The Zero-Knowledge Landscape
an overview of the current zero-knowledge scaling ecosystem
as always, thanks for reading and you can follow me here
Staying up to date and recapping the crypto ecosystem can sometimes be a monumental task, but there are often narratives and hype for specific projects or sectors that you can see forming. Over the past few months zero-knowledge projects funding, developments, and applications have continuously surfaced at an increasing velocity. Many of the most giga-brained, deep-rooted crypto OGs, along with the increasing crop of brilliant contributors to CT, believe that when ZK-rollup (ZKRs) tech is operational at scale the crypto ecosystem, and potentially world, will technologically advance. While that reality in its full development is 5-10 years away, we’ll begin to see the applications of a fully compatible ZKR enabled blockchain in the coming months. This post aims to recap the recent developments, map where the current ZK players stand, along with potential timelines for what they are building and wen tokens as it becomes clear we are inching closer to the ZK future. The technical details that differentiate the protocols highlighted are not explained as they require a nuanced discussion regarding data availability, validity and volition verification, security, and decentralization among other minor tradeoffs and technical differentiations each protocol takes. There are some links at the bottom of the post that include these deep discussions along with a comparison of the two market leaders zkSync and StarkWare.
Rollup scaling is focused on decreasing the fees on blockchains and are paramount to scale blockchain technology (L1 agnostic) to hundreds of millions, potentially billions of users. While Optimistic Rollups using fraud proofs are scaling now (Arbitrum/Optimism), ZKRs using off-chain computation is our best bet for scaling in the future. The deepest dive on rollup technology you’ll find is from, no surprise, Vitalik where he concludes, “in the medium to long term ZK rollups will win out in all cases as ZK-SNARK technology improves.” ZKRs accomplish the same goal as optimistic rollups while giving users the option of privacy and increasing scalability. As stated on EthHub, “ZK reduces the computing and storage resources for validating the block by reducing the amount of data held in a transaction; zero knowledge of the entire data is needed.” Boiled down to the most generic definition, ZK tech allows the user to prove that they own or know something without giving any information as to what or how much of that said thing is. There’s been renowned excitement for ZK tech along with a renewed enthusiasm and need for privacy enabled transactions after the high profile financial deplatforming observed in Canada along with the economic sanctions surrounding the Russian invasion of Ukraine.
image from a Matter Labs blog in April of 2021
Recent ZK Announcement Recap
StarkWare reportedly raising $100M @ $6B valuation after previously raising $50M @ $2B valuation in November of 2021.
StarkWare built StarkNet completes launch on February 22nd and will move to community control “in the second half of the year”
Immutable X raises $200M @ $2.5B valuation
GameStop partners with Immutable X to build their NFT marketplace and announce $100M fund for their ecosystem
Aleo, a ZK tech blockchain, raised $200M @ $1.45B valuation on February 7th
zkSync developer Matter Labs raised $50M in November 2021 and launched their zkEVM available to the public on Ethereum’s testnet on February 22
Matter Labs & BitDAO announce a $200M DAO to continue expansion and core infrastructure building for the zkSync ecosystem
Polygon acquires ZK rollup startup Mir Protocol for $400M;
Polygon previously acquired Hermez Network for $250M in August which is another ZK rollup scaling solution that merged their tokens MATIC & HEZ — $650M in total buying ZK rollup protocols
Polygon raised their most recent round of $450M on February 7th to expand ETH scaling and ZK tech operations
Espresso, ZK tech enabled L1, announces $32M of funding and emerges from stealth building on March 6th
Aztec Network raises $17M series A in December 2021
Argent, ETH DeFi mobile wallet, launches zkSync powered L2 wallet with over 500k people on the waitlist
StarkWare — builds StarkNet and StarkEx
StarkNet is a ZK-Rollup L2 using ZK-STARKs first arriving on ETH mainnet on November 29th and the team has been relentlessly shipping new features and updates.
On February 23rd, StarkNet announced their latest version, StarkNet Alpha, and that the scaling solution is ready for application building and transactions. To see a current overview of the StarkNet ecosystem, you can check out their website.
Recently StarkNet has announced partnerships with Aave, Opera Browser, DeversiFi, and Argent with countless other protocols waiting to deploy
wen token: “in the second half of the year” — presumably an airdrop to early users
StarkEx is a scalability engine built through the programming language Cairo that has been in production on Mainnet since June of 2020 and is currently used by DeversiFi, Immutable X, dYdX, and Sorare
According to StarkWare here, their last update on StarkEx usage from March 9th is $1.1B TVL, 123M transactions, & $462B in cumulative value
wen token: “eventually run by the community” but my assumption would be that it’s not long after the StarkNet token launch which, as referenced above, is “in the second half of the year”. — again presumably an airdrop to early users
zkSync is a ZK-rollup using ZK-SNARKs that has been live since June of 2020 and is developed by Matter Labs. In a tweet from February 22nd, zkSync announced that zkSync 2.0 was live and included the first EVM-compatible ZK Rollup on Ethereum’s testnet.
