Scalability on the Ethereum (ETH) Network has been a point of contention within the cryptocurrency ecosystem for years, mainly due to high fees and network congestion during periods of high demand.
The latest solution, emerging as the final solution to Ethereum’s scalability problems, is zero-knowledge rollups (ZK rollups), a form of scaling in which calculations are performed off-chain and transmitted on-chain via validation.
Zk rollup season
– cryptowarlord.eth (° ͜ʖ ͡ °) (@CryptoWarlordd) December 7, 2021
Earlier this year, protocols using optimistic rollups like Optimism and Arbitrum dominated the headlines and were touted as the best solution for scaling up on Ethereum, but aside from Arbitrum, the hype surrounding these protocols has settled and traders have advised that even optimistic ones Rollups have higher fees than desired when the network is under peak load.
Early successes in 2021
At the same time as optimistic roll-up solutions were in the spotlight, protocols adopting the ZK roll-up model quietly demonstrated their capabilities.
dYdX, a decentralized perpetual and futures exchange, was one of the first users of the ZK rollup technology through its partnership with StarkWare, whose StarkNet network is a permit-free decentralized ZK rollup.
To date, the platform has seen decent success and at times managed to get a higher 24-hour trading volume as Coinbase.
Loopring (LRC) is another protocol that ZK rollups have used to lower transaction costs and accelerate its throughput capabilities, which helped drive LRC’s price to a new all-time high of $ 3.83 in early November.
LRC / USDT 1-day chart. Source: TradingView
Related: Ethereum Layer-2 TVL hits all-time high
ZK rollups could be the next “rotation” for traders
After the strong market-wide sell-off last week, ZK rollups have reappeared as a buzzword in the crypto sector.
Polygon, a Layer 2 platform for the Ethereum network, made headlines with the announced acquisition of Mir, a project developing two subcategories of zero-knowledge evidence known as PLONK and Halo.
Polygon’s 250 million MATIC token investment, which already offers some of the lowest fees of any protocol on the Ethereum network, was done with an effort “To research and promote all meaningful scaling approaches and technologies at this stage,” says Sandeep Nailwal, co-founder of Polygon.
Another highly anticipated protocol that has been gaining traction recently is zkSync, a scaling solution developed by Matter Labs that secured $ 50 million in a Series B round led by Andreessen Horowitz in early November.
zkSync total deposits vs. total number of individual users
According to Digital Delphi, the two main projects that are live on zkSync are ZigZag, a decentralized exchange, and a funding platform called Gitcoin.
Delphi Digital analysts said:
“According to L2 fees, Token swaps via ZigZag on zkSync have the lowest fees. “
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