Strengths and Weaknesses
- Fast transactions: Achieves up to 20,000 Transactions Per Second (TPS) and aims to reach over 100,000 TPS in the future
- Multi-token fee payment: Fees can be paid with tokens that you include in the transaction
- EVM compatibility: With full compatibility with the Ethereum Virtual Machine (EVM), developers have an easier transition from the Ethereum blockchain
- ZK-Rollup: This technology enables zkSync Era to operate quickly and securely
- Competition: There are many competing blockchains that are also trying to create fast, cost-effective systems
- Centralization: In the early stages of zkSync Era development, verification mechanisms are centralized (the project aims to become more decentralized as development progresses)
The zkSync Era protocol is a trustworthy ZK-rollup that utilizes cryptographic proofs of validity to provide scalable and cost-effective transactions as a layer-2 (L2) solution on the Ethereum blockchain. Within zkSync Era, computations are performed off-chain, and most of the data is also stored off-chain. As all transactions are finalized on the Ethereum network, users have the same level of security as when using Ethereum itself.
zkSync Era has been designed to offer a similar user experience to the Ethereum blockchain, but with lower fees. Smart contracts in zkSync Era are written in Solidity / Vyper languages, making it compatible with the EVM.
Matter Labs is behind the creation and development of the zkSync Era blockchain, which was founded in 2020. Since then, Matter Labs has raised over 250 million USD from various investors to foster the zkSync Era ecosystem.
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Functioning of the Chain
zkSync Era is an L2 protocol based on the ZK cumulative architecture. All assets are held in a smart contract on the main chain (on-chain), while computations and storage occur off-chain. The fundamental concept is that instead of individually verifying each transaction, these transactions are "rolled up" into a single block (rollup block), which is then verified and approved as a whole.
Transactions in zkSync Era achieve finality on the Ethereum blockchain once a SNARK proof of the zkSync Era block has been generated and accepted by the smart contract. It is expected that the generation of this proof will take approximately 10 minutes. After this time, the zkSync Era transaction is considered as equally final as any transaction on the Ethereum blockchain included in the same block. When submitting a transaction to the zkSync Era network, there is a wait for the block to be filled, and therefore, the proof is not created immediately. With the higher throughput of the zkSync Era system, the time between blocks is shortened. Although the time until final confirmation takes approximately 10 minutes, this does not impact the usability of the network. Transactions sent to zkSync Era are immediately confirmed to users, appearing instantly to recipients in the user interface and API (even though they are marked as unconfirmed), and the received assets can be immediately used for further transfers (which can even end up in the same zkSync Era block).
Currently (as of May 29, 2023), instant confirmations are only statements from zkSync Era that they will include your transaction in the next block.
The zkSync Era protocol offers cryptographic assumptions and security features that provide users with security guarantees. Users don't need to monitor the network, and their private keys can be kept safe. Validators have no ability to steal funds or disrupt the zkSync Era state. Users can withdraw their assets back to the Ethereum mainnet at any time without the need for cooperation from zkSync Era validators.
Several mechanisms are utilized to achieve these guarantees. The zkSync Era protocol is built on the ZK-rollup architecture, which verifies each transaction through a smart contract on the Ethereum mainnet using a proof of block validity. This prevents system tampering by validators or loss of user funds.
If validators become unavailable, there is an emergency exit mechanism in place. In such a situation, users can submit an exit request directly to the priority queue on the mainnet. Validators are obliged to process these requests within a short time window, but if they fail to do so, the system enters an exodus mode, allowing users to immediately exit zkSync Era and transfer their assets back to the Ethereum mainnet through a direct transaction.
zkPorter is an innovative solution that provides high data availability off-chain for zkSync Era and offers advantages in scalability and transaction fees. Key transaction data necessary for state reconstruction is not directly stored on Ethereum but remains accessible through a Proof of Stake (PoS) mechanism, where stakers represent future holders of the zkSync coin. This approach enables much higher scalability with a capacity of tens of thousands of transactions per second. As a result, transaction fees are significantly reduced to a level comparable to side chains, costing just a few cents.
In terms of safety, zkPorter should offer a higher level of security than any other main or side chain. In the event that a malicious actor controls both the sequencer and more than two thirds of the total stake, they could sign a valid state transition, but would not be able to access the data. In such a scenario, the state would be "frozen," and users would not be able to withdraw their assets, but the attacker's deposit would also be frozen. This means that an attacker with a high stake would not derive any direct financial benefit from exploiting the system. This security mechanism ensures asset protection and minimizes the risk of financial loss in the event of an attack.
