<p>Blockchains have often faced challenges in maintaining a high  level of trust while being fast and cost-effective. To extend the  advantages of this technology to billions of people, it&#39;s crucial for  them to handle significantly more transactions than they currently do,  all while keeping costs low enough for everyday users to participate  easily in the Web3 economy.</p><p>Improving <a href="https://listing.help/what-is-blockchain-scalability-and-why-is-it-important/" rel="noopener noreferrer nofollow">scalability</a> is  a major focus in research and development. The aim is to make it robust  enough to support critical sectors like finance, insurance, logistics,  gaming, and beyond.</p><p>One method for scaling involves rollups, which handle computation  and state off-chain while keeping transaction data on-chain. This  article will explain a specific type of rollup known as a zk-rollup, how  it enhances scalability and keeps costs down, and how it compares to  other scaling methods.</p><h2 id="header-0">Understanding Zk-Rollup</h2><p>Zero-knowledge rollups (zk-rollups) are <a href="https://listing.help/what-is-layer-2-in-blockchain/" rel="noopener noreferrer nofollow">layer-2</a> scaling  solutions that move computation and state off the main chain into  off-chain networks but store transaction data on the main chain, or <a href="https://listing.help/what-is-layer-1-in-blockchain/" rel="noopener noreferrer nofollow">layer-1</a> network, like Ethereum. State changes are processed off-chain and validated on-chain using zero-knowledge proofs.</p><p>These rollups significantly boost transaction throughput and lower  costs while maintaining the security of the layer-1 network they use  for settlement. Rather than posting each transaction individually  on-chain, zk-rollups periodically post validated batches of transactions  from the layer-2 network to the layer-1. This method utilizes the  security and censorship resistance of the main layer for transaction  settlement. Additionally, rollups often employ data compression  techniques to minimize the amount of data that needs to be posted on the  layer-1 network.</p><h2 id="header-1">How do Zero-Knowledge Rollups work?</h2><p>Zero-knowledge rollups (ZK rollups) work by combining two main  components: core infrastructure and execution process. These elements  enable the rollups to scale Ethereum efficiently.</p><h3 id="1-core-infrastructure">1. Core Infrastructure</h3><p><strong>- On-chain contracts:</strong> These <a href="https://listing.help/what-are-smart-contracts-on-blockchain/" rel="noopener noreferrer nofollow">smart contracts</a> operate  on Ethereum, managing rollup blocks, tracking deposits, and monitoring  state updates from the ZK rollup. A verifier contract validates the  zero-knowledge proofs submitted by block producers.</p><p><strong>- Off-chain virtual machine:</strong> This  component handles transaction computation and storage outside the main  chain. Zero-knowledge proofs (ZKPs) allow the Ethereum-based verifier  contracts to confirm the correctness of these off-chain computations.</p><h3 id="2-execution-process">2. Execution Process</h3><p><strong>- Sequencing:</strong> Sequencers,  akin to node operators on Ethereum, execute transactions, bundle them  into batches, and submit them to the ZK rollup contract. This step is  known as sequencing.</p><p><strong>- Proof generation: </strong>Operators create validity proofs to verify the correctness of the batched transactions.</p><p><strong>- Proof verification:</strong> Using  zk-SNARKs or zk-STARKs, the integrity of the zero-knowledge proofs is  checked on-chain. The proof must demonstrate a sequence of valid  transactions from the layer-1 pre-state root to the ZK rollup’s  post-state root. Once verified, the post-state root is accepted and  published on Ethereum.</p><h2 id="header-2">Comparing ZK-Rollups and Optimistic Rollups</h2><p>Optimistic rollups present an alternative layer-2 scaling solution  with distinct differences from zk-rollups. Instead of relying on  validity proofs, optimistic rollups utilize a fraud-proof mechanism,  allowing users to contest the results of a rollup execution within a  designated time frame.