The Best Ethereum Layer 2? ZkSync Simplified

One big issue the Ethereum Network face is limited scalability.

The blockchain trilemma states it’s difficult to have the three essential pillars(Decentralization, Scalability, and Security) existing simultaneously in a network.

Layer 2 solutions' primary purpose is to solve this exact problem. But even though progress has happened in this category there are still improvements to be made.

This is where zkSync becomes relevant. By making use of the cutting-edge zero-knowledge validation mechanism, the platform aims to bring scalability to Ethereum without sacrificing security.

If you’ve been around the crypto side of the internet for a while you probably already heard of them. But:

• What exactly is zkSync about?
• If there are several L2s running on Ethereum already what’s the need for another one? What makes zkSync different from the existing alternatives?
• How to potentially profit from the network’s growth and token launch?

In this article, we’ll go deeper into what zkSync fundamentally is and try to answer the questions above.

What is zkSync?

ZkSync is basically a Layer 2 solution aiming to solve Ethereum’s scalability problem.

But the platform differs from sidechains like Polygon and Optimistic Rollups like Arbitrum and Optimism. We’ll go over the comparison between Rollups, but first, let’s understand what a ZK Rollup (the underlying technology of zkSync) is.

ZK stands for zero-knowledge, which essentially means the validation of the transaction occurs without revealing the underlying data, this is why it’s called “zero-knowledge”. The “Rollup” part is because the platform does so through “rolling up” batches of transactions all at once instead of going over transactions one by one like the mainnet does.

Vlada Karpovich via pexels

This is a more effective solution since it verifies batches of transactions and then sends proof of validity to the L1. The proof is called ZK-SNARK (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge).

By making use of this process zkSync can offer up to a 100x increase in terms of scalability in virtually all types of applications when compared to the L1.

A highly simplified version of the process:

1. zkSync “rolls up” transactions into batches.
2. zkSync verifies the validity of those batches through mathematically proven algorithms. (This is done off-chain, the reason why it’s substantially faster and cheaper).
3. zkSync sends the cryptographed proof of validity to Layer 1.

According to the docs, they will be able to scale the network up to 100–200x of mainnet capacity.

Gasless meta-transactions

An additional cool feature of the zkSync platform is “gasless meta-transactions” where the fees can be paid in the token being swapped.

Easy to Integrate with other dApps

Another key trait of zkSync is that applications can migrate to their ecosystem with almost no need to rewrite any code.

As stated on their website, several applications like 1Inch, Balancer, and Yearn are already building on their platform. 150+ projects have already registered to deploy on zkSync 2.0.

And because zkSync is general-purpose EVM compatible, it facilitates the migration process of dApps.

Also important to mention zkSync will have its own token and the airdrop is confirmed.

How does zkSync differ from the alternatives?

At this point some may be asking: if there are already Rollups like Arbitrum, Optimism, Loopring, and Starkware, operating and gaining a lot of traction(specially Arbitrum recently), what’s new and unique about zkSync and how does it compare to the alternatives?

In order to answer this question we need to dive deeper into the technology of Optimistic Rollups and make a comparison with what zkSync has to offer.

Optimistic Rollups

Optimistic rollups operate based on a fraud-proof mechanism.

Simply put, it means they don’t send validity proofs to the mainnet as ZK Rollups do. Instead, they assume off-chain transactions are valid and set a time period for watchers to submit challenges if they notice something is wrong with the batch of transactions.

Those watchers are responsible to monitor the Optimistic Rollup operator to evaluate if he is being honest or not.

This is why the name is “optimistic”. They take the batch of transactions as valid until there is a fraud-proof to justify the opposite.

In summary, those are the advantages of a zkRollup versus an Optimistic Rollup

1. ZK Rollups offer more security

ZK Rollup relies primarily on cryptographed proofs of validity instead of watchers, thus making them safer.

2. ZK Rollups are cheaper

Because ZK Rollups deal with most of the data off-chain and only have to periodically communicate with the L1 to send the validity proofs they can offer extremely low fees.