This is part of the zkSync 1.0 protocol and allows for fast design iterations. However, users have the right to reject future upgrades, as anything new must be announced through the zkSync contract, and users are then given a 4-week time window to exit the protocol if they wish to do so.
The Security Council, which consists of 15 members from the Ethereum community, has the ability to shorten the 4-week time window to ensure a balance between security and upgrade. If Matter Labs initiates an upgrade, at least 9 out of the 15 council members can implement it immediately. In this phase of zkSync Era, a higher probability of errors is expected, which is why this mechanism has been chosen.
Fractal Scaling is a smart way to create a heterogeneous, yet highly scalable blockchain system, thanks to the utilization of Zero-Knowledge Proofs (ZKP). Within this concept, multiple ZKP chains run in parallel, known as hyperchains in the zkSync Era world. The block proofs from these hyperchains are then aggregated into a single final block, which is settled on L1 (the main chain). Each of these hyperchains can be a system on its own, and can have an infinite number of additional hyperchains above it, such as L3, L4, and so on. This approach achieves an incredible level of scalability and flexibility for the entire system.
Fractal scaling is important, but it alone is not sufficient to achieve hyperscaling; there is another key component which is necessary. Fractal scaling can always be connected through native bridges via underlying layers, but this creates a central bottleneck for scalability and limits inexpensive direct transfers between users on both chains.
Hyperchains are parallel running fractal instances of zkEVM that settle on the main L1 mainnet. Anyone can create and deploy hyperchains without permission; however, to maintain trustworthiness and full interoperability, every hyperchain must use the exact same zkEVM engine as the main zkSync Era L2 instance. This ensures that all ZKP circuits remain 100% identical, and that hyperchains inherit security and trustworthiness from L1, regardless of who deployed them. This guarantees zero reliance on trust or security.
This hyperscaling interface, known as hyperchains, is not limited to usage within the zkSync Era chain. To facilitate and expand its usage, the Hyperchain SDK has been developed, which is a set of tools that allows developers to create and deploy their own hyperchains outside the zkSync Era environment.
Hyperbridge is a tool that enables asset transfers between different hyperchains with minimal costs and without the need to traverse the layers of individual chains. Similar to hyperlinks on web pages that allow one-click navigation from one page to another, hyperbridges facilitate easy asset transfers between hyperchains.
Smart contracts can utilize hyperbridges for the secure sending of assets and messages between hyperchains without the need for trust. Communication through hyperbridges is always asynchronous. The sending hyperchain must finalize its state up to the oldest common hyperchain, which serves as the foundation for both the sending and receiving hyperchains. Communication latency through hyperbridges is usually a matter of seconds, as hyperchains are capable of generating blocks quickly, and hardware acceleration ensures fast block proof generation.
A zero-knowledge proof is a method by which something can be demonstrated as true without directly revealing the information. One person, called the prover, attempts to prove a statement, while another person, the verifier, is responsible for verifying if the statement is indeed true.
Zero-knowledge proofs have undergone significant development in recent years, offering new possibilities for anonymizing data flows on the blockchain. This makes it more difficult to link an address to a specific individual and track their movements.
An example showcasing the power of zero-knowledge proof technology is a decentralized application (dApp) on the Ethereum blockchain called Tornado Cash. This application utilizes zero-knowledge proofs to secure and mask your transactional activities when using the app.
It is important to note that zero-knowledge proof technology brings not only benefits, but can also raise concerns regarding illegal activities. One of the main drawbacks of zero-knowledge proofs is the creation of a shared reference chain that is available to all participating contributors. Unfortunately, users cannot independently assess whether all participants are genuinely honest.
Nevertheless, I believe that the development of zero-knowledge proof technologies represents an important step towards enhancing privacy and protecting user data on the blockchain. The future of zero-knowledge proofs promises even greater advancements in privacy protection and ensuring anonymity in financial transactions and data sharing on public blockchain networks.
