Cryptomeria Capital, a firm focusing on Web3 investments, has put out an insightful report. Alisa Davidson This report is titled 'ZK-Rollups Landscape Overview.'

The extensive 57-page report evaluates the pros and cons of ZK-rollups, compares two types: ZK-SNARK and ZK-STARK, and suggests that ZK-rollups might rise to be one of the top sectors in the blockchain realm this year.

According to Vadim Krekotin, a founding partner at Cryptomeria Capital, 'ZK-rollups facilitate secure and private aggregation of off-chain transactions, which leads to lower fees and increased transaction speeds. As the demand for scaling solutions on Ethereum keeps growing, ZK-rollups are poised to significantly impact the crypto landscape in 2023, ultimately shaping the future of Web3, decentralized finance, and the metaverse.'

The concept of ZK-rollups can be traced back to a foundational paper published in 1989 by MIT researchers. This pioneering work introduced zero-knowledge proofs and laid out crucial ideas including the interactive proof hierarchy and knowledge complexity, marking a significant step forward with the first zero-knowledge proof applied to a specific problem.

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By 1993, researchers had bridged traditional proof theory with zero-knowledge proofs, expanding the horizons of these techniques. As Ethereum encountered issues meeting transaction demands by 2017, it began exploring scaling options like Plasma and Bulletproofs.

Despite the limitations that Plasma faced initially, it set the stage for the development of optimistic rollups, designed to enhance scalability and security. The concept of zero-knowledge rollups emerged in 2018, providing immediate transaction validation along with fraud-proof mechanisms. This innovation birthed projects like zkSync and Starkware, although it required extra computational resources and distinct tools for smart contract deployment.

The evolution of ZK-rollups illustrates an ongoing commitment to tackle Ethereum's scalability hurdles while optimizing for transaction efficiency and security through innovations like optimistic and zero-knowledge rollups.

When set against the backdrop of ZK-rollups, optimistic rollups (OR) boast a more cost-effective solution. With their optimistic methodology, they enhance efficiency and scalability, although users may face wait times for withdrawals from Layer 2 to Layer 1 while ensuring chain integrity and resolving disputes.

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Optimistic rollups function on the premise that the majority of transactions are valid, only generating fraud proofs when a dispute arises, while ZK-rollups utilize intricate zero-knowledge proofs. However, ZK-rollups face challenges such as issues related to compilers and the need for new programming languages, which means developers must dedicate more time and effort to create decentralized applications on these platforms. Each block within ZK-rollups necessitates separate calculations, adhering strictly to state transition rules, which sets them apart from Ethereum Virtual Machine (EVM) computations.

Once a batch of transactions has been submitted to Ethereum, optimistic rollups impose a waiting period that typically lasts seven days, during which transactions are open to challenges. If a challenge arises, fraud proofs are employed to authenticate the absence of fraud. While these extended wait times allow for the chance of capturing erroneous data, they can also negatively impact users with legitimate transactions. There's an inherent theoretical risk of being unable to detect fraudulent transactions or facing a 51% attack during the state finalization by ill-intentioned actors. Such delays correspondingly undermine capital efficiency.

Both optimistic rollups and ZK-rollups utilize permissioned sequencers for transaction processing and rollup block creation. However, optimistic rollups depend on whitelists of validators, which necessitates a greater level of trust compared to alternate systems. Some solutions have emerged aiming to alleviate withdrawal delays by providing liquidity against outgoing transactions. Optimistic rollups maintain compatibility with Ethereum across various layers, from high-level RPC to low-level bytecode, rendering their implementation quite simple using tools such as geth.

ZK-rollups comprise two principal forms of zero-knowledge proofs: ZK-SNARKs and ZK-STARKs. ZK-SNARKs, which have been well-established since the dawn of Zcash, offer high integrity and security through proofs. They benefit from a robust developer community and provide reliable implementation assurances. Conversely, ZK-STARKs are in a phase of active exploration and development, promising potential for off-chain computations and on-chain verifications. These proofs are designed for superior scalability and transaction throughput but are more complex and expensive to verify compared to ZK-SNARKs.

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ZK-STARKs showcase efficient scaling abilities and have a built-in resistance to quantum threats, offering protection against future risks from quantum computing. They are designed without a trusted setup, greatly enhancing their security and appeal for zero-knowledge proofs. On the other hand, ZK-SNARKs are pursuing ways to gain quantum resistance, exploring developments like PQ-SNARKs, although practical implementations are still forthcoming. Transparent SNARKs eliminate the necessity for a trusted setup, thereby upholding decentralization.

Despite the advantages of ZK-STARKs relating to scalability and security, their proofs require considerable memory in contrast to ZK-SNARKs. Work is actively being done to minimize the size of STARK proofs. Nevertheless, SNARKs generally consume about four times less gas than STARKs, even when STARKs deal with more compartmentalized data. These dimensions contribute to the continual investigation and application of both ZK-SNARKs and ZK-STARKs as solutions to Ethereum's scaling struggles and the optimization of optimistic rollup technologies.

The report concludes that optimistic rollups are leading the competition among Layer 2 (L2) solutions on Ethereum, demonstrating the highest Total Value Locked (TVL) and a flourishing ecosystem. These rollups align natively with the Ethereum Virtual Machine (EVM). However, they encounter limitations in bandwidth and security compared to their Zero-Knowledge (ZK) counterparts. Starkware and other notable firms stand as the frontrunners among ZK solutions with established ecosystems and toolkits but face challenges related to architectural and developmental complexity. In contrast, Scroll and Polygon zkEVM are making strides in enhancing compatibility with EVM.

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The current ecosystem underscores the triumph of optimistic rollups, highlighting their advantages of compatibility with EVM and economical transaction processes. In the meantime, ZK-rollups signal the next pivotal development in the evolution of Ethereum's layer-2 solutions. News Report Keep in mind that the information on this page does not serve as and should not be misconstrued as any form of legal, tax, investment, or financial advice. Remember to invest only what you can afford to lose, and seek independent financial guidance if you have any concerns. For more detailed information, we recommend reviewing the terms and conditions, as well as support resources offered by the issuer or advertiser. MetaversePost aims for accurate and unbiased reporting; however, market conditions are subject to change without prior notice.

Cindy, a journalist at Metaverse Post, specializes in covering web3, NFTs, the metaverse, and AI topics, with a keen focus on interviewing key figures in the Web3 space. She has engaged with more than 30 executives in top positions, delivering their invaluable insights to readers. Originally hailing from Singapore, Cindy is now based in Tbilisi, Georgia. She holds a Bachelor’s degree in Communications & Media Studies from the University of South Australia and possesses a decade of experience in journalism and writing.