The blog post in the above linked tweet included what the zkEVM milestone means saying, “Last May, we laid out our vision for zkSync’s zkEVM, a permissionless, Turing-complete ZK Rollup that would allow developers to build and deploy decentralized applications in a low-fee, highly scalable layer-2 environment using Ethereum’s native programming language, Solidity.” A few more details from their post regarding the current features of zkSync 2.0.
For more information on zkSync you can check their ecosystem of projects building with their ZK solutions here and reference the Dune Analytics zkSync dashboard with a great overview of transactions, TVL, deposits and withdraws to zkSync among other information
wen token: according to their official docs, there is confirmation a token will exist but it’s difficult to know when.
powered by StarkWare’s StarkEx, $IMX is one of the leading ZK-tech enabled protocols with a gaming and NFT focused application. $IMX describes themselves saying “experience zero gas fees, instant trades, and carbon neutral NFTs for marketplaces, games, and applications without compromise”.
Products built on top of $IMX include Gods Unchained, Illuvium ($ILV), and TikTok’s Top Moments collections
GameStop x Immutable X — on February 3rd, GameStop announced that it would be building its NFT marketplace on top of $IMX along with the announcement of a $100M fund dedicated to supporting game development inside their ecosystem. GameStop also said they plan the marketplace to include “billions of low-cost, in-game assets that can easily be bought and sold.”
$IMX has been building for years and accomplished a vast majority of the heavy development and lifting necessary to support ZK enabled NFTs and gaming at scale in the future
Currently there are three separate ZK-rollup scaling initiatives developing
Polygon Miden — “a STARK-based, zk-Rollup with support for arbitrary smart contracts” — currently in development
Polygon Zero — “offers rollup and validium modes, giving users access to higher throughput and lower fees” — in development
Polygon Hermez — “an open-source zk-Rollup optimized for secure, low-cost and usable token transfers”
Polygon wrote a good blog in August 2021 about their commitment to ZK technology and their $1B treasury allocation to the sector along with a general overview of ZK tech.
While detailed timelines of their suite of ZK rollups is difficult to come by, it’s clear they’re committed to scaling ETH through ZK enabled technological solutions evidenced by their recent ~$650M worth of acquisitions
Espresso emerged from stealth building on March 6 with their announcement of funding and the introduction into what their vision and blockchain are.
Espresso describes themselves as, “a layer 1 blockchain system that combines proof-of-stake consensus and a ZK-rollup mechanism” which results in, “single-shot scaling & privacy solution.”
released CAPE (Configurable Asset Privacy for Ethereum) which is an EVM application that allows users the ability to customize who can see ownership details and the movement of assets with the ability to wrap and unwrap current ERC-20 tokens inside CAPE.
CAPE will be deployed to the Rinkeby testnet in “the next few weeks” along with further details surrounding their ZK scaling solution.
a L2 ZK-Rollup scaling solution that “acts as a privacy shield for ERC20 token transfers and other DeFi interactions.”
zk.money is the core application built by Aztec that allows MetMask users to confidentially send DAI and ETH with the team hoping for full wallet-level privacy of assets “later this year”
Aztec’s L2 rollup solution uses zk-SNARKs and is currently deployed on the Goerli testnet
Aleo is a ZK enabled, private by default base layer blockchain that “processes transactions off-chain which are then verified (rather than executed and re-executed) by network nodes.”
Aleo raised $200M in series B funding on February 7th and their blockchain is currently in testnet, scheduled to launch on mainnet in Q3 this year
Conclusion & Further Reading
Zero Knowledge proofs are at the bleeding edge of moon math, cryptography, and technological innovation increasingly pushing us towards the future of global, 24/7, privacy enabled cheap transactions. The two current industry leaders are zkSync and StarkWare (StarkEx/StarkNet) and they’ve all confirmed tokens sometime this year, something to position yourself for. Demand, as evidenced by their funding rounds and current valuations, will be astronomical but the long awaited L2 szn and downstream effects may finally occur as these protocols, and other L2s, incentivize users and liquidity to migrate applying pressure for tokens to one another. While we’re still months away from seeing this on a micro scale and years on a macro, ZK tech will likely change the blockchain industry going forward.
For deeper technical and practical applications I would highly suggest reading through these linked articles and threads:
Supercycled has a great thread on ZK rollups specifically the differences between the main two competitors zkSync and StarkWare you can read here.
Packy McCormick and Jill Gunter, co-founder of Espresso, wrote an excellent article on ZKRs and what they are and can enable
EthHub on the differences between ZK-SNARKs & ZK-STARKs
Suzuha explains the ground-breaking potential ZK allows
Vitalik’s blog is always a great resource and he has previously written about ZK tech and rollups many times
A detailed breakdown of Optimistic v. ZK rollups from Polygon
Thank you! This was enjoyable, nicely structured, profound-but-not-over-my-head, insightful.
What's your stance on Loopring as a current player?