Sideshift.ai enabled Scroll ($SCR) to swap from wallet to wallet with over 200 coins to choose from. With that, let's look at the project behind the token!
What is Scroll? π€¨
Scroll is a zkEVM (Zero-Knowledge Ethereum Virtual Machine) rollup on the Ethereum network. It aims to enhance scalability while maintaining Ethereum's robust security, neutrality, and decentralization.
Zero-Knowledge Proofs (ZKP) π
Before we look at the project, let's step back and review what Zero-Knowledge Proofs are. A buzzword abundantly used in the crypto industry, ZKPs are protocols that allow a prover (Alice) to validate a state to a verifier (Bob) without revealing any additional information other than the validity of the aforementioned state.
A common analogy is if Alice proves to Bob that she knows where Waldo is without sharing with Bob where he is, other than revealing Waldo through a peephole. Using a peephole demonstrates to Bob that Alice knows where Waldo is without revealing to Bob where Waldo is. (This analogy is not considered a true ZKP since Bob can also see other information about Waldo, such as his hair and attire.)[1]
ZKPs were first introduced in 1985 by Shafi Goldwasser, Silvio Micali, and Charles Rackoff in their research on interactive proof systems.[2] The topic have since been further studied and applied to other fields, such as nuclear arms disarmament.[3]
ZKP is being explored for $BTC scalability as well. In 2024, a bridging framework titled BitVM was published, and since then, several iterations of BitVM have been explored. The newest iteration, BitVM2, explores zkSNARKS for permission-minimized bridging to and from $BTC.[4]
Scaling Solutions in Cryptocurrency βοΈ
An underlying problem across all of crypto, including $BTC, is the blockchain trilemma, which simply put, is the sacrifice of one of scalability, security, or decentralization. Scalability solutions as a whole are currently called Layer Twos. Different methods to scale an L1 include Roll-Ups, Side Chains, and Channels. These methods differ in terms of security, privacy, and economic impact, and Scroll promotes itself as a bytecode-level zkEVM roll-up ecosystem.
Scroll Project Overview π§
Introduction: Scroll was introduced on September 28th, 2021, as a native zkEVM solution to scale Ethereum.[5] Unlike other Layer 2 solutions at the time, such as Validium/Optimium and Optimistic Rollups, Scroll intended to integrate with Ethereum as its data availability layer.
Mainnet Live: Scroll's mainnet was announced on October 17th, 2023, and with it, the Scroll Origins campaign.[6] The initiative was to invite builders into the ecosystem to build on and reward them with commemoratives in the form of NFTs and reward points. A promotional strategy often used in crypto to bring in developers, liquidity, and users.
Ethereum Upgrade: On March 13th, 2024, $ETH was updated, implementing the Ethereum Improvement Proposal (EIP) 4844, which involves blobsβtemporary containers for L2s to store data.[7] With that, rollups like Scroll are now able to post data economically and natively onto Ethereum Layer 1, providing seamless integration for developers using Solidity.
Ecosystem Highlights π
Here are a handful of dApps deployed on Scroll:
- Ethena: A crypto-native stablecoin ($USDe) pegged by the yield generated on interest from delta-neutral positions.
- Maverick: An Automated Market Maker (AMM) optimizing capital efficiency and liquidity using their Maverick v2 engine.
- Nansen: A data and analytics tool providing insights into the ecosystem's performance.
- Fireblocks: An enterprise-grade digital asset management platform. Perfect for those who take themselves seriously.
- Matcha: A DEX aggregator.
Governance and Token βοΈ
The Scroll Foundation launched the Scroll Token in 2024, enabling users to participate in governance.[8] $SCR was airdropped to early participants. Holders can also stake their token to secure the network. The Scroll ecosystem is nascent yet carries the ambition of becoming an open economy for emerging markets. However, the sandbox they built does not have any direct value accrual that goes to the token, which begs the questionβhow does one value a governance token?
Conclusion π€
Significant progress in cryptography over the past decade has lowered the barriers to building on Ethereum and the greater crypto industry. The economic overhead for entrepreneurs to start is negligible, paving the way for broader innovations. I envision a future where most transactions will be on-chain, and with breakthroughs in ZKP, I want to say that in the future, most transactions will be on ZKP-implemented chains.
Closing Thoughts γ
As ZKPs find applications in areas like GameFi and SocialFi, there's a promise for continued blockchain adoption. Consider that incumbent gaming and social media companies can integrate ZKP technology, enhancing their security and privacy offerings. This means if crypto-native projects exploring that narrative don't find product market fit, then what is stopping market incumbents from web2 from implementing ZKPs to protect their moat and enter into web3? This is a business question more than it is a technical question.
