A Comparison of Layer2 Solutions and Products: Optimistic-Rollups, ZK-Rollups, ZKSpace, and More
Citing data by L2Beat, there are only the following 7 of all Layer2 networks having their TVL exceeding 100 million US dollars. Among them, Arbitrum, Optimism, and Boba Network adopted the Optimistic-Rollups technology, and dYdX, Loopring, and ZKSwap chose the ZK-Rollups technology.
Since the debut of the ZKSwap mainnet in early 2021, the platform has been running for 10 months in a safe and stable manner. After two mainnet iterations and updates of V1 and V2, it has become the first Layer2 DEX on Ethereum with impressive user volume and TVL, requiring zero gas fees and supporting unlimited token listing and customized platform fees. While the NFT and GameFi markets are of prosperity, we decided to upgrade our brand and introduce a full-featured ZK-Rollups-based Layer2 protocol — ZKSpace, supporting NFT minting and trading, the cost of which is nearly a tenth of that of Ethereum.
This article is a detailed comparison and analysis of the user experience of the Layer2 network based on different technology solutions, and further explains the advantages and characteristics of the ZKSpace protocol.
I. Optimistic-Rollups
Among 7 Layer2 networks with TVL exceeding 100 million U.S. dollars, three have adopted Optimal Rollup technology solutions, with which the plaintext data is sent to the on-chain contract in the form of calldata, and proactive fraud-proof is used to ensure the accuracy of the off-chain calculation. Optimistic-Rollups adopts the method of “Innocent until proven guilty” for the effectiveness of transactions. Optimistic-Rollups processes the transaction and feeds back results to Ethereum to store results on the basic chain finally. The disputing period ensures that any user monitoring state of Rollups can address inquiries when Rollups sequencer processes invalid transactions. This challenge will immediately trigger the dispute resolution process.
The advantage is that it is compatible with EVM, among which the Arbitrum network possesses the most market share. The DEFI protocol on the Ethereum mainnet can be easily migrated to the Arbitrum network. At present, dozens of Dapp covering different fields such as DEX, lending, insurance, and aggregation transactions have been deployed on Arbitrum network, TVL reaching 2.6 billion U.S. dollars.
Arbitrum network is indeed a Layer2 solution for the Ethereum mainnet. However, users, using Arbitrum, can almost enjoy a real “cross-chain” experience.
Users need to configure the Arbitrum network in MetaMask and deposit the funds on the Ethereum mainnet to the Arbitrum network wallet through the official cross-chain bridge before they can use it. In addition, it always takes 1–2 weeks to withdraw funds from the Ethereum mainnet due to the limitation of the challenge period of fraud-proof Optimistic-Rollups.
The biggest difference between Optimism and the Arbitrum network lies in the implementation of a fraud-proof mechanism, that is, after a transaction is completed, the resolution methods on both networks are different for the disputes caused by the state. Optimism uses single-round fraud-proof, that is to say, Layer1 will complete all transactions of Layer2 on-chain to verify the state root. This makes the fraud-proof instant, which is an advantage. However, its disadvantage is that, for each transaction, a state root needs to be generated on-chain, resulting in more costs and certain security risks.
However, Arbitrum, using multi-round fraud-proof, only needs to generate one state proof for a whole batch of transactions and put it on-chain. It has greater security than that of Optimism. But its disadvantage is that multi-round fraud-proof will take a longer time to complete and for users to exit from Rollup. In comparison, ZKSpace, adopting a proactive proof solution, can submit all transaction data to the Layer 1 mainnet at any time and list them on-chain for confirmation, which makes it accessible for users to withdraw assets successfully waiting for only 20–40 minutes.
The Boba network, a new network of Optimistic-Rollups’s technology solution, has just been launched on the mainnet. Similarly, users need to add and configure the Boba network in MetaMask first.
Because the Optimistic-Rollups solution is compatible with Ethereum smart contracts, The Boba network sets a single token mining pool of mainstream tokens on Ethereum mainnet and Layer2 through token incentive to absorb users’ assets through smart contracts. When users need to deposit or withdraw assets, they only need to deposit their assets in the contract of one layer, and the contract of another layer will automatically release the same amount of assets to users. In this way, users can deposit and withdraw assets in real-time without waiting for fraud-proof of Optimistic-Rollups during the challenge period. This is more user-friendly.
In general, Layer2 network based on Optimistic-Rollups is compatible with EVM, and thereby it can quickly migrate Dapp on Ethereum mainnet and reduce the gas fee of users’ transactions to a certain extent, which has more advantages in the medium and short term. However, it also has unsolvable defects. Due to potential fraud-proof, the timing of on-chain transaction processing will be delayed and the real experience of users is more like cross-chain operations. Besides, it takes 1–2 weeks for users to withdraw funds from Rollup to the Ethereum mainnet. The high challenge cost leads to the uselessness of the challenge mode. Compared with ZK-Rollups, its security is poorer and it has limited scalability and a higher gas fee.
