynamics already present in Web2. At the beginning of this year, Moxie Marlinspike wrote in detail about this—few central services acting as intermediaries in the field are replicating the same dynamics as Web2, just on a much larger scale. Combined with the aforementioned privacy issues, these entities have the capabilities of super ISPs to read and control access to all our data, which is a disaster for user sovereignty.

Entities like Infura and Alchemy are the weak links in the decentralized opportunities of Web3. Users in Venezuela and Ukraine recently found their access to Infura was censored. While so far these powerful forces have been limited to specific regions, we would not be surprised if these access points become tools for governments to exert widespread control over cryptocurrency, and the corporate owners of these access points provide preferential treatment to projects they favor over others, typically profiting from Web3.

Impact of ZKP

These security and privacy issues are technical problems. Fortunately, ZKP cleverly addresses this. In terms of privacy—ZKP allows users to share information with decentralized networks privately while providing the network with a secure guarantee that the data is authenticated. In terms of security—they assure users that the data they receive from the network is real without needing to trust intermediary access points.

This opens up the paradigm we are accustomed to in Web2, where trusted information is shared back and forth with applications. However, the decentralization of Web3 simultaneously eliminates the possibility of applications betraying that trust, which is common in the centralized world of Web2.

In terms of privacy, consider identity. Suppose we want to create an NFT collection where each person can own at most one NFT from that collection. Doing this naively would require users to disclose their identities. However, through zero-knowledge proofs, users can provide evidence of their identity's uniqueness without revealing their specific identity.

In the context of Web2, this would require a centralized entity to track users and ensure uniqueness. In typical Web3, this would require users to disclose their identities and the corresponding NFTs. In Web3 with ZKP, this can be done completely privately, with all the same assurances that people want from the system.

For a security example, consider a world where a large portion of financial status is accessible through cryptocurrency via the network. By proving the state of the chain with ZKP, DeFi users will be assured that the account status they see on the network truly matches the on-chain status, thus ensuring security. From the user's perspective, this is similar to the transition from HTTP to HTTPS, but without the risk of censorship.

However, the new capabilities of ZKP are not just about opening Web2 functionalities to Web3. They will also greatly expand the novel possibilities available in Web3. For a brief preview of possibilities, applications enhanced with ZKP could be built to:

• Allow everyone to own only one NFT from a set of NFTs
• Allow tweet authors to generate NFTs from their tweets in a decentralized manner
• Enable users to prove ownership of a subset of NFTs without revealing the specific NFTs they own
• Generate non-transferable NFTs to identify real-world or digital achievements (i.e.; I am a major contributor to an open-source project)
  Allow Twitter users to create DAOs for their followers
• Unlock anonymous voting in DAOs
• Connect existing financial data to cryptocurrency to help guide DeFi

This set of substantive enhancements provided by ZKP will unlock tremendous potential for Web3. It will allow Web3 to provide a far better experience than Web2. Where Web2 struggles—with handling sensitive user data and privacy—Web3 will win through ZKP. It will address one of the biggest pain points for users through centralized networks and help accelerate the migration to Web3, surpassing the speed we have seen in DeFi, NFTs, or other waves that generate more interest.

Narrowing the scope, if we want to create a new, decentralized internet, we will need security, scalability, and privacy—there is no better technology than zero-knowledge.

Why 2022

This leaves the question, why now? One of the variables is the significant growth of Web3 over the past 12 to 18 months, creating an environment for further experimentation and development.

Moreover, it is also a good time for ZK, as they are now ready to be applied in this field. Technological advancements in 2020 made zero-knowledge more widely promotable in 2021, with ZK Rollups gaining prominence as a primary tool for scaling. In 2021, ZKP also saw further technological improvements in verifier and prover performance—Mina's SNARK Kimchi is 4-6 times faster than last year while maintaining its small and efficient proof size.

Following the cryptographic developments seen in ZK, 2021 witnessed a significant product development in ZK programmability. ZK programmability means taking ZK beyond scaling, zkRollups, or zkEVM. The next step will bring something more powerful, leveraging the core capabilities of ZK for dapps, or what we call zkApps.

In 2021, O(1) Labs released an early version of Mina's zkApps. This was the first time developers could write ZK code using widely used languages like Typescript. O(1) just held the first workshop and hackathon for Mina's ZK smart contracts in December 2021, with more events planned for this year. At Mina, we see a tremendous opportunity to unleash the full potential of ZKP through ZK programmability for developers.

With SnarkyJS supporting simple ZK programming, developers have already been building with it, and the Mina to Ethereum zkBridge is forming, soon we will start to see all the ZK application examples mentioned above deployed on Web3.

Whether Mina launches the first wave of applications or the broader industry adopts ZK programming more widely, ZK will enter Web3 dapps in 2022.

Other zk Predictions for 2022 and Beyond

The era of ZK in the crypto space has begun, and it will have a significant impact on Web3. Here are some other things I believe we will see this year:

• As Web3 takes off, we will see an increasingly clear demand for privacy and security. ZKP will become the most promising tool enabling users to control their data and selectively share personal information. This will lead to the next large-scale migration of users to Web3 and further undermine Web2-based networks.
• ZK applications will first launch in the most obvious areas: voting and private identity management, with aggregation playing a significant role in this development.
• At least one zkEVM will release a beta version by the end of the year.
• At least one major tech company will announce significant developments related to ZKP—it's still too early for products, but to form teams or conduct significant research work.

Amid all this, we also see the overall timeline for the broader rollout of ZKP becoming a focal point. Looking back, I predict we will see it unfold under the following timeline:

• By 2020—The technological foundation has been laid.
• 2020—The underlying cryptography reached a functional tipping point.
• 2021—ZKP came into play, and it became clear how they would disrupt the field—see last year's predictions.
• 2022—As ZKP begins to become an important component that differentiates products, scales, and other aspects, disruption starts and takes off.
• 2023/2024—As ZKP becomes a major component of product growth, disruption unfolds fully.
• 2024/2025—The dominance of applications utilizing ZKP and ZKP-driven platforms.
• 2025/2026—Standardization of ZKP and ZKP-driven platforms.

Final Thoughts

As ZKP and cryptocurrency become mainstream for building a scalable, private, and secure Web3, there will be opportunities to build truly empowering technologies for users.

Fortunately, we see a willingness to execute products with value-driven goals in Web3. We have already seen crypto achieve feats such as the transition from proof-of-work to proof-of-stake. As cryptocurrency begins to impact the broader world, it will be exciting to see what else we can achieve. At Mina, we are thrilled to continue driving this participant-driven culture and building the future together with our community.