ZKP Projects: A New Frontier for Traders to Explore

Traders, take note: zero-knowledge proofs [ZK] have emerged as a major player in the world of blockchain scaling, particularly when it comes to offchain execution environments known as Layer 2s [L2s]. These L2s can execute transactions outside of Ethereum and then post transaction data in batches to Ethereum to inherit its security, providing affordable and rapid transaction processing. Among the most popular L2 solutions are ZK rollups, which can facilitate up to 2,000 transactions per second [TPS], a huge increase from Ethereum's current rate of 30 TPS.

ZK rollups use ZK proofs such as SNARKs to validate and post their transaction batches on Ethereum. This approach combines offchain execution with onchain data to provide ZK rollups. Some of the largest ZK rollups today include dYdX, Loopring, zkSync Lite, ZKSpace, and Aztec Connect.

In addition to ZK rollups, two other styles of scaling to note are validiums and volitions. Validiums execute transactions offchain and maintain their data via ZK proofs offchain as well, which makes them ultimately custodial. They can facilitate up to 20,000 TPS, however, making them powerful scaling solutions. Immutable X and Sorare are among the more recognizable validiums in action today.

Volitions, created by the StarkWare team, are a cross between a ZK-rollup and a validium. With a volition, users can choose between onchain and offchain data availability, providing apps the option of validium-levels of TPS performance while still being interoperable with non-custodial ZK-rollup tech.

Traders should keep a close eye on ZK projects, particularly ZK rollups, as they continue to innovate and scale Ethereum's capabilities. With L2s becoming increasingly important for scaling solutions, ZK proofs are likely to play a crucial role in the future of blockchain technology.

All that said, the five largest ZK rollups as currently tracked by L2BEAT are as follows:

1. dYdX [$DYDX$] — a crypto and derivatives exchange | $375M USD TVL
2. Loopring [$LRC$] — L2 for trading, NFTs | $121M USD TVL
3. zkSync Lite — L2 for trading, NFTs | $65M USD TVL
4. ZKSpace [$ZKS$] — L2 for trading, NFTs | $49M USD TVL
5. Aztec Connect — L2 for private DeFI | $15M USD TVL

This article has been summarized for easier reading. Check the original here: https://newsletter.banklesshq.com/p/whats-new-with-zks