zkSync is a Layer-2 scaling solution developed by Matter Labs, which aims to reduce costs, speed up transactions and provide security on Ethereum using ZK Rollups technology.
How ZkSync works
To understand how ZkSync works, users need to know what are Rollups. Rollups are a utility designed to increase scalability of Ethereum. Rollup allows to roll many transactions up into a single batch and simultaneously send them to the main Ethereum chain. In other words, instead of submitting each transaction separately, rollup operators submit a summary of the required changes to represent all transactions in a batch.
Similarly, ZK Rollups are rollups that use Zero Knowledge to prove that the batch of transactions sent to Ethereum are correct and valid. Then, smart contracts on layer-1 Ethereum just need to verify that proof without re-executing the entire transaction. This saves more gas fees because Proof verification is much cheaper than executive transactions again.
zkSync is Matter Labs’ first product based on the Zk Rollups architecture, working as a Layer 2 of Ethereum. On zkSync, the funds will be stored on the smart contract on the main network (on-chain) while the computation and data storage is performed off-chain.
With any batch of off-chain transactions, the ZK rollup operator generates a proof of validity for this batch. Once the proof is generated, it is submitted to Ethereum to make the roll-up batch final. In zkSync, this is done via a SNARK, succinct non-interactive argument of knowledge.
Matter Labs’ products
Matter Labs is the developer of zkSync and during its development, this company has launched a number of products:
1, zkSync Lite
Its former name is zkSync 1.0. Launched in June 2020, zkSync 1.0 at that time, was simply a payment method and has not yet integrated smart contracts. In May 2021, zkSync released an upgrade (v1.x) that added NFT and swap features.
2, zkSync Era
Former name is zkSync 2.0. The initial zkSync 2.0 version includes new features such as Account Abstraction and EVM support through Solidity and Vyper. zkSync 2.0 has the ability to combine with smart contracts, Zinc programming language along with zkPorter.
3, zkPorter
As part of zkSync 2.0, it includes zkRollups with the ability to provide data on-chain and zkPorter with the ability to provide data off-chain. This is a byproduct of Matter Labs that increases the network’s TPS faster.
To sum up, Matter Labs has developed zkSync 1.0 and ZkSync 2.0 t, and then renamed them to zkSync Lite and ZkSync Era respectively.
ZkSync Era
After changing its name from zkSync 2.0 to zkSync Era, the team emphasized the application of zkEVM technology to increase compatibility with EVM smart contracts. The Matter Labs team has been researching the application of zkEVM on the pilot network for more than a year and on the main network since October 2022, and has also gone through many audit rounds.
zkEVM is partially developed based on Zero-Knowledge Proof, which is divided into 4 different types based on EVM compatibility, in which EVM compatibility will decrease from 1 to 4. zkSync Era falls in the type 4 zkEVM, which means it is only close to being compatible with EVM. zkEVM type 4 will only be equivalent to high-level languages, not the EVM itself.
Registered projects in the ZkSync ecosystem can test their dApps on ZkSync Era. With the MIT/Apache 2.0 license, ZkSync Era is fully open source and allows community contributions. Up to now, ZkSync has completed 12 months of testing with 8.8 million transactions taking place on the Testnet. The team also spent $3.8 million on audit activities and bug bounties to increase the security of this layer 2.
Highlights of zkSync Era
More effective than Optimistic Rollups
Optimistic Rollup projects like Arbitrum, Optimism and Zk Rollup projects like zkSync, Starkware are all leading scaling solutions for Ethereum. However, the zkSync team asserts that ZK Rollup has advantages over Optimistic Rollup such as:
Transaction Validation Time: ZK Rollups is faster than Optimistic as it does not have to wait 7 days to verify the correctness of the transaction.
Capital efficiency: Deposits and withdrawals of assets on ZK Rollup also do not have a 7-day delay like Optimistic Rollup, resulting in improved capital efficiency.
Account Abstraction (AA) Support
On Ethereum there are two types of accounts: externally owned accounts (EOAs) and contracts accounts. The former type is the only one that can initiate transactions, while the latter is the only one that can implement arbitrary logic. For some use-cases, like smart-contract wallets or privacy protocols, this difference can create a lot of friction. As a result, such applications require L1 relayers, e.g. an EOA to help facilitate transactions from a smart-contract wallet.
Accounts in zkSync Era can initiate transactions, like an EOA, but can also have arbitrary logic implemented in them, like a smart contract. This feature, called “account abstraction” (AA), aims to resolve the issues described above.
Advantages:
- No seed phrases: Avoid getting lost or being hacked. Account abstraction (AA) enables biometric verification and social recovery via family, friends or a selected third party. Users can sign into Ethereum with their web2 profile and customize permissions for at an individual app level.
- Paying fees in any token: Allow gas payments in ERC-20s or offset gas fees for users. Gas fees on zkSync Era are already 10-100x lower than L1, so programmatically subsidizing gas, lowers one of the biggest barriers to entry for your users. On zkSync Era, accounts that subsidize gas for other accounts are called Paymasters, swapping the chosen token for ETH behind the scenes.
- Automatic payments: Users can create automatic and scheduled transfers, recurring payment subscriptions, and other applications that are impossible today – all while retaining self custody.
zkEVM adoption
zkEVM is a new ZK-Rollup technology developed in early 2021 and is highly compatible with EVM. ZK programming languages still have some limitations. One of the biggest barriers is the heterogeneity between these programming languages that makes it difficult for developers to program in different languages. This makes it difficult to build DApps or want to migrate DApps between layers 1 & 2. All in all, zk-Rollup is relatively difficult to apply and has certain limitations in terms of functionality.
With zkEVM, the composability in layer 2 is greater thanks to the unification of programming techniques, making it easy for Ethereum-based DApps to transition to the zk-Rollup chain with little alteration to the source code.
Tokenomics
zkSync has not launched a token yet but Matter Labs has revealed that they can launch the token within 1 year after mainnet. So, users can support products and projects in the ZkSync Era ecosystem now to take the chance to get airdrops like how Arbitrum and Optimism did.
Roadmap and Updates
Development team
Matter Labs was founded by 2 members: Alexandr Vlasov and Alex Gluchowski. Alex Gluchowski is a software engineer with 19 years of experience, he worked as CTO for several technology companies, including one specializing in Ethereum R&D, before starting to focus on zkSync.
Investors & Partners
Investors and funding rounds
ZkSync has received a total of more than $458 million through more than 3 funding rounds, in which:
- Series A (March 2021): Received $6 million from Binance, Coinbase Ventures, Balancer, Aave, Curve, etc.
- Series B (November 2021): Received $50 million from a16z, Blockchain.com, Crypto.com, Bybit, Consensys, OKEx, Covalent, etc.
- January 2022: Matter Labs approved a $200M investment from BitDAO to build the zkSync ecosystem.
- Series C (November 2022): Received $200 million led by Blockchain Capital and Dragonfly, along with other investors such as Light Speed Venture Partners, Variant, A16z, etc.
Partners
zkSync is a layer 2 solution so it partnered with many companies in various areas.
- CEX exchange: Bybit, Huobi,…
- Project: Curve, 1inch, Hop Protocol, Aave…
- Investment funds: Mirana Venture, a16z, Dragonfly…
- Infrastructure: Chainlink, Arkn, Gitcoin, Unstoppable Domain…