Privacy and Efficiency: How ZK Rollups Are Revolutionizing Web3

Zero-knowledge (ZK) rollups have grown in popularity as scaling solutions for the Web3 ecosystem since the pioneer ZK-oriented payment solution, zkSync, was launched in June 2020. Today, there’s over $4.5 billion locked across various ZK rollups, but even more intriguing, we have zkEVM Layer 2 chains such as Prom that have gone beyond scaling the Ethereum ecosystem alone.Privacy  Security Simplicity and Compatibility 

So, why are ZK rollups gaining traction in the DeFi realm? Of course, the primary reason for the adoption of this type of infrastructure in DApp building is the value proposition in solving Ethereum’s scalability issue. But there’s more to it; while ZK rollups do not enjoy as much liquidity as optimistic rollups, their technical design is more focused on privacy, a feature that most Web3 users seek. 

ZK Vs Optimistic Rollups 

At the core, both types of rollups are designed to reduce the workload on Ethereum’s blockchain by performing transaction execution off-chain and then submitting the data as a batch on-chain. This makes the Ethereum blockchain more scalable, as several transactions can be submitted in a single batch as opposed to relying solely on Ethereum nodes, which have to process every transaction sequentially.

The difference, however, lies in the approach by which off-chain transactions are verified and added to Ethereum’s main network.

In optimistic rollups, all transactions submitted on the Layer 2 chain are assumed to be valid unless challenged and proven to be false through fraud proofs. ZK rollups, on the other hand, rely on ZK proofs (ZKP) to prove the validity of all transactions submitted on the L2.

While both approaches have their own advantages and disadvantages, several aspects stand out. For example, the transaction finality on optimistic rollups could take up to 7 days, which is the challenge period for submitted transactions. This is not the case for ZK rollups, which have instant transaction finality as all transactions have to go through a ZKP validity proof at the time of submission. 

Below are a few other comparison factors: 

Privacy

When it comes to privacy, ZK rollups are more secret; this is because ZKP cryptography allows several parties to prove the validity of a statement without necessarily revealing what is encoded within the statement itself.

This means that if party A were to send funds to party B through a ZK rollup chain, the only information that needs to be verified is that party A submitted a transfer transaction on the blockchain and party B is the recipient. Anything more, such as the amount of funds transferred, remains concealed.

As for optimistic rollups, all the data is broadcasted on-chain for fraud-proof verification by actors (verifiers) who may deem the information invalid, which means no privacy for the transacting parties.

Security

Naturally, ZK rollups are considered to be more secure than their optimistic counterparts. This is because every transaction in a ZK rollup is verified through ZKP validity proofs before being submitted to the main Layer 1 chain. 

However, with optimistic rollups, only transactions that are disputed are subjected to fraud proofs. This means that there is a higher likelihood of fraudulent transactions passing off as valid executions if no one disputes them within the 7-day window before a transaction is finalized.

Simplicity and Compatibility

As for ease of use, optimistic rollups carry the day. ZK rollups are more technical and not as compatible with multiple smart contract operations in comparison to optimistic rollups. This explains why there’s more liquidity locked across optimistic rollups ($31.6 billion), coupled with the fact that the top four leading rollup ecosystems are all optimistic. Arbitrum One leads the pack, followed by Base, OP Mainnet, and Blast.

zkEVM Rollups Are Gaining Traction 

Despite their complexity which has been a major hindrance to mass adoption, it is arguable that ZK rollups will soon give optimistic rollups a run for their money. This was Vitalik Buterin’s prediction at the ETH Seoul Event in 2022 where he emphasized that ZK rollups will win in the long run, mainly because of their transaction finality compared to optimistic 7-day window.  

It is also interesting to observe that at the time there were no fundamental developments in ZK rollups beyond the Ethereum blockchain. 

Fast forward to 2024, modular zkEVM Layer 2’s like Prom have already launched their testnet, hitting 100,000 active wallets within two weeks. This zkEVMrollup is powered by Polygon and leverages the Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (zkSNARKs) technology, which reduces Web3 transaction costs significantly. 

Other EVM-compatible rollups such as Consensys' Linea are also making headlines in the DeFi sector. This rollup’s mainnet was launched in August 2023, but within a few months, it has grown to a TVL of over $1.1 billion, touting a 30-day transaction count of 17.69 million. 

These two examples are just a glimpse of the developments currently taking place in the ZK rollup space, but what’s more intriguing is the fact that innovators are no longer limiting themselves to scaling the Ethereum blockchain. zkEVM chains are becoming more and more popular by the day, a signal that the foundational principles of ZK rollups — privacy and security — are set to transform a larger part of the Web3 ecosystem.