Zero Knowledge Rollup Deep-dive

In the middle of the recent bull market, everyone wants their transaction to go through, but because of the enormous demand for block space, fees are driven to the hundred of dollars on Ethereum, and your transaction takes time. Zero Knowledge rollups are a way to solve this.

Zero-knowledge (ZK) rollups use the minimum data necessary to verify transactions by unburdening Ethereum from excess network workload. This makes Ethereum both faster and cheaper.

What Are Rollups?

Before we get into ZK rollups, we need to understand rollups. Rollups perform transaction execution outside of Ethereum on an execution layer, and then the data is posted to Ethereum, where consensus is reached. As transaction data is included in Ethereum blocks, this allows rollups to be secured by native Ethereum security.

Rollups are smart contracts that reduce Ethereum’s computing and storage requirements for validating a transaction block. Rollups do so by rolling up a bunch of transactions into one; It is the job of the roll-up smart contract to disassemble them and verify all of those transfers held in a single transaction before it is sent as a new block to Ethereum.

What Are ZK-Rollups?

Zero-knowledge proof executes that rollup on a Layer 2 network, such as ZK-Sync, Loopring, and Starkware, by submitting a validity proof. It uses a clever piece of cryptography called Zero-Knowledge proofs. In this model, every batch of transactions submitted to Ethereum includes a cryptographic proof called a SNARK ( Succinct Non-Interactive Argument of Knowledge ) verified by a contract deployed on the Ethereum main network. This proof acts as a receipt that the rolled-up transactions are indeed authentic and, as such, added to Ethereum.

In other words, ZK-rollup presents the public validation of a particular block without revealing the crucial details of the block; by reducing transaction data load, ZK-rollups improve privacy and enable cheap and fast transactions. 

How Do ZK-Rollups work ?

Zero-knowledge rollups (ZK-rollups) are a way to process transactions on a blockchain more efficient and scalable. They operate using two contracts on the Ethereum blockchain, the "main" contract, and the verifier contract. The main contract handles tasks such as saving roll-up blocks and tracking fund deposits and withdrawals. In contrast, the verifier contract validates zero-knowledge proofs sent to Ethereum. ZK-rollups also have an off-chain virtual machine, which is used to process batches of transactions and post proof of their validity on the Ethereum blockchain. Despite operating off-chain, ZK-rollups rely on Ethereum for security and settlement and post compressed transaction data to the Ethereum blockchain.

A simple analogy is to imagine that Ethereum is the boss of a company, and all the other blockchain stuff is its employees. The boss has two main assistants, the "main" contract and the verifier contract, who handle essential tasks and ensure everything runs smoothly. These assistants have their off-chain virtual machine, which helps them get their job done faster and more efficiently. The boss (Ethereum) also gives the assistants (ZK-rollups) security and helps them settle disputes. However, the assistants still need to report back to the boss and show that they did their job correctly. Overall, ZK-rollups are super efficient hybrid employees who can work independently but still rely on their boss (Ethereum) to get things done.

Pros And Cons ZK rollups

Pros:

• Improved scalability: ZK-rollups allow for a more significant number of transactions to be processed quickly because they can process transactions off-chain and only post proof of their validity. This can lead to reduced transaction fees and faster confirmation times for users.
• Enhanced privacy: ZK-rollups use zero-knowledge proofs, verifying transactions without revealing the underlying transaction data. Think of it like this: ZK-rollups use zero-knowledge proofs to verify transactions, like how a bouncer checks IDs at a club. The bouncer needs to make sure you are who you say you are, but they don't need to know your full name, address, or other personal information. They just need to see that your ID is real and that you can enter the club. Similarly, ZK-rollups use zero-knowledge proofs to verify transactions without revealing sensitive information.
• Improved security: ZK-rollups rely on the security of the underlying blockchain, in this case, Ethereum, for the validity of their updates. This can provide an additional layer of security for users. It's like having a top-of-the-line home security system, but you still lock the front door and have a sturdy gate to protect your home. Likewise, the ZK-rollup is like your top-of-the-line home security system, it's great for keeping your transactions safe, but just like you have a locked gate and a sturdy front door, the ZK-rollup also relies on the security of Ethereum.

Cons:

• Complexity: ZK-rollups can be complex to understand and implement, which may discourage some users or developers from using them.
• Dependence on underlying blockchain: ZK-rollups rely on the security and stability of the underlying blockchain, and any issues with that blockchain can also affect the ZK-rollup. Back to our House analogy, the foundation you build your house on is critical. If the foundation you build your house on starts to crack, it doesn't matter how secure your house is. It will break down.
• Limited flexibility: ZK-rollups can only process transactions in batches, which may not be suitable for users who need to process transactions in real time. If you need to process transactions in real-time and can't afford to wait, ZK-rollups may not be the best choice for you. But if you're okay with a bit of a wait, they can be a great option.

Live ZK-Rollup Networks

ZK-rollup technology is gaining traction at a rapid pace. Here are some of the most popular networks that employ this scaling technology:

• ImmutableX – a general-purpose scalability provider for NFT and Web3 gaming
• zkSync – one of the most advanced ZK networks, as the first one that is EMV-compatible under zkSync 2.0
• StarkNet – another Layer 2 scalability for Ethereum’s dApps
• Aztec Connect – leverages ZK-rollup privacy to create a VPN-like service for blockchains
• Polygon Hermez – as a part of the Ethereum scaling solution within Polygon
• Loopring: A protocol for building decentralized exchanges that uses ZK-rollups to process transactions.

Which ones should you invest in?

ZkSync and Starknet are your best bets from the ones mentioned above, but the one that gives you a 100x return is probably not out yet. There are a multitude of ZK rollups that are yet to be released, and as always, Flagship will always be on the lookout and cover them for you

About Flagship

Flagship is an easy-to-use DeFi platform. We provide you access to early investment opportunities across emerging crypto sectors through our cross-chain ecosystem of decentralized funds and a network of experts.

• Join our Discord to be part of our active community and discover new assets and opportunities
• Check out our website and whitepaper here
• Get in touch with the team

We’d love to have you onboard!