NEW RESEARCH ZKSYNC

NEW RESEARCH REPORT
The fundamentals of @zksync

Background & progress to date

Alex Gluchowski is the CEO, Co-Founder, and “face” of Matter Labs — the development team behind zkSync — an upstart zero-knowledge Ethereum rollup/L2.
The German-based developer group is recognized as one of the early proponents of Ethereum rollups — having launched the very first zero-knowledge prototype in 2019 shortly after establishing the development team.
Per Gluchowski, the thesis was (and still is) that Ethereum would require scaling solutions in the near term. The team concluded that entities putting lots of value onchain will always pick the platform that offers the highest security — with Ethereum being #2 in this category (behind only Bitcoin). For this reason, it didn’t make sense to build a competing L1. Rather, the team decided that the next wave of app developers will seek a rollup such as zkSync — since it offers the same security guarantees as Ethereum L1 with the added benefits of privacy, lower costs, and higher throughput.
Having launched multiple versions of the protocol, conducted robust testing, several internal and external security audits, public contests, and bug bounties — the Matter Labs team launched its mainnet to the public on March 24, 2023 (just 9.5 months ago).
The team is now up to 116 employees (per LinkedIn) and has become the fastest-growing Ethereum rollup over the last 6 months.

Let’s go onchain to check the progress to date:

Core developers & transaction counts

1. zkSync is #1 in terms of core developers when compared to Arbitrum, Base, OP Mainnet and Starknet — it’s main competitors.
2. They are also #1 in terms of transaction counts over the last 180 days.

Takeaway: It’s really hard to attract and inspire a talented team of core developers to build a blockchain. It’s even harder to get other developers to come in and build apps “on top.” And it’s even harder to get users to come in and use those apps.
This data tells us that zkSync is seeing early success on all three fronts. Stay tuned as we look at user retention figures later in the report.

Bridged assets

The total value deposited to zkSync’s bridging contracts is currently $591m. With that said, in total, the L2 has only $167m of value locked within project smart contracts — with SyncSwap the leader at $48m today (per DeFiLlama).

Active users

Below we can visualize zkSyncs active users vs Arbitrum, Optimism (L2), Ethereum, Solana, and Avalanche (L1s):

As we can see, despite its nascent stage, zkSync is currently the leader amongst the heavyweights. Impressive indeed.

Product: What makes zkSync different?

As ever, our goal is to keep these sections as high-level as possible — so that you can stay out of the technical weeds, yet come away with clear takeaways.
To provide a quick primer — Ethereum rollups (L2s) are designed to scale the network with faster throughput and lower costs by batching transactions off-chain — and then anchoring proofs of the data on the L1. In doing so, rollups inherit the security guarantees of the more decentralized and secure L1 — while solving the scalability constraints of the base layer. This then enables more interesting use cases for developers to build consumer applications — leveraging the rollup/L2 for execution, and the L1 for security/settlement/data availability.Our recent coverage of Ethereum L2s (Base, Arbitrum, and Optmism), has been largely focused on optimistic rollups.
zkSync is taking a different approach toward scaling Ethereum. They are doing it with a zero-knowledge rollup.
Below are some of the primary differences between zero-knowledge rollups and optimistic rollups.

Security guarantees: in both cases, security is derived from Ethereum because L2 rollups offer trustless bridges and do not have their own consensus — which differs from side chains such as Polygon (which has its own validator set and uses the MATIC token to pay for transactions).
Transaction verification: Optimistic rollups use “fraud-proofs.” In essence, every transaction “optimistically” assumes all transactions are valid. However, there is a 7-day “fraud-proof” period where anyone can challenge the validity of the transaction, and is economically incentivized to do so.
Zero-knowledge rollups use “validity proofs” instead.
Timing of transaction verification: 7 days for optimistic rollups vs nearly instant for zero-knowledge rollups. Why? There is no “fraud-proof” period for zero-knowledge rollups.
Privacy of data: As the name “zero-knowledge” would imply, when zk rollups such as zkSync anchor proofs of the data to Ethereum, only the “proof” is visible — and not