zkSync is a Layer-2 scaling solution (trustless protocol) that grants quicker and inexpensive payments compared to Layer-1 protocols on Ethereum, which are boosted by zk-Rollup technology.

A specific advantage is that it uses zero-knowledge proofs and on-chain data availability to secure users’ funds as safe as they never left the mainnet. Layer-2 (L2) solutions move most activity from Layer-1 (L1) and still inherit its security and conclusiveness.

This article explores the zk-Rollup technology, how zkSync works, why it matters, and its features.

What is zkSync? A Layer 2 Scalable Solution

A lot has been written recently concerning breaking down barriers to mainstream crypto adoption. This can be done through various implementations all to greatly improve users’ experience or various on- and off-ramp solutions to increase global accessibility to the crypto ecosystem. With that in mind, the goal is to achieve satisfaction by providing end users with as many ways as possible to engage with the crypto world.

Ethereum scaling solution providers believe firmly that cryptography and blockchain are essential technologies for protecting and fostering freedom globally, and have made continuous L-2 scaling solutions that birthed a way to make the dream a reality for all crypto users across the space. Considerably, this belief has brought about a rapidly increasing number of scaling solutions, each offering a tricky promise to be trustless, secure, economical, and easy to use. These existing scaling solutions have had to compromise on one or more requirements.

zkSync stands out as a remarkably mainstream scaling technology, implementing innovative solutions in security, performance, and usability to Ethereum scaling. It is explicitly designed to make it the most enjoyable platform on Ethereum for end-users and builders. With the combination of cryptography and on-chain data availability, zk-Rollup (the core technology of zkSync) is the only L-2 scaling solution that doesn’t require any operational activity to keep its users’ funds safe.

Zk refers to zero knowledge, while rollups stand for smart contracts. Smart contracts roll up a slew of transactions off the main layer and club them into a single transaction.

A Quick Snippet into Rollups

Rollups are a general-purpose scaling solution that maintains its security level by keeping in line with the Layer One (L1) consensus and security protocol model of the mainchain, in this case, Ethereum. For these reasons, rollups have become the more popular choice for scaling Ethereum. The basic idea behind a rollup is not very different from its other Layer Two (L2) scaling solution, off-loading work from the mainnet to a sidechain that does all transaction computing and passes the finalized transaction hash back to the L1 chain for verification.

Naturally, Rollups L2 lie on the general concept of only executing a transaction off-chain, but always reporting data about it on the main chain; in practice, while channels and side chains need to report the “summary” of a set of transactions with just two of them on the blockchain, Rollups Every off-chain state update will broadcast a smaller amount of data (concerning the usual size of on-chain transactions) for every transaction.

Who are the Founders of zkSync?

The popular zkSync has been live since September 2020 and was developed by Matter Labs (headquarters in New York), founded by Ukrainian Alex Gluchowski and Russian Alexandr Vlasov in 2019. It launched its first publicly available zk-Rollup prototype the same year. With Matter Labs known for its amazing technological innovations, the company has successfully raised $50 million as part of its Series B financing round while receiving funding from the Ethereum Foundation and top-tier investors, such as Union Square Ventures. The company is famous for building out a sophisticated Rollup product.

How Does zkSync Work?

zkSync is an open-source scalability solution called rollups. More specifically, zkSync is a zk-Rollup. The ZK is an acronym for zero-knowledge, a cryptographic word for one party being able to prove to another that something is true, without leaking any other information.

Let’s break down how the zk-Rollup operates to understand how a zkSync works (and why it is different).

The Basic Operations: zkSync Technology

Zk-Rollup

The zk-Rollup is one of the two types of Rollups. In the case of ZK-Rollups, a sequencer node batches hundreds of rollup chain transactions, generate a SNARK (succinct, non-interactive argument of knowledge) or STARK (succinct, transparent argument of knowledge) proof, and then posts these transactions to Layer-1.

These proofs, known as validity proofs, cryptographically validate the transactions before their state gets posted to the Ethereum Mainnet. Even though there are many components to a typical Ethereum transaction, they can all be represented in a unique transaction hash without revealing the transaction data.

Maximum Throughput

The consensus mechanism employed by a blockchain platform determines a decentralized protocol’s transaction throughput. (Throughput is a measure of how many actions are completed within a given time frame). Since the upgrade on Feb 9, 2021, that brought the support of recursion to zkSync on mainnet, protocol throughput is limited essentially only by the need to publish state changes for every transaction via call data Ethereum, to ensure data availability.

Transaction Finality

Transactions in zkSync reach the finality of Ethereum once the SNARK proof of the zkSync block is generated and accepted by the smart contract. (Transaction finality refers to the moment when parties involved in a transaction can consider the transaction to be completed.) Transaction finality can be either deterministic or probabilistic.