- Towards the end of the year, Matter Labs introduced the zkSync scaling concept for the Ethereum blockchain
- June - zkSync 1.0 (Lite) was launched on the Ethereum blockchain
- August - the zkSync 1.1 upgrade was released
- March - a funding round raised 2 million USD
- April - zkPorter was introduced, and the Exodus mode was tested on the testnet
- May - the zkSync 2.0 testnet was launched
- November - the second funding round raised a total of 50 million USD and Chainlink price channels were implemented into zkSync 2.0
- January - zkDAO was founded
- February - the public testnet of zkSync 2.0 was launched
- October - the mainnet alpha, named Baby Alpha, was released
- November - the third funding round raised 200 million USD from investors for the development of the zkSync ecosystem
- February - zkSync 2.0 was renamed zkSync Era
- March - the zkSync Era mainnet was opened to the public
The Gemholic project, which raised 921 ETH through an IDO on the zkSync Era protocol, faced issues accessing those funds as they were locked in a smart contract, causing incompatibility with the transfer function. zkSync Era offered assistance in recovering the locked assets and confirmed that the funds were secure.
Gemholic deployed its token contract without testing it first on the testnet of the zkSync Era mainnet, but encountered issues due to using the outdated .transfer() function with a hardcoded gas amount. The zkSync team found a solution to unfreeze the contract and restore access to the funds.
This incident highlights that the integration of zkSync Era with EVM is not yet flawless and requires improvement. Gemholic should have tested its contracts on the testnet first to avoid such risks with users’ funds.
Alex Gluchowski - Co-Founder and CEO
Alex is a software architect with over 15 years of experience in engineering and startups. His extensive expertise allows him to effectively tackle technical challenges and offer innovative solutions. Currently, he serves as a co-founder at Matter Labs, a company focused on research and development in the blockchain field. The main goal of the company is to overcome scalability barriers in blockchain technology through zero-knowledge proofs.
Alex is passionate about individual freedom and self-ownership, making his work in decentralization incredibly important. His involvement in these areas motivates him to explore new ways of creating an environment that empowers individuals to control their own assets and data.
With his knowledge and passion for technology, Alex is a significant part of Matter Labs, contributing to the development and improvement of their products. His expertise and perspective are valuable factors in seeking new approaches and innovative solutions in blockchain scalability.
Matter Labs, based in Berlin, is the main creator and developer of zkSync Era, a revolutionary blockchain protocol. The company focuses on creating a breakthrough solution in zero-knowledge proofs that is compatible with the Ethereum Virtual Machine (EVM). The team consists mainly of European members with deep knowledge in blockchain technologies. Although the company doesn't actively seek public attention, the CEO and co-founder, Alex Gluchowski, along with several other managers, publicly represent the startup.
Matter Labs does not currently have plans to launch its own native coin for zkSync Era. This will be considered after the network's shift towards greater decentralization, at which point, the coin could become an essential element of the zkSync Era ecosystem.
Matter Labs has exclusive responsibility for implementing changes to the zkSync Era blockchain, which includes both technical development and strategic decision-making. Since its inception, Matter Labs has been striving for continuous improvement and the innovation of zkSync Era to provide users with a powerful and secure blockchain protocol.
After the successful launch of its own coin, one of Matter Labs' main goals will likely be to design and implement mechanisms for greater decentralization, and to transfer governance capabilities to the community. This step will democratize the decision-making process and involve zkSync Era users in shaping the protocol's future.
Revenue & Tokenomics
Matter Labs can point to several significant financial investments that have provided a substantial boost to the development of the zkSync ecosystem. From 2019 to 2022, the company successfully raised a total of 458 million USD in three financing rounds. These funds will be used to support the growth and innovation of zkSync.
In collaboration with BitDAO, Matter Labs also established zkDAO, which received a 200 million USD investment to support the overall growth of the zkSync ecosystem.
The Uniqueness of the Chain
ZK-rollup technology provides users with a high level of privacy when conducting transactions. By utilizing zk-SNARKs, which are zero-knowledge proofs, transactions are secured and private. zkSync Era users can therefore perform their transactions without worrying about the confidentiality of their financial information.
Transaction Processing Speed
ZK-rollup leverages efficient data compression and optimized processing, enabling fast and scalable transaction execution. zkSync Era users can make real-time payments and interactions on the blockchain without unnecessary delays.
zkSync Era is made compatible with the EVM through zkEVM technology, which introduces the ability to create ZK-based smart contracts that are fully compatible with the Ethereum EVM ecosystem. This compatibility opens doors for developers to easily and conveniently harness all the benefits of zkSync Era.
With zkEVM, developers can utilize native Ethereum programming languages, such as Solidity, when building applications on zkSync Era. This means developers don't have to learn a new language or adapt their existing skills; instead, they can leverage their existing knowledge and experience with Ethereum programming.
