Imagine trying to send a large package through a small mailbox. That’s essentially the problem blockchain networks face with scalability.
As the number of users and transactions grows, the network’s capacity to process and store data becomes constrained, leading to congestion, delays, and increased costs.
While Zk rollups and Compression offer a solution, they differ significantly in their approaches and implications.
This article will explore these differences and determine which technology holds more promise.
Introduction to Zk rollups
A Zero-knowledge rollup (Zk-rollup) is a technology that helps make blockchain transactions faster and cheaper.
It does this by moving some of the work off the main blockchain (layer 1) and onto a separate network (layer 2)
Additionally, rollups often use compression techniques to make the data they post even smaller, saving space and reducing congestion on the blockchain.
Zk rollups have two core components:
- On-chain smart contracts: deployed on Ethereum, these contracts manage operations, handle user's deposits/withdrawals, and verify ZKPs.
- Off-chain virtual machine: This component Collects multiple transactions, executes them, Compresses data, and generates validity proofs (Zk-proofs) in the form of ZK Snark or Zk Stark.
How Zk rollups work on the Ethereum blockchain:
The Ethereum blockchain is a decentralized platform that enables the creation of smart contracts and decentralized applications (Dapps)
It has faced scalability challenges as its network has experienced rapid growth, From 1,329 transactions per day in 2015 to 1,961,144 transactions per day in 2024.
This exponential growth has led to congestion and high transaction fees; innovative solutions like Zk-Rollups have emerged in response.
Zk rollups are layer two scaling solutions that cater to applications requiring enhanced privacy and security.
By leveraging Zk rollups, developers can build scalable and efficient applications on the Ethereum blockchain, ensuring a seamless user experience.
Vitalik explained how Zk rollups operate in this video.
In simple terms….
Zk-rollups work like a high-speed express lane for Ethereum transactions.
They process transactions off the main road (layer 1), bundle them up, and then post a single proof of validity to the main chain.
Benefits and trade-offs
ZK rollups have emerged as a promising layer two scaling solution for the Ethereum blockchain, Which is currently handling approximately 1 million transactions daily,
fortunately, ZK rollups offer a timely solution to increase capacity. But, like any technology, they present both trade-offs and Benefits:
Trade-offs
* ZK rollups require complex cryptographic techniques, which can be difficult to implement and maintain.
* Users need to trust the operators of the ZK rollup, as they are responsible for processing transactions and generating proofs.
* ZK rollups are limited in their ability to express complex smart contract logic, as they are designed for simple transactions.
* ZK rollups rely on the Ethereum network for settlement, which means they are subject to Ethereum's limitations and potential congestion.
* Regulatory uncertainty: The regulatory environment for ZK rollups is still unclear, which may pose risks for users and operators.
Benefits:
* ZK rollups process many transactions off-chain, reducing congestion on the Ethereum main chain and increasing overall scalability.
* By processing these transactions, ZK rollups significantly reduce transaction times, making them ideal for applications that require fast processing.
* Zk rollups reduce the data stored on the main chain, resulting in cost-effectiveness and lower transaction fees.
* by using Zkps to keep transactions private, ZK rollups reveal no specific details about the transactions
* ZK rollups inherit the security guarantees of the Ethereum network, ensuring that transactions are secure and tamper-proof.
Essentially, ZK rollups make transactions faster, cheaper, and more secure, enabling new possibilities across industries.
Here’s a deep dive into their potential:
* Zk Rollups streamline KYC/AML processes, and startups like KYC-Chain use blockchain ZK rollups to create decentralized identity solutions.
* Zk rollups enable fast and affordable NFT minting and trading, and immutable X uses ZK Snarks for an efficient NFT experience.
* Zk rollups manage micro-transactions efficiently, benefiting Defi protocols; Loopring uses zKRollup for fast and Cost-effective trading.
Note: this list is not exhaustive; more projects may integrate these technologies.
Introduction to Zk compression on Solana:
The 2022 Solana mainnet outage, which lasted for 7 hours and resulted in over 1 million transactions being stuck in the mempool, exposed the need for more efficient and scalable solutions on the Solana blockchain.
This congestion event revealed the network’s current capacity limitations and underscored the importance of innovative solutions like Zk Compression.
ZK Compression is an innovative Solana (SOL) blockchain tool that empowers developers to build scalable applications by compressing their on-chain data on Solana’s layer 1.
Here are Zk compression core features:
* Minimal state cost*: significantly Reduces the cost of storing data on the Solana blockchain.
* L1 security & performance: Maintains the same level of security and performance as the Solana Layer 1 (L1) blockchain.
* Composable: Enables seamless interactions and combinations with other applications and protocols on Solana. When combined, These features create a cost-effective system to manage data, and it includes these processes:
* Compression: Account data is compressed, reducing its size and making it more efficient.