</p><p>For zk-rollups, state changes are verified cryptographically. In  contrast, optimistic rollups assume transactions are valid unless  disputed. When an optimistic rollup batch is submitted to the base  layer, a challenge period ensues. During this window, anyone can dispute  the transaction by generating a fraud proof. If successful, the  transaction is re-executed and the rollup&#39;s state is updated. If no  challenges arise before the period ends, the batch is accepted as valid  on layer 1.</p><p>The fraud-proof approach with a challenge period means that  withdrawing funds from an optimistic rollup to layer 1 using a native  bridge entails a waiting period, typically around seven days. To  mitigate the user inconvenience of this delay, optimistic rollups can  use liquidity providers. These providers allow quicker withdrawals by  charging a small fee. Additionally, optimistic rollups implement  economic incentives and game-theoretic strategies to prevent network  spam from false fraud proofs.</p><p>Due to the relative simplicity and maturity of optimistic rollups,  they have seen earlier adoption compared to zk-rollups. The technology  behind optimistic rollups is easier to implement and carries a lower  risk of bugs. However, zk-rollup supporters argue that their solution  offers better long-term scalability, thanks to the cryptographic  validity proofs that ensure higher security and reliability.</p><h2 id="header-3">Advantages and Disadvantages of ZK-Rollups</h2><p>Let&#39;s explore the benefits and drawbacks of using zk-rollups.</p><h3 id="advantages-of-zk-rollups">Advantages of ZK-Rollups</h3><p><strong>1. Increased Throughput:</strong> ZK-rollups  enhance transaction processing by offloading execution from the main  chain to a more efficient environment, significantly improving  throughput since transactions are not processed individually on-chain.</p><p><strong>2. Reduced Congestion: </strong>By  minimizing blockchain bloat, ZK-rollups facilitate more efficient Layer  1 operations. Full nodes only need to store zero-knowledge proofs,  rather than all transaction data.</p><p><strong>3. Lower Fees: </strong>Due to decreased congestion, ZK-rollups help in reducing overall transaction fees.</p><p><strong>4. Security:</strong> ZK-rollups  include mechanisms that allow users to withdraw funds even if the  rollup network encounters issues, offering a level of security not found  in sidechains, which might compromise funds during network failures.</p><p><strong>5. Faster Challenge Period: </strong>Only the validity proofs within the rollups need verification, resulting in a quicker transaction challenge period.</p><h3 id="disadvantages-of-zk-rollups">Disadvantages of ZK-Rollups</h3><p><strong>1. Complexity: </strong>The  primary drawback of ZK-rollups is their complexity. They are  significantly more complicated to implement compared to optimistic  rollups.</p><p><strong>2. Dependence on Base Layer: </strong>Despite their efficiencies, ZK-rollups are still subject to the limitations of the underlying base layer.</p><p><strong>3. Liquidity Fragmentation:</strong> Layer  2 solutions can lead to fragmented liquidity within the ecosystem.  Insufficient liquidity in the base layer protocols can result in  potential issues.</p><h2 id="header-4">Conclusion</h2><p>Scalability is often seen as the &#34;holy grail&#34; of blockchain  technology. A system that doesn&#39;t operate optimally serves little  purpose. Both optimistic and zk-rollups offer elegant solutions to this  persistent challenge. ZK-rollups, with their distinct approach, promise  faster speeds, reduced congestion, and enhanced security. While they are  complex, their potential is enormous. For anyone interested in the  future of digital currency, understanding zk-rollups is essential.</p><p><img src="https://media.licdn.com/dms/image/D4E12AQGwCR1xD7o1CA/article-inline_image-shrink_1500_2232/0/1717710758923?e&#61;1723075200&amp;v&#61;beta&amp;t&#61;_2-0_Aba_XylId98P_WqENMR1smHM02FC0NzQUcAtKU" /></p><p>For more insights on blockchain technology and other related topics, visit our blog at <a href="https://listing.help/blog" rel="noopener noreferrer nofollow">https://listing.help/blog</a>.</p>

What Are Zero-Knowledge Rollups?

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Sergei Khitrov

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