Zero-knowledge proofs, a protocol originally developed by Zcash for the purposes of enhancing transaction privacy between crypto users, have come to prove their value in other ways. Over recent years, ZK technology has become the scaling solution of choice for a slew of new Layer 2 platforms, transforming the Ethereum landscape from a congested, single-lane highway into a sweeping ecosystem of high-speed blockchains.
Projects including zkSync, Immutable X, and Loopring leverage ZK technology in rollups batching transactions to enable them to be validated using a ZK proof. This makes it far faster and cheaper to transact on-chain while tapping into Ethereum's consensus and battle-tested security at the base layer level. It's so effective that by mid-2024, there were already a dozen active ZK rollups, collectively holding $1.3 billion in locked value.
ZK-enabled scalability isn't solely limited to Ethereum either. Solana is also getting in on the action with ZK compression, making it even more competitive against its biggest rival on scalability and fees.
More than just a scaling solutionEven beyond scalability, Web3 innovators are now harnessing ZK proofs for more advanced use cases within the blockchain sphere, such as verifiable off-chain computation or trustless identity solutions. Off-chain computation provides a zero-knowledge way to verify data from off-chain sources, such that it can be incorporated into on-chain smart contracts. ZkOracle is a project using ZK proofs to verify off-chain data for use in oracles, while Space and Time uses a ZK co-processor to index SQL-optimized blockchain data.
For identity solutions, ZK proofs offer an elegant way to preserve the privacy of someone's identity while providing an assurance that the individual holds certain credentials. Established Web3 identity platform Ontology is exploring the use of ZK technology, while Polygon's zkKYC solution already enables users to get KYC verified without revealing any personal data, opening up a new way to transact compliantly without compromising privacy.
The interoperability conundrumIn the Web3 space, where blockchains operate as closed environments, the rapid advancement of the ecosystem is a double-edged sword. Each new platform or solution creates a risk of dispersing users, liquidity, or both across an increasingly fragmented landscape unless there's a way to securely interoperate.
This isn't a new problem, and non-Ethereum platforms had decided that bridges were the Band-Aid solution of choice long before the Ethereum ecosystem itself grew so complex. However, bridges have already demonstrated that they are only as strong as the weakest link.
Therefore, projects have started focusing more on shared interoperability solutions that could demonstrate superior resilience compared to independently operated bridges.
For example, the recently launched Cronos zkEVM was developed using the ZKsync tech stack, launching as the first chain to go live on the platform alongside the native Era chain. The Cronos zkEVM and Era will share a native bridge, enabling cross-chain transfers via what the project calls "horizontal scalability," meaning transactions that don't even require settlement at the base layer level - a new paradigm in blockchain.
Other solutions focus on enabling zero-trust interactions between blockchain protocols. While bridges and interoperability wallets tend to involve ceding trust to a centralized party or small group of validators, zero-trust protocols aim for the same level of security as the connected blockchain systems themselves.
For instance, Ika (formally dWallet Labs) uses an advanced cryptographic protocol called 2PC-MPC (or two-party-multi-party computation) to facilitate transactions signed by both the user and a decentralized network of validators that act as witnesses to the signature. The project cites use cases, including advanced wallets, cross-chain DeFi, and multi-chain staking.
The proliferation of ZK platforms and the challenges they present are a reminder that no technology is a panacea. Even so, blockchain interoperability is an issue that predates the rise of ZK technology, so it's reassuring to see that along with new solutions, current developments in ZK are also tackling legacy problems.