Hyperscaling on the zkSync Era blockchain refers to processing an infinite number of transactions without compromising security and decentralization. In theory, it is possible to aggregate arbitrarily large blocks of transactions and create a single, succinct proof of computational integrity for each such block. However, in practice, no single monolithic blockchain system will be able to satisfy the infinite demand in the market. ZKPs offer a beautiful way to build a heterogeneous, yet hyper-scalable blockchain system. This idea is called fractal scaling. Multiple different ZKP chains (referred to as hyperchains in the zkSync Era world) run in parallel, and their block proofs are aggregated into a single final block settled on L1. Each of the hyperchains will resemble an entire system (i.e., it can have an infinite number of additional hyperchains on top of it: L3, L4, etc.). Fractal scaling is necessary, but not sufficient to achieve hyper-scalability; you need one additional component: hyper-bridges - native bridges that enable transfers between any two hyperchains.
zkSync Era introduces a new type of functionality called account abstraction. This feature significantly improves traditional Externally Owned Accounts (EOAs) such as MetaMask users, and transforms them into Contract Accounts (CAs). This opens up a vast array of new possibilities and benefits for users.
By transitioning to CAs, users are able to leverage an infinite number of functions, which was previously not possible. For example, no upfront phrases enables the instant use of the account without the need for prior funding, while aggregating multiple operations together allows for efficient processing and reduced transaction costs. Payment automation also simplifies the payment process and enables automatic execution of payment transactions.
How the Network is Secured
zkSync Era has several key security advantages due to the separation of two key components:
- Prover (ZK proofs)
- Sequencer (block formation)
This separation enhances the overall security of the system. The prover is responsible for assembling and verifying privacy proofs (ZK proofs) that confirm transactions on the blockchain. These proofs are independent of the sequencer and can be verified by other network participants. If someone were to attempt to exploit the prover by trying to manipulate the privacy proofs, it would still be necessary to hack the sequencer to incorporate these manipulated proofs into blocks and potentially cause issues.
On the other hand, the sequencer is responsible for block formation and determining which transactions and proofs will be included in blocks and incorporated into the overall blockchain. The main advantage of separating the sequencer is that if the prover is abused, the integrity of the entire blockchain is not automatically compromised; an attacker would also have to successfully breach the sequencer and manipulate the block formation process, which is a significantly more challenging task.
As of May 31, 2023, zkSync Era is still in the early alpha stage, meaning it is still under development and testing. During this phase, the main responsibility for the proving and verification mechanisms lies with Matter Labs. The company is striving to optimize and ensure the protocol's security before further expansion and release to the public.
However, the future development of zkSync Era holds promising changes. Matter Labs' plans include additional iterations and protocol enhancements that would enable a gradual transition to the next phase. This would involve progressive decentralization and the involvement of a broader community in the governance and development of zkSync Era.
Bug Bounty Program
The zkSync Era blockchain incorporates a set of monitoring tools in its system, such as OpenZeppelin Defender and Forta. These tools continuously monitor the correctness of deployed contracts on the blockchain and monitor key actions and events. Their main task is to ensure the security and integrity of the zkSync system.
To prevent potential asset leaks from the L2 layer, the system implements a feature called layer-1 withdrawal delay. This feature prevents attackers from withdrawing funds from zkSync Era until Matter Labs conducts a thorough investigation and confirms their legitimacy. This measure maximizes security and minimizes the risk of financial loss.
These security mechanisms are currently deployed to ensure maximum protection of zkSync's assets and users. However, as time passes and the network decentralizes, there are plans to gradually phase out these monitoring tools. The goal is to achieve full decentralization and rely on the robust security architecture of the zkSync Era blockchain itself.
At the moment, you cannot run your own node on the zkSync Era blockchain; all verification and proving mechanisms are managed by Matter Labs.
Delegation is currently not possible either, due to the absence of a native coin that you could stake. However, this is expected to change in the future with the development of zkSync Era chain. Indeed, one of Matter Labs' main goals is to achieve a fully decentralized zkSync Era blockchain.
Matter Labs launched the zkSync mainnet Era to the public on March 24, 2023 after extensive testing and fine-tuning. At the moment, there has been no further Road Map presented, but once it is introduced, we will surely update this section.