* Zero-knowledge proofs: the compressed data’s integrity is ensured using Zk proofs, which cryptographically verify the state roots.
Zk compression benefits and Takeoffs:
Cost-effective: compression reduces storage costs by minimizing data size, making it a cost-effective solution for individuals.
Scalability: by reducing the data size, compression improves transaction efficiency and reduces blockchain burden, enabling faster processing of transactions.
Enhanced Security: ZKPs provide an additional layer of protection against data breaches and cyber-attacks, ensuring the confidentiality of data.
Faster Data Retrieval: compressed data can be quickly retrieved and decompressed, resulting in faster application performance.
Trade-Offs:
Computational Overhead: Compression and decompression require additional resources, which can lead to increased energy consumption and hardware cost.
Complex Implementation: Expertise in zero-knowledge proofs and compression algorithms is necessary, which can be challenging for developers without the required knowledge.
Data Type Limitations: Compression may not be suitable for large media files or certain data types, which require specialized compression algorithms and storage solutions.
Zk compresseion Use cases
Recently, the developer of Helius lab introduced a revolutionary use case for ZK compression, showcasing its potential to Scale Solana’s L1 blockchain by 10,000x and Reduce Costs by 5,200x, but that’s not all. Here are even more exciting use cases for ZK compression:
* Zk compression enables efficient data storage and retrieval, reducing cost and increasing stability.
* ZK compression streamlines DeFi applications, reducing transaction fees and increasing efficiency.
ZK roll-ups Vs ZK compression: A comparison:
While some praise its groundbreaking approach to scaling layer one blockchain, others see it as a rebranded layer two rollups.
Justin Bons, CIO of Cyber Capital, calls it a game changer, saying it brings “all the upsides of a roll-up without any downsides” to Solana, allowing for Scaling without fragmentation and other L2 limitations.
However, Ethereum developer Ryan Berckmans disagrees, calling Zk compression “Ordinary” and an L2 in disguise.
Let’s dive into a comprehensive comparison between Zk Compression and Zk rollups to explore whether Ryan Beckermans’ criticism is valid or not!
Similarities
* Zk rollups and ZK compression utilize ZKPs to enable privacy and efficiency gains.
* Zk rollups and Zk compression both prioritize privacy by hiding transaction data and only revealing proof of validity
* They Both Aim to improve scalability by reducing the amount of data stored on the blockchain. * Zk rollups and Zk compression seek to reduce computational overhead and improve overall efficiency.
It's clear that they share some features, but there are key differences, One of which was shared by Micah Casella, senior research analyst at Messari.
Casella argued that ZK Compression is distinct from L2 scaling solutions like ZK Rollups because:
* Transaction execution and state storage are conducted on the L1 chain in ZK Compression.
* In contrast, ZK Rollups execute transactions and store states on an ancillary chain, only sending periodic commitments and proofs to the main L1 chain.
"In summary, it seems to come down to where execution is conducted and where the state is located. In ZK Compression, it's all on Solana," added Casella.
This highlights a fundamental difference between the two technologies, but there’s more:
* Zk compression uses a novel compression algorithm, while Zk rollups bundle multiple transactions into a single proof.
* Zk compression aims to scale monolithic L1 blockchains without fragmentation, while ZK Rollups are designed for specific use cases.
* Zk rollups require additional trust assumptions. Zk compression relies on the underlying blockchain’s security.
* Zk Compression aims for higher throughput, while ZK Rollups focus on reducing Computational overheard.
In summary, ZK Rollups and ZK Compression are two blockchain scaling solutions.
ZK Rollups processes transactions off-chain and posts proof to the main chain, while ZK Compression compresses data on the main chain. Both use zero-knowledge proofs for privacy and efficiency.
Key differences:
* Execution and state storage: ZK Compression on layer 1, ZK Rollups on layer 2
* Scalability approach: ZK Compression scales monolithic L1 blockchains, ZK Rollups for specific use cases
My thoughts:
Zk rollups and Zk compression are two different approaches to scaling blockchain transactions.
Zk rollups have been around for a while, allowing for improvements and integrating with other protocols.
Unlike Zk rollups, Zk compression is building something new. Though I might not like the name, Solana’s approach to computing and data is unique and differs from Ethereum’s, making them two distinct solutions with different goals and approaches.
Zk compression is a novel approach, but so is the crypto space, and it has brought us incredibly far.
The fact that we’re even discussing solutions like ZK compression is a testament to the progress made.
Given the potential of Zk compression and the Solana ecosystem, I believe it’s worth building on and exploring further. By doing so, we can continue to push the boundaries of what’s possible in the crypto space.