LuckyHash Analysis: Why is zkSync in Leading Position of Ethereum Layer-2 Scaling Solution?

Ethereum’s network congestion and high transaction fees have created a mature market for its Layer-1 competitors and EVM compatible Layer-2 projects. As a result easy deployment of decentralized applications using much of the same infrastructure, these solutions have been embraced by users who had been priced out of Ethereum mainnet. These solutions regard themselves as early scaling incumbents.

However, such solutions often face severe security tradeoffs. The sidechain technology relies on separate consensus mechanism (compared to the mainnet), so it introduces the problem that validator groups can jointly steal or freeze user’s funds. These risks may not be significant right now, but they will gradually accumulate over time. A successful attack is enough to cause a devastating impact on enterprises and users.

For example, a system like zk-Rollup that uses “validity proof”，can fundamentally eliminate the possibility of invalid or fraudulent transactions, which greatly reduces the value that an attacker can extract. To be precise, zk-Rollup is the only scalability solution that relies on cryptographic security guarantees. It can remain robust no matter how much value is locked in the system.

Therefore, many people regard zkRollup as one of the most promising Layer-2 scaling solutions, and Layer 2 sidechain has been considered as the “Holy Grail” of scaling on Ethereum. Why?

zkRollup have an interesting feature: the more transactions they process, the cheaper they become. It subverts the trilemma of “Decentralization”, “Security”, and “Scalability” of blockchain.

One of the pioneers of zk-Rollups is zkSync. Though they are in the early stages, they are very likely to be fully productive on the mainnet soon. zkSync is one of Ethereum’s most promising scaling solutions using zkRollup technology. As the crypto economy tends to rollups and zkSync shifts to decentralized governance, the year 2022 may be an explosive year of the Layer 2.

So what is zkSync?

Many people regard zkSync as a Layer 2 (L2) scaling solution because its purpose is to make Ethereum gas fee inexpensive and transactions almost instantaneous.

Technically speaking, zkSync is built by Matter Labs, and belongs to a class of L2 known as zkRollups. This means that zkSync uses a “zero-knowledge” cryptographic proof, posting data batches “on-chain” through zkSync, and at the same time executing transactions externally to the Ethereum base layer, thereby effectively batching and verifying Ethereum transactions.

In addition, the design of zkRollup led to something quite magical: through network effects, zkSync became cheaper for users as activity on its network increases. This is in sharp contrast to traditional blockchains, which become more expensive as the demand for their blockspace grows. Therefore, a resource like zkSync is very promising as a prospect for scaling Ethereum.

According to analysis website L2BEAT, zkSync is the 10th largest L2 locked per total value, with a TVL of $63.42M. As zkSync continues to develop in features and functions, and a growing number of users begin migrating to zkRollups for a better user experience and cheaper transactions, this number is expected to grow even further.

zkSync has reached several key milestones in its ecological development. The first is to release zkSync 1.x, which provides native minting, transfers, and atomic swap for NFTs. In September 2021, zkSync 2.0 was also launched on public testnet, providing EVM compatibility and code transplation from Solidy /Vyper.

On January 7, 2022, BitDAO and Matter Labs jointly launched a new proposal on “zkDAO Endowment”, proposing to develop and fund the community-owned zkSync ecosystem accelerator, and provide 200 million USD to support the zkSync ecosystem and develop BitDAO and all DAOs. The proposal aims to promote the scalability of Ethereum and adopt the Layer-2 scaling solution zkSync.

Therefore, both in terms of technology and ecological applications, zkSync has a relatively mature development and huge potential for futher development.

Simultaneously, zkSync officially plans to launch its token and start to introduce the incentive mechanism of the token economy into the project for sustainable operation of zkSync. Undoubtedly the upcoming zkSync Token will attract more liquidity and practicality for zkSync. However, Matter Labs stated the launch of its tokenomic model might take several months. If you are interested, keep an eye out.

In conclusion, the crypto economy is moving in the direction of zkRollups. zkRollups may bring Ethereum-based transactions to millions or even billions of users in the next few years. Although the zkRollup ecosystem is in early stage, zkSync is an early bright star in this application scenario!

— — — — — — — — — — — — — — — — — — — — — — — — — — — —

In addition to zkSync, there are other platforms that allow users to obtain considerable income and allow their encrypted assets to appreciate and earn interest. The Crypto Savings Fund launched by LuckyHash offer an APY of up to 90%. In order to provide platform users with more product discounts, LuckyHash has launched a Saving Coupon Campaign [2022/01/10 10:00 -01/18 10:00 (UTC+8)]: Users can manage crypto with LuckyHash and obtain APY up to 90%, let’s share 20,000 USDT cashback prize pool.

To participate:

Purchase LuckyHash saving account products, and get corresponding crypto back when the cumulative amount reaches a certain level. Details as shown below:

20,000 USDT is in the prize pool in total, first comes first served.