II. ZK-Rollups
ZK-Rollups is proposed by Ethereum researchers and characterized in that all computing processes are completed off-chain and stored on-chain. The plaintext data in the computing is sent to the on-chain contract in the form of calldata, to reduce the storage cost. At the same time, the off-chain computing correctness is guaranteed by a zero-knowledge proof algorithm. With such designs, this solution can not only greatly increase TPS, but also reduce the cost of a single transaction. According to L2fee.info data, the Layer2 protocol, based on Optimistic-Rollups technology, can reduce the gas fee of Ethereum to about one-tenth, while the Layer2 protocol, based on ZK-Rollups technology can reduce more on this basis, which possesses much greater scalability and a better future.
Both dYdX, the high-profile decentralized contract transaction platform recently, and Immutable_X, a Layer2 NFT platform, are running on Starkware ZK-Rollups.
Among these platforms, dYdX, focusing on contracts and leveraged transactions have adopted StarkEx engine matching and on-chain settlement to realize the self-hosted asset (i.e., depositing/recharging to Layer2 network StarkWare is accessible). StarkEx products, used by dYdX, have adopted the Validium solution in which transaction data is not on-chain and the transaction mode is point-to-point matching with liquidity mainly provided by the market made by professional market makers. Except for the necessary deposit and withdrawal steps of the Layer2 network, dYdX, using the order book model, can offer users an excellent and friendly experience. Both for the transaction speed and market depth, its performance can be on a par with mainstream centralized exchanges. Recently, with its token incentives, it has also attracted a large number of users, its TVL ranking second and the transaction volume can also compare favorably with mainstream centralized exchanges. Among Layer2 contracts, it has become a well-deserved leading one.
However, Immutable_X focuses on Layer2 NFTs. Users can choose a zero-knowledge proof system based on Validium or on ZK-Rollups. Validium has improved the efficiency of system operation while sacrificing data availability and reducing the security of the zero-knowledge proof system; while the complete ZK-Rollups list all transaction data on-chain, which can ensure the same security as Ethereum Layer 1, but the cost is much higher. The NFT marketplace of Immutable_X has adopted the order-to-order model, in which users only need to deposit the funds of the Ethereum mainnet to Layer2 wallet, and then they can purchase the NFT in the mall. Users can experience excellent and rapid transaction speed with just a low cost when only buying and selling NFTs.
However, it is worth noting that:
- NFT of the current Ethererum mainnet cannot be deposited to Immutable_X, and if users need to withdraw Layer2 NFT to Ethereum mainnet, the mintable NFT smart contract of Layer1 must be prepared before its issuance. The NFT market on Immutable_X is more like a closed “Paradise”.
- NFT transaction fees must be paid in IMX tokens, and there is no other choice for users.
- On Immutable_X, users have poor freedom, that is they cannot create NFT independently, because the NFT issuance of NFT is only supported when the project party applies for cooperation.
- The Validium-based solution doesn’t put data on-chain so that its security is less than the ZK-Rollups solution which puts all data on-chain.
Loopring
Loopring’s Layer2 scalability solution is designed based on the ZK-Rollups solution and is also a long-history solution with practiced experience in the Layer2 field. Loopring supports token transactions in the order book and AMM modes, which can be chosen independently by users according to their personal preferences. Similar to other Layer2 protocols, users can enjoy market-making and transacting services with a low gas fee by simply recharging their assets to Layer2 from the Ethereum mainnet. From real experience, transactions on Loopring are confirmed rapidly, and the gas fee is as low as a small percentage of that of Uniswap on the Ethereum mainnet.
According to official information, Loopring will also provide NFT minting and transfer services of Layer2 in the future to help users mint NFT at a low price and a high speed. However, it has not been launched yet and the NFT trading market is still under preparation.
III. ZKSpace
Having been iterated through two mainnet versions of the mainnet, V1 and V2, ZKSwap has supported all functions of payment and DEX. With the launchl of ZKSpace, NFT-related Layer2 functions has been added and the overall Layer2 ecosystem has been enriched to contribute to the scalability of the Ethereum network.
As a full-featured Layer2 protocol based on ZK-Rollups technology, ZKSpace supports all token transactions on Layer2 while ensuring the consistent state of Layer1 and Layer2 by by packaging and aggregating transactions on the Layer2 network so as to maintain the same decentralization and security of the public chain mainnet. At the same time, all token transactions can be completed without any block confirmation on Layer1, TPS can be increased by multiple levels, and the gas fee can be reduced to one-tenth. At present, we have developed ZKSquare, ZKSwap, and ZKSea, which contain wallet, DEX, NFT, and other functions.