zkSync Era has over 40 active projects within its DeFi ecosystem. The three largest ones are:
- SyncSwap - DEX
- iZiSwap - DEX
- Muti.io - DEX
Matter Labs, in collaboration with BitDAO, has established zkDAO, which will support both new and existing projects. zkDAO will provide grants primarily focusing on:
- The development of tools that facilitate migration from the Ethereum blockchain to L2 for both users and developers. These tools aim to reduce barriers and enhance the user experience when transitioning to L2. Developers receive support and tools that streamline their work in creating applications on L2
- Support for the creation of public goods. Through Request for Proposals (RFPs), grants are provided for current and future projects, and contributions that have a positive impact on the ecosystem. The DAO also recognizes past contributions that have proven beneficial and awards retrospective prizes as recognition for these efforts
- Support for the creation of native zkSync Era tools that are essential for synergy with ZK-rollup applications. These tools contribute to the efficient and secure functioning of zkSync Era and enable better interaction with other applications and project solutions within the ZK-rollup ecosystem
Additionally, zkDAO will provide strategic capital through financing various high-impact verticals. This financing will be regularly reviewed to ensure that resources are directed where they bring the most value and benefit, such as:
- In its initial phase, the DAO will provide funding for various high-potential areas, including DeFi, NFTs, gaming, payments, privacy, interoperability, oracles, data management, data analysis, file storage, DAOs, digital identity, and social networks. This way, the DAO is actively engaging in the development of key verticals that are crucial for growth and innovation in the blockchain ecosystem
- The DAO will have the ability to provide liquidity, deposits, and staking. This enables support for additional projects and initiatives that have the potential to bring benefits and strengthen the ecosystem
- Returns from these investments and financing will be continually reinvested back into zkDAO. This approach aims to ensure long-term sustainability and growth, increasing its capital and the ability to support new projects and initiatives in the future
Twitter is a great place to get the best and most up-to-date news about the zkSync Era ecosystem. This social platform regularly shares information about new partnerships, development progress, and other important events related to zkSync Era.
The Matter Labs blog also serves as a platform for communication with the zkSync community and the public. Here, zkSync users can gain a deeper understanding of the technology, future plans, and expected benefits that zkSync will bring.
zkSync Era has a large and active Discord community. As of now (June 15, 2023), it boasts an impressive user base of over 550,000 members, which is testament to its popularity within the blockchain industry. Despite the substantial number of users, the community does an excellent job of maintaining order and enforcing rules, creating a positive and engaging environment for everyone involved.
The Discord server is well-organized, with clear and intuitive sections that make it easy to navigate and find relevant information. The various channels and categories cater to different topics and discussions, allowing users to connect and engage with like-minded individuals who share a common interest in zkSync Era.
However, one aspect of Discord that I found slightly bothersome was the verification process during login. In order to access the server, users are required to complete a series of verification steps, including verifying their Google account, wallet, and occasionally dealing with an unreliable captcha system. Personally, I encountered some difficulties with the captcha, and it took me three attempts before successfully completing the verification process.
Where to Buy
There is currently no coin available for purchase.
Ledger Nano X - The most widely used hardware wallet on the market. When paired with your software wallet, you gain greater security for your cryptocurrencies
MetaMask - Software wallet
Phantom - Software wallet
I believe that Matter Labs is leading zkSync Era in the right direction, although its current centralization may raise concerns. However, I trust that this will change in the future. Indeed, centralization at zkSync’s current stage is not a significant problem because Matter Labs need sufficient financial resources for development. However, it remains to be seen how much the native coin will cost on launch, and how resistant investors will be to selling their zkSync Era blockchain coins. In the future, an airdrop will reveal how much VC (Venture Capital) will receive from Matter Labs' coin, and how they will handle it. This will demonstrate whether the funds raised for development were beneficial, and whether a good product was created that will attract even more retail users after the VC's departure.
It is important for Matter Labs to continue its efforts towards decentralization and community involvement in decision-making processes. Only then can zkSync Era achieve the full trust and scalability necessary for its long-term success. It is also crucial to monitor how Matter Labs progresses in its decentralization efforts, and the impact it will have on users and investors in the future.
I am also intrigued by their hyperscaling concept and curious to see how it will perform under full network operation and load. In the L2 solutions space for the Ethereum blockchain, there are many competitors such as Arbitrum and Optimism, which use different technologies than zkSync Era. Therefore, I am very interested in how the full launch of zkSync Era will affect this competition. Optimism has been the leading L2 solution for Ethereum so far, but it was surpassed by Arbitrum after the launch of their own coin, ARB.
There has also been speculation about a zkSync Era airdrop, but equally, there has been no official confirmation yet. Personally, I would expect the coin to be released sometime between 2024 and 2025, given the pace of zkSync's development. Considering that Matter Labs has many financial investors who have invested significant resources in the project, it would not be surprising if, after the coin launch, ZKS reshuffles the deck among the top L2 solutions on the Ethereum blockchain in terms of TVL.