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Crypto Weekly
Testnet Upgrade for Ethereum And It's Years Ahead of Schedule I
n an unexpected development yesterday, zkSync, a protocol that implements Ethereum scaling platforms, announced the release of its ZeroKnowledge rollup (zkEVM) compatibility with Ethereum Virtual Machines years ahead of schedule. In addition to setting the rules for the chain from block to block, it is also where Ethereum wallets and contracts reside. As the first implementation of the Zero-Knowledge rollup that can run the full Ethereum environment, the new test network will provide a great insight into how well Zero-Knowledge can scale blockchains. Ethereum's base layer has been scaled in two ways over the past few years, Optimistic and Zero-Knowledge. Both technologies have seen some adoption, with Arbitrum being the most notable Optimistic chain and DyDx utilizing ZK technology to enable leveraged trading.
www.cryptoweeklymag.com
ZK rollups have traditionally offered a single type of application per chain as the Ethereum environment, which offers customizable smart contracts, is too computationally intensive. Until now, trade-offs favored Optimism and Arbitrum; now, zkSync offers a fair playing field. Users who use Optimistic rollups can use applications from NFT marketplaces like OpenSea to lending protocols like Aave on the mainnet in one composable environment. With zkEVM, users would have a similar enduser experience, with lower transaction fees and nearly immediate finality, eliminating the need for the two-week withdrawal periods associated with Optimistic rollups. The computing requirements of these methods are more significant, and nodes must solve zero-knowledge validity checks. Still, they can post network state to Ethereum for a fraction of the cost
of even Optimistic rollups. According to L2Fees.Info, transaction fees on Loopring and zkSync are 1/200th of what they are on the mainnet. Ethereum users pay over $90 per trade on a decentralized exchange, while Loopring and zkSync users pay between $0.45 and $0.68. The scaling issues associated with Ethereum may be alleviated earlier than anticipated if zkEVM can offer fees similar to other ZK rollups. Scaling blockchains requires lower transaction fees, but only if the chain can host applications that drive user demand. Ethereum native applications will port over Solidity-based contracts and provide a full range of services in a low-fee environment backed by Ethereum's security. As such, zkEVM will theoretically be able to host the industry's favorite applications without sacrificing liquidity, decentralization, or product offerings.
March 2022 | Volume 17