3. Better Withdrawal times

While withdrawal takes up to 1 week on Optimistic Rollups because of the challenge verification period, the process is done in a matter of minutes in ZK Rollups.

ZkSync 2.0 is considerably favored when compared to all the other existing layer 2 solutions, but still, we need to see the platform working in real-case scenarios when the Full Alpha is launched.

According to Vitalik Buterin, even though optimistic rollups are better than zkRollups in specific areas, ZK Rollups will win in the long term.

Here is an excerpt from his article on Rollups

In general, my own view is that in the short term, optimistic rollups are likely to win out for general-purpose EVM computation and ZK rollups are likely to win out for simple payments, exchange and other application-specific use cases, but in the medium to long term ZK rollups will win out in all use cases as ZK-SNARK technology improves

In case you’re looking for a more in-depth comparison with options that weren’t mentioned here like sidechains, channels, plasma, etc, I recommend reading this article.

ZkSync Roadmap

ZkSync has already been out for a while but the hype really comes from the zkSync 2.0 launch.

The key difference is that unlike previously, zkSync will now be EVM compatible, which means it’ll support Solidity and Vyper code and allow existent dApps to easily migrate.

It will also introduce new features such as account abstraction.

The milestones are:

• Baby Alpha — Started Oct 28th. (Only the zkSync team will have access to the platform to test features)
• Fair Launch Alpha — Q4 22. The platform will be open for external teams to start migrating applications and test the environment.
• Full Alpha — Q4 22/Q1 23. The actual launch of zkSync for users.

Ethereum Layer 1 optimization vs Layer 2 solutions

There are two ways to scale a blockchain:

1. Upgrade the underlying Layer 1.

2. Build Layer 2 solutions on top of the primary blockchain.

Simultaneously with the development of L2s, the Ethereum Organization is investing a lot to make the underlying Network better.

Efforts like The Merge, future implementations like Sharding, and the planned next 4 upgrade phases (The Surge, The Verge, The Purge, The Splurge) are great examples.

And while there is no way to predict how things will play out exactly I’d assume both L2 and L1 developments will complement each other.

While the best tech is likely going to dominate the progress will happen gradually. Only the future will tell which products are going to stay and which are going to become obsolete.

In my opinion, those who are able to spot game-changing narratives early will make life-changing gains fast.

How To Profit From ZkSync Token Launch

The two ways to earn money with zkSync Token Launch are:

• Qualify for the Airdrop
• Simply buying the token itself

One question I’d raise is what will be the token utility since the fees in the ecosystem can be paid in different tokens.

Conclusion

Layer 2 solutions are the gateway for fast expansion and mass adoption of the Ethereum Blockchain.

Additionally, the implementation of Ethereum L1 upgrades will be vital in the development of the network. The combination of L2s and L1 Upgrades (like Sharding for example)is key for the final vision of Ethereum.

There are already many layer 2 solutions functioning but ZK Rollups offer key advantages when compared to the alternatives and even Vitalik himself acknowledges the fact.

The growth of the Network can be a phenomenal opportunity for users, developers, and investors.

The topic of Layer 2s and Rollups is complex. The technology of Rollups is exciting but it’s important to be aware that it is early and there is a lot to discover and improve.

There is a lot I didn’t cover so for those who want to develop a deeper understanding of how the tech works I’d encourage to start by reading zkSync docs and the articles mentioned in this post.

Key Takeaways

• Zk-Rollups are here to bring more scalability to Ethereum without giving away security.
• In theory, zk-Rollups have expressive advantages when compared with other L2s(withdrawal times, security, gas prices) but we need to see how the EVM compatible ZKPs work in practice and look at real data to compare.
• Layer 1 upgrades combined with Layer 2 solutions can help accelerate the expansion of Ethereum and crypto.
• ZkSync makes it easy for dApps to onboard their ecosystem because it’s EVM compatible. Several protocols are already being hosted on zkSync.