1. ZKSquare
ZKSquare is a Layer2 payment product based on the ZKSpace protocol, with which users can deposit any of their assets on the Ethereum mainnet to the Layer2 wallets, such as ERC20 tokens and NFT tokens. No fees will be charged by ZKSquare. As a Layer2 payment product, ZKSquare makes it accessible for users to complete fast and smooth transfers of ERC20 tokens and NFTs between different Layer2 wallets with rapid block confirmation and quite a low gas fee (0.5 USDT). Assets can also be withdrawn to Ethereum addresses at any time after 20–40 minutes of the on-chain transaction aggregation.
2. ZKSwap
ZKSpace contains the DEX function of the ZKSwap V2, that is, based on the Layer2 common wallet, users can experience fast transactions with a low gas fee and enjoy extremely rapid confirmation and trading. In addition, users can list LP Token to become a market maker to earn transaction fees from other users. On this platform, users can also list unlimited tokens independently. For instance, users can list any ERC20 protocol token to the ZKSwap platform for transactions, without any fees charged by the platform. The gas fee for all Layer2 operations is much lower than that of Ethereum.
We have adopted the ZK-Rollups solution in which 100% of transaction data will be put on-chain to ensure the same security as that of the Ethereum mainnet. ZKSwap has undergone two iterations, V1 and V2, and has run stably for nearly a year without any security incidents. We’ve also launched liquidity mining and transaction mining activities from time to time to incentivize users. The TVL of ZKSwap reached a peak of 2 billion U.S. dollars and the daily transaction volume reached tens of millions of dollars.
3. ZKSea
ZKSea is the first ZK-Rollups-based platform supporting NFT transfers between Layer1 and Layer2 as well as deposits and withdrawals on the Ethereum mainnet. Users can enjoy sufficient composability of the Ethereum ecosystem. In the NFT mall, users can list and trade NFTs freely. In the future, we will continue to iterate on and update the functions, such as auctions, blind boxes, etc. These are the infrastructures to support GameFi and Metaverse.
IV. Conclusion
The ZKSpace protocol uses ZK-Rollups technology and provides a set of decentralized Layer2 products, covering DEX, Payment, and NFT. ZKSpace has infinite scalability and supports super high TPS. For all token transactions on Layer2, the gas fee is as low as one-tenth of that on the mainnet. As well, users can experience rapid and real-time transactions with no block confirmation time. Such a function has greatly reduced the threshold for users to use blockchain applications. We have provided a common Layer2 wallet, ZKSquare, with which users can keep their assets at all times. The wallet has the same security as that of the Layer1 mainnet, and users can withdraw their assets to the mainnet Layer1 at any time.
Compared with Layer2 products using Optimistic-Rollups solution, ZKSpace has higher fund efficiency (the asset withdrawal speed is hundreds of times faster than that of others), lower gas fees (which can be further reduced by several times), and higher TPS with much greater security (its proactive proof is as safe as that of the Ethereum mainnet). As well, ZKSpace will have a brighter future. With increasing cryptocurrency users and fund volume, the Ethereum network will encounter more congestions. We believe that ZK-Rollups, which is compatible with Ethereum virtual machines, will be the ultimate form of Ethereum scalability solution. Currently, we are dedicated to the R&D of zkEVM and will launch it soon.
Compared with Layer2 products using the ZK-Rollups solution, ZKSpace has connected various operations on Layer2, becoming the first Layer2 complete protocol with functions of payment, DEX, and NFT. Users can independently list new assets on-chain, issue NFT, and conduct transactions with extremely high freedom. In the future, L2 Lab will continue to implement the interaction and update of the Layer2 protocol layer and support more transaction modes and protocol types. In addition, we will further improve processing performance and TPS, and open resources of the complete underlying protocol to the community, to establish a complete Layer2 DeFi and NFT ecosystem together with developers of blockchain applications. What’s more, based on the ecosystem development condition, we will deploy to other public chains (such as BSC and SOLANA) outside of Ethereum, and connect Layer2 funds on various chains, and therefore, users can finish rapid and low-cost cross-chain transactions on the funds.
About ZKSpace
The all-new ZKSpace platform is comprised of three main parts: ZKSwap, the innovative Layer 2 AMM DEX utilizing ZK-Rollups technology, payment service ZKSquare, and an NFT minting center and marketplace called ZKSea. With an all-new-look user interface, NFT support, unlimited token listing, smoother withdrawal, optimized efficiency, and multi-chain support, ZKSpace aims to implement EVM-compatible ZK-Rollups and bring the community more layer 2-based products in the near future.
