State cost reduced by 5200 times, does ZK Compression allow Solana to outperform Ethereum?

Author: Luccy, BlockBeats

Last week, Solana launched a new technology called "ZK Compression," which is said to reduce Solana's state costs, allowing Solana to enhance network scalability without relying on L2. This is like slapping the words "I won" right in Ethereum's face.

Solana co-founder Anatoly Yakovenko also emphasized that "all execution happens on L1 and is ordered by L1 validators." Justin Bons, founder and CIO of Cyber Capital, believes that "this clearly puts Solana far ahead of ETH in terms of actual L1 scalability, addressing one of Solana's biggest survival issues."

Has the Ethereum community "broken defense"?

The blockchain faces a "trilemma," meaning that a distributed network struggles to simultaneously achieve decentralization, security, and scalability. To improve scalability while maintaining the first two, Ethereum chose to outsource its execution layer operations to L2.

From the initial plasma to the current rollup, L2 has indeed solved Ethereum's scalability problem, making Ethereum a "universal asset." However, this choice has also brought about unexpected chaos for Ethereum, as L2 gradually becomes fragmented, weakening Ethereum's own value capture capability. On June 29, Ethereum's mainnet gas fees even dropped to 1 Gwei.

The recent debate between Ethereum and Solana has also pointed fingers at L2, which can be seen as a gamble for Ethereum. However, this dilemma has been resolved by Solana, and Ethereum believers naturally find it hard to accept this reality, questioning the "L1 nature" of ZK Compression.

In Ethereum's L2 solutions, the Validium mechanism is quite similar to zkRollup, where all transaction validity is enforced using zero-knowledge proofs, with the main difference being that in zkRollup, data availability is on-chain, while Validium keeps it off-chain.

Because of this, when Mert Mumtaz, CEO of Solana's ecosystem development platform Helius, stated that ZK Compression's data is kept off-chain, the Ethereum community regarded it as validium. Among them, CEHV partner Adam Cochran firmly stated that ZK Compression is Solana's L2 solution, and he believes "one day, the Solana crowd will realize that what they are building is a very good rollup based on L2 functionality/effectiveness, rather than an entire chain."

Even though Anatoly emphasized that the technology "all execution happens on L1 and is ordered by L1 validators," Adam still insists that ZK Compression cannot be L1.

The Solana community responded with a meme, mocking Ethereum believers for not having done serious research yet claiming to be experts. Mert even provocatively named ZK Compression as ZK validium.

Solana's airdrop cost reduced by 5200 times

ZK Compression is a blockchain scaling solution jointly launched by Solana's ecosystem development platform Helius and Solana's privacy project Light Protocol. According to Helius CEO Mert Mumtaz, ZK Compression will operate directly on L1 without the need for L2, significantly enhancing Solana's network scalability, "and taking a step towards building a financial computer—a unstoppable, global, light-speed synchronized atomic state machine."

According to ZK Compression documentation, this technology is a new primitive built on Solana that enables developers to build applications at scale. Developers and users can choose to compress their on-chain state, reducing state costs by several orders of magnitude while maintaining the security, performance, and composability of Solana L1.

ZK Compression works through a process called state compression, allowing developers to use Solana's cheaper ledger space instead of the more expensive account space to store certain types of data. The "hash" or "fingerprint" of off-chain data is stored on-chain for verification using "sparse state trees."

A purely technical explanation may be overly complex; simply put, this technology reduces Solana's state costs.

In Solana, technicians face two costs—computational costs and state costs. Currently, Solana already has cheap computational power, but state is expensive. Allocating accounts, paying rent, and scaling with users have proven to be significant obstacles for Solana developers, and ZK Compression addresses this issue.

Mert used airdrop costs as an example, assuming an airdrop to 1,000,000 users, where the state cost dropped from over $260,000 to $50, a reduction of 5,200 times.

To make the L1 nature of this technology more convincing, Mert called out Ethereum founder Vitalik on Farcaster, asking him to comment on the technical principles of ZK Compression. Vitalik responded seriously, stating that the technology resembles a stateless client architecture.

Vitalik interpreted ZK Compression into three key points: first, you have a new account class, for which only the hash of its state is stored on-chain; second, to interact with these accounts, a TX must be written that specifies the pre-state hash and post-state hash of N accounts and provides a validity proof (assuming this means ZK-SNARK); third, the new state must be public (this is reasonable; otherwise, you could randomly send money to someone, and their account would not be accessible, which could circumvent this, making it a UTXO system, but that would be a significant limitation).

In addition to interpretation, Vitalik also raised questions about the documentation, one being the 128-byte validity proof mentioned in the document, and the other whether the public content includes transaction content.

Subsequently, Vitalik posted again expressing confusion, believing that the numbers claimed by ZK Compression are like if each was done individually, the overhead of verifying SNARK would be higher than the cost of doing some small actions and hash operations (e.g., token transfers). The benefits of ZK rollup come from "one" SNARK wrapping "many" transactions.

However, Vitalik's questions went unanswered, and his initial characterization of ZK Compression as a "stateless client architecture" boosted the confidence of Solana supporters, who believe this technology is indeed L1.

Will rollup be the perfect partner for Solana?

Solana has always been searching for value for its network. The valuation logic of various altcoins emerging from the last bull market does not completely resemble that of Bitcoin and Ethereum; due to cheap block space, corresponding token prices are hard to rise significantly. Yet Solana continues to focus on compression technology, constantly reducing its costs, which poses a significant challenge for the appreciation of SOL.

Even considering Moore's Law, even if hardware continues to improve performance and Solana optimizes for this hardware advancement, it does not necessarily mean Solana can meet global demand. However, Solana will manage better than other chains under the reliance on composability and low latency.

Unlike Ethereum, Solana's mainnet does not intend to become a "B2B chain"; it has always been and will forever be a consumer chain. Building large-scale distributed systems is extremely challenging, and Solana has the potential to become the most valuable shared ledger for global transactions.

As for rollup, Solana's rollup will largely be abstracted for end users.

Ideologically, Ethereum's rollup is top-down, meaning the Ethereum Foundation and leaders decide that the best way to scale is through rollup, then start supporting various Layer 2 after the CryptoKitties incident. In contrast, Solana's demand is bottom-up, coming from application developers with significant user adoption rates. Therefore, most current roll-up approaches are marketing-driven, more narrative-driven than user demand-driven. This is a significant difference that may lead to a different rollup future from Ethereum.

However, ZK Compression has enabled state compression for Solana, combined with Firedancer, multiple concurrent leaders, asynchronous execution, and an ecosystem of thousands of developers, which undoubtedly gives Solana a real opportunity in crypto.