Welcome, Crypto Dummies!
If you’re new here, this substack focuses on educating those who know nothing about crypto and blockchain technology. If that’s you, then you’re in the right place!
Here at crypto4dummies, we uncover the most fascinating and equally misunderstood protocols and break them down to their most basic levels.
For today’s agenda, we’ll dive into zkSync, what it does, how it works, and what makes it unique.
Let’s dive in!
What is zkSync?
zkSync is a scaling and privacy engine, a trustless protocol for scalable and low-cost payments on Ethereum. Built to introduce low gas transfers of ETH and ERC20 tokens on the Ethereum network. Zksync supports atomic swaps, limit orders, and native L2(Layer 2) NFT support.
How does zkSync work?
ZkSync is built on zero-knowledge rollup architecture.
Wait, wait, what is Zero-Knowledge Rollup Architecture?
Zero-Knowledge Rollup is a Layer 2 scaling solution. With ZK Rollup, funds are held by a smart contract deployed on the mainchain, and computation and storage are performed off-chain. With every state change on the Rollup block, a state transition zero-knowledge (SNARK) proof is generated and verified by the mainchain contract. The SNARK will include proof of validity for every transaction in the rollup block.
SNARK verification is significantly cheaper than verifying each transaction individually and storing the state off-chain compared to on the EVM, then provides a huge boost of scalability and savings on transaction fees.
Following ZK Rollup architecture can guarantee:
Rollup Validators can never corrupt the state or steal funds
Users can always retrieve funds from the Rollup even if validators stop cooperating. The data is always available to them.
Neither users nor a single other trusted party needs to be online to monitor rollup blocks.
ZK Rollups inherit the security guarantee of the underlying Layer 1, in this case, Ethereum.
The combination of advanced cryptography and on-chain data availability makes zkRollup the only L2 scaling solution that doesn’t require any operational activity to keep user funds safe. Users can go offline for a year and then come back and be sure to safely withdraw assets without external intervention.
What makes zkSync different?
Zksync as a scaling solution is capable of making quick and cheap transfers. The protocol is also smart contract friendly and as of February 2022, the zkSync 2.0 testnet has been live featuring smart contracts written in solidity or reusing existing solidity code.
Gas fees on the Ethereum mainnet can be ridiculously high, especially at times with high network congestion. The price of ETH fees has left many small players in the crypto space feeling left out. zkSync can reduce costs to a small fraction. Some of zkSync’s main features are:
Mainnet-level security
ETH and ERC20 token transfers with instant confirmations and 10-minute finality on Layer 1
Low transaction fees (roughly 1/100th of maii=nnet costs for ERC20 tokens and 1/30th for ETH transfers)
No registration required
Payments to existing Ethereum addresses (smart contracts included)
Fees payable in tokens being transferred
Withdrawals to mainnet in approx 10 minutes
Multisig support
zkSync is positioned to thrive in a high-congested environment. Ridiculously high network fees and a congested network will not pose a threat to any assets stored in zkSync. Movement of funds within or out of zkSync requires a zero-knowledge proof of validity, and this is unaffected by Layer 1 censorship in any way.
zkSync remarkably separates itself from the crowd among existing L2 scaling solutions. The combination of on-chain data availability and cutting-edge cryptography put zkSync in a league of its own when it comes to security and usability.
Note: Tokenomics were not covered in this post because there is no native currency for zkSync at the moment. As stated in the official documentation “When zkSync becomes fully decentralized, a token will be used for staking in order to become a validator in the network.”
Disclaimer: As a reminder, all information in this post is for educational purposes only. None of this is to be deemed financial/investment advice.
That’s all for our introduction to zkSync Crypto dummies!
Join us next week for a more in-depth overview of SNARKS and ZK Rollup architecture!