Instant Confirmations

Transactions submitted to zkSync by users are instantly confirmed, and instantly displayed to the receiving party in the UI and API, and the transferred assets can immediately be used to make further transfers. A consensus run by the validators provides a subsecond confirmation to the user that their transaction will be included in the next zkSync block, signed by a supermajority of the consensus participants.

Congested Mainnet

The zkSync L2 solution has been properly designed to thrive under congested networks, which is one of its many advantages. Transfers made into or taken from zkSync are completely unaffected by L1 censorship.

Also, it is doubtful that zkSync’s regular operation will be interfered with. The validator’s node is set up to automatically raise the gas price to an above-average level to prioritize mining zkSync blocks. Users of zkSync will be least impacted because the cost per transaction is less than one-hundredth of the cost of a comparable plain transaction on the L1.

Easy Steps to Use in ZkSync

• Connect your browser-based wallet to the zkSync wallet.
• Fund your account and activate it.
• Transfer funds to another zkSync account (optional).
• Explore the zkSync ecosystem.

ZkSync Ecosystem

Source: ZK Daily

Speaking of the ecosystem, zkSync has a buzzing array of over 100 projects ranging from DeFi to NFTs that are currently building on it.

These projects would simultaneously launch after the zkSync full launch. At this rate, it could be the largest layer 2 launch ever, as the team noted.

The team’s decision was to create an ecosystem that could yield economic value by giving various projects and DAPPs a good foundation.

ZkSync Bridgehub

zkSync Bridgehub is a cross-chain bridge based on zkSync, designed to unlock interoperability among all ZK Stack chains. It allows users to efficiently transfer assets and integrate liquidity across ZK Stack chains.

Technological Innovations

1. P256Verify

• This feature supports hardware signature verification, enabling users to securely and easily sign transactions using commonly used hardware devices, such as Apple’s Secure Enclave processor or Android Keychain. This enhances wallet security and simplifies the signing process without recording private keys or installing additional wallet software, thereby improving the user experience.

1. ecAdd, ecMul, and ecPairing Precompiles

• These precompiles support developers in creating ZK dApps that can verify proofs on zkSync Era.
• Precompiles improve transaction efficiency and security, providing a better development environment for developers.

Use Cases

1. Cross-Chain Asset Transfer

• Bridgehub enables users to efficiently transfer assets between different ZK Stack chains, facilitating increased asset liquidity and transaction efficiency.

1. Liquidity Integration

• Bridgehub can integrate liquidity across different ZK Stack chains, allowing users to trade assets efficiently across various chains. This helps enhance asset liquidity and transaction efficiency.

Future Development

1. Support for More Asset Types

• Bridgehub will support cross-chain transfers of a wider range of asset types, including tokens, NFTs, and other asset classes.

1. User Interface Optimization

• Bridgehub will optimize its user interface to make it easier for users to utilize the cross-chain bridge.

1. Security and Reliability

• Bridgehub will continue to enhance its security and reliability to ensure the safety of users’ assets.

Bridgehub represents a significant upgrade for zkSync, further enhancing its performance, security, and functionality. It aims to provide a superior cross-chain experience for both users and developers.

EVM Compatible

Currently, there is general support for EVM although it poses a great risk for zkSync as a result of its complexities since general EVM is still in its developmental stage. These complexities, alongside the difficulty faced in generating proof, are a significant source of pain points during transaction processing. zkSync V2 proves to be 99% EVM compatible with Solidity and Vyper needing to first compile to Yul, an intermediate language, before compiling down to zkEVM bytecode through LLVM.

Additionally, zkSync supports their ZKP-optimized Rust-like language, Zinc, which compiles directly to bytecode using LLVM. However, Zinc is currently not Turing complete, and its development has halted since September 2021 due to zkSync focus on Solidity compatibility.

Comparison with Other L2 Solutions

Layer-2 Chainz like Polygon, Optimism, Arbitrum, and Immutable X aims to scale Ethereum. Each solution offers remedies for any or a few of the key features like scalability, security, throughput, gas fees, and functionality. Not one single solution is broad enough to cover all. However, rollups are an attempt to enhance all these features.

Layer-2 Rollups

As mentioned, zk-Rollup is a layer-2 scalability solution that facilitates faster validation of transactions in Ethereum at a cheaper rate. It simply fuses an array of layer-2 transactions to execute them off-chain at a go and sends them on Ethereum’s blockchain as a single transaction.

Optimistic Rollup improves scalability, as they don’t do any computation by default. After a transaction, they must inform the mainnet of the new state. Optimistic Rollups optimize transactions by reducing congestion of the base lawyer and slashing the gas cost. These rollups publish little information about transactions on-chain and transactions are considered automatically.

