Introduction

Blockchain has emerged as a critical technology in recent years, redefining value and information exchange in a digital context. Nevertheless, with new platforms such as Ethereum, problems of scalability and the number of processed transactions per second have appeared. This is where solutions such as Layer-2, especially ZK-rollups, are a perfect fit for the given scenario.

This article describes the role of ZK-rollups, the progress of rollup technology, and the future of Ethereum Layer-2s and rollups. It emphasizes their possibility of outperforming Layer-1 transaction volumes and their scalability and velocity in blockchain use cases.

What Are ZK-Rollups

A ZK-rollup is a layer-2 scaling method that uses zero-knowledge proofs (ZKPs) to combine several transactions off-chain and prove their validity to the Ethereum mainnet. This technique greatly decreases the computing burden on the base layer, enabling larger transaction capacity and reduced gas fees.

Zero-knowledge proofs, namely zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge), are the foundation of ZK-rollups. These cryptographic approaches enable the prover to demonstrate the truth of a statement to the verifier without disclosing any further information other than the statement's validity.

Within the framework of ZK-rollups, this implies that the rollup operator can demonstrate the validity of a group of transactions without disclosing the specific details of those transactions to the mainnet. This improves privacy and decreases the volume of data that must be kept on the Ethereum blockchain.

Key Components of ZK-Rollups:

Zero-Knowledge Proofs (ZKPs): In cryptography, these are methods by which one party (the prover) can prove to another party (the verifier) that a given statement is true, without conveying any information apart from the fact that the statement is indeed true. Regarding the ZK-rollups, ZKPs are implemented to check the integrity of the off-chain transaction without revealing the specifics of the transaction on the Blockchain.
Rollup Contracts: On layer-1, smart contracts store the rollup's state and verify the proofs sent by the layer-2 operators.
Off-Chain Computation: The majority of the transactions are performed off-chain, which decreases the pressure on the layer-1 blockchain and boosts the efficiency of layer-2.

How Do ZK-Rollups Work?

ZK-rollups work in that they bundle a large number of transactions into a batch and present a cryptographic proof called a zk-SNARK. This proof checks all the affected transactions and confirms that no manipulations are included in the post-state root. This way, ZK-rollups can process transactions at a much higher throughput and definitely cheaper compared to their direct execution on Layer-1.

Security and Efficiency

The benefits of ZK-rollups are evident in their semantics: They use the security of the Layer-1 chain while shifting computation and state to a more scalable environment. This, in turn, contributes to the overall throughput of transactions in the smart contract environment while maintaining essential features of censorship resistance and minimal trust.

Evolution of Rollup Technology

1. Early Layer-2 Solutions

The history of layer-2 scaling solutions started with state channels and sidechains, which paved the way for emerging blockchain scalability. State channels provide an off-chain environment for a series of transactions, and the resulting net changes are put on the blockchain. However, sidechains are other blockchains connected to the main blockchain through a two-way peg, meaning they are separate from the main blockchain.

2. Introduction of Rollups

Layer-2 rollups became the sophomore improved solution to the Layer-2 approach, providing the ability to pack several transactions at once into a batch and send them to the main chain. There are two main types of rollups: optimistic rollups and ZK-rollups. Optimistic rollups assume all transactions are legitimate and will only perform computations if there is a dispute, while ZK-rollups make computationally verified transactions off the main chain and send proof to the main chain.

3. Advancements in ZK-rollup Technology

The latest trends in ZK-rollup development involve increasing its performance, security levels, and compatibility with other systems. For instance, ZK-rollups operate with instant withdrawals, unlike optimistic rollups that require time to make withdrawals to allow for arbitration. Also, ZK-rollups are more likely to have better privacy since they retain extra information about the off-chain transactions. Nonetheless, zk-SNARKs construction and its verification are still costly and time-consuming. Hence, using ZK-rollups is limited to general Ethereum Virtual Machine (EVM) transactions.

Expected Growth in ETH Layer-2s and Rollups

Overview of Ethereum Layer-1 as of Now: Presently, Ethereum Layer-1 settles at around 20-30 TPS, far from Solana and Avalanche, which handle thousands of transactions per second. Due to this, there have been high transaction fees and slow processing times, which makes the Ethereum network non-scalable.
Potential of Layer-2 Solutions: The L2 rollup solutions developed on Ethereum, like Arbitrum, Optimism, zkSync Era, and others, are fully capable of processing approximately 40,000 TPS with transaction fees that are relatively cheaper in comparison to the Ethereum Layer-1. It has been observed that these solutions have gained more momentum and usage in the last year due to the demands of real-world efficient and less expensive solutions regarding the utilization of blockchain technology.
Future Upgrades and Innovations: There are ongoing projects in the Ethereum community to solve some of the issues that affect both the Layer-1 and the Layer-2 solutions. There is one called the ‘danksharding' upgrade that slims down the cost of transactions on Layer-2s, which would enhance Ethereum to go beyond 100,000 TPS. Moreover, the "proto-danksharding" plan also includes a new type of efficient and temporary storage called a "blob" to serve for usage by rollups only.
The possibilities of scalability and speed: The growth of scalability and speed is vast regarding Ethereum Layer-2s and rollups. Thus, by transporting most of the heavy computation away from the base layer and distributing Layer-1 costs over batched operations, rollups help achieve significantly lower fees and virtually unlimited TPS. This enhances the user experience and relieves network traffic, making Ethereum ideal for everyday use.

Conclusion

ZK-rollups represent a promising solution to the scalability challenges blockchain networks like Ethereum face. By moving computation and state off-chain while maintaining the security of the base-layer network, ZK-rollups significantly increase transaction throughput and reduce costs.

Constant innovations in the rollup technology, plus the fact that Layer-2 on Ethereum is expected to scale further, could soon outcompete Layer-1 on transaction counts and revolutionize the scalability and speed of blockchain applications. The option of blockchain scalability becoming even better as the technologies steadily develop brings a positive outlook on the applicability of these solutions in practically any sphere.

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What Are ZK-Rollups? The Evolution of Rollup Technology