What are Zk-Rollups? An Analysis of Layer-2 Scalability Technology

Original Title: What are Zk Rollups? The Layer 2 Scalability Technique

Compiled by: GaryMa, Wu Says Blockchain

Abstract

• The low scalability of blockchain leads to slower speeds, higher transaction fees, and poor user experience. This issue can potentially be fixed through corresponding solutions such as Layer 1 (e.g., sharding) and Layer 2 (e.g., rollups).
• Layer 1 solutions aim to upgrade the blockchain itself, while Layer 2 solutions create a framework on top of the existing chain.
• Rollups are a popular Layer 2 solution that bundle transactions off-chain for faster computation.
• Zk-rollups are a rollup implementation that uses zero-knowledge proofs.
• Zero-knowledge proofs allow verification without revealing underlying data, ensuring transaction privacy and security.

The Race for Blockchain Scalability

As cryptocurrencies gain widespread adoption, addressing the scalability issues of blockchain networks becomes crucial. Congested blockchains lead to slower speeds and higher transaction fees. To tackle this problem, we have two main frameworks: Layer 1 and Layer 2 solutions.

• Layer 1 Solutions: These solutions directly improve the underlying infrastructure of the blockchain to enable the entire system to achieve higher throughput. Sharding is a typical example. By dividing the blockchain into different shards, it increases the system's capacity and allows transactions to be processed simultaneously.
• Layer 2 Solutions: These solutions operate on top of the underlying blockchain. In Layer 2, transactions are processed off-chain and submitted together to the underlying chain. Key technologies include state channels, sidechains, and rollups. Zk-rollups are a form of rollups that leverage zero-knowledge proofs.

What are Zk-Rollups?

To understand zk-rollups, it is important to grasp rollups and zero-knowledge proofs.

What are Rollups?

Rollups allow blockchains to bundle transaction data together and process it off-chain. After processing, the final results are submitted to the underlying chain. Processing so many transactions simultaneously eliminates the possibility of blockchain bloat and enables faster, cheaper computation. Rollups are divided into two categories: Optimistic and Zk-rollups.

• Optimistic Rollups: Optimistic rollups operate under the assumption that all transactions they bundle are valid. Before these transactions are submitted to the blockchain, they undergo a waiting period. During this waiting period, the network raises disputes to challenge suspicious transactions. Optimism, Arbitrum, and opBNB are examples of Optimistic rollups.
• Zk-Rollups: Unlike Optimistic rollups, zk-rollups verify each transaction through zero-knowledge proofs. Although more complex to implement, zk-rollups aim to bypass the dispute resolution period seen in Optimistic rollups, theoretically processing transactions faster.

Now, let's understand zero-knowledge proofs.

What are Zero-Knowledge Proofs?

Zero-Knowledge Proofs (ZKP) are cryptographic tools that allow one party (the prover) to prove to another party (the verifier) that a statement is true without revealing any details about that statement.

ZKP must possess three characteristics:

• Completeness: If the statement is true and both parties are honest, the proof will always confirm its truth.
• Soundness: An untruthful prover should not be able to convince an honest verifier that the false statement is valid in a negligible number of cases.
• Zero-Knowledge: The most definitive characteristic. At the end of the process, the verifier only learns the validity of the statement without gaining any insight into its content.

So, how does ZKP work? The method can be divided into three steps:

• Witness: In the first phase, the prover provides the verifier with a piece of secret information, or "witness." The idea here is to prove to the verifier that the prover has access to specific data without explicitly mentioning it. The witness establishes a set of questions about the information that only a legitimate prover can answer.
• Challenge: In this phase, the verifier issues a challenge to the prover by selecting random questions from the set.
• Response: The prover successfully answers the verifier's questions to prove their credibility.

Now that we know what rollups and ZKP are, let's put them together to understand how zk-rollups work.

How do Zk-Rollups Work?

Zk-rollups have two core components:

• On-chain Smart Contracts: Smart contracts define the operational rules of the zk-rollup protocol. It includes the main contract and the verification contract. The main contract stores rollup blocks, tracks deposits, and makes important updates. The verification contract verifies the generated ZKP.
• Off-chain Virtual Machines: These machines are responsible for executing transactions in Layer 2. The off-chain virtual machines operate independently of the Ethereum main chain.

Zk-rollups are closely intertwined with the Ethereum blockchain, although they exist at a unique layer. They do not overwhelm Ethereum with the details of every transaction. Instead, they cleverly provide bundled summaries, ensuring that the underlying chain remains clean and efficient.

Advantages and Disadvantages of Zk-Rollups

So, what are the benefits of using zk-rollups? Let's take a look.

Advantages of zk-Rollups

• Increased Throughput: Zk-rollups shift transaction execution from the underlying chain to a more efficient computing environment. Since transactions are not processed on-chain one by one, it improves overall throughput.
• Reduced Congestion: By minimizing blockchain bloat, zk-rollups contribute to efficient Layer 1 operations. Additionally, full nodes only need to store zero-knowledge proofs instead of the entire data.
• Lower Fees: By reducing congestion, zk-rollups help lower overall costs.
• Security Measures: Zk-rollups include security measures that allow users to withdraw funds in case of issues within the rollup network, which is a clear advantage over sidechains that may compromise funds during network failures.
• Faster Transaction Challenge Period: With zk-rollups, only the validity proofs within the rollups need to be verified, speeding up the transaction challenge period.

Disadvantages of zk-Rollups

• Complexity: The biggest drawback of zk-rollups is their inherent complexity. They are more complex to implement than optimistic rollups.
• Limited by Underlying Chain: Despite their efficiency, zk-rollups are still constrained by the limitations of the underlying base layer.
• Liquidity Fragmentation: Any Layer 2 solution leads to fragmentation of liquidity within the ecosystem. Shallow liquidity in underlying chain protocols may lead to potential issues.

Optimistic Rollups vs Zk-Rollups

Conclusion

Scalability is often touted as the "holy grail" of blockchain technology. If the system cannot operate at its best, there is little point in using it. Rollups, including optimistic and zk, provide an elegant solution to this long-standing problem. Zk-Rollups promise faster speeds, less traffic, and robust security with their unique approach. Yes, they come with complexity, but their potential is immense. For anyone concerned about the future of digital currencies, understanding zk-rollups is essential. As we continue to push for better blockchain performance, now is the time to familiarize ourselves with zk-rollups and their promise for the future.