Like Optimistic transactions, zk-Rollups batch transactions to execute them off-chain. However, there is a difference. Instead of assuming the validity of transactions until proven otherwise, zk-Rollups use validity proofs for instant proof of whether the transactions are valid. The technology’s complexity and ability to execute arbitrary code make developing Ethereum Virtual Machine (EVM)-compatible zk-Rollups challenging.

What are the Features and Benefits of ZkSync?

Low Gas

Up to 1/100 of L1 gas & cheaper than using optimistic rollups: Since transactions are bundled up, users share the gas cost among themselves. If enough users band together, this allows gas fees to amount to just a few cents. ZK rollups are much cheaper, opening more opportunities for users to explore several crypto use cases because it’s cheap to send to on-chain without signatures.

High Speeds

2000+ transactions per second (tps) compared to 14tps on L1. Withdrawals take a longer time on Optimistic rollups than on ZK rollups. This is a result of some settings that cannot be altered without a significant decline in security. However, liquidity providers often solve this with their huge idle liquidity. And then, to reward them for their effort, they are charged a fee to go past the delayed waiting time.

Security

Secured by the main Ethereum blockchain: Despite being decentralized, zkSync maintains main net security since the validity proof is stored on Layer 1 without any reliance on third parties. This allows increased scalability while maintaining decentralization. zk-Rollups offers many interesting features that attract users more than Optimistic rollups. It has proactive cryptographic security. Unlike Optimistic rollups, ZK removes dependence on users with its cryptographic proofs (Mathematical Models).

Scalability

In terms of expanding the network, Optimistic rollups are much more time-consuming when validating transactions, as they depend on smart contracts at layer 2, which shows how scalable the zk-Rollups are.

Platforms

zkSync and the largest crypto stablecoin, Tether, also employ zk-Rollups to lift the congestion on the main chain. Meanwhile, Optimism uses optimistic rollups to achieve a cheap layer-2 scaling system on Ethereum and Arbitron.

Tokenomics

The total supply of zkSync tokens ($ZK) is 21 billion. Of this, 66.7% is allocated to the community, and 33.3% is allocated to the Matter Labs team and investors. The specific token distribution is as follows:

• Airdrop: 17.5%
• Ecosystem Incentive Program Allocation: 19.9%
• Token Assembly (one of the three on-chain entities forming the zkSync governance system): 29.3%
• Matter Labs Team: 16.1%
• Investors: 17.2%

The tokens allocated for airdrop will have no vesting period or lock-up period and will be fully liquid on the first day. This is part of a broader strategy to distribute 49.1% of the supply through ecosystem planning and governance processes. Tokens allocated to the team and investors will be locked for the first year and then unlocked over three years (from June 2025 to June 2028).

Market Reaction Post-Airdrop

zkSync, along with Optimism, Arbitrum, and StarkNet, is one of the four major Layer 2 solutions. By June 2024, the other three projects had already launched their tokens and conducted relatively generous airdrops, leading to significant anticipation for zkSync’s airdrop. On June 11, 2024, zkSync announced that a snapshot was taken in March 2024, and token distribution would begin in mid-June, concluding a four-year period of user interactions. However, the complexity and strictness of the airdrop rules sparked widespread dissatisfaction within the community.

With over 6 million unique addresses on zkSync, the airdrop would distribute a total of 3.675 billion tokens, with 89% allocated to users and 11% to contributors. According to the airdrop rules, approximately 695,000 addresses, about 10% of the total, were deemed eligible. Compared to other Layer 2 airdrop rules, zkSync’s criteria were more complex and unconventional, involving eligibility multipliers, allocation multipliers, and reward multipliers, along with minimum token requirements and regular anti-sybil checks.

Overall, conducting an airdrop for a user base of 6 million is challenging. Many users engaged in extensive interactions based on airdrop rules from other Layer 2 projects, making the selection process more complicated and stringent. While the high bar set by zkSync’s airdrop rules filtered out most users, it also led to discontent and skepticism within the community. This dissatisfaction could lead to increased distrust and questioning, potentially negatively impacting the project’s long-term development.

Conclusion

We can conclusively say that the zkSync has quite an enormous advantage for both builders and users, gracefully providing a reliable scalable solution that tackles the security, performance, and usability issues faced in the Ethereum ecosystem. Noticeably, we have seen how much effort, deliberate rate of development, and aggressive funding are currently put in to bring a solution to the market, as Matter Labs, is solely dedicated to scaling solutions for Ethereum.

There is a fast shift in the crypto economy towards zk-Rollups, both from end-users and builders. Although it is pretty clear the zk-Rollup ecosystem is still in its birthing days, zkSync is positively demonstrating the beginnings of what zk-Rollups can achieve in a short time. And yes, zkSync is poised to evolve significantly from here. Without lingering further on this, we can accept that zkSync is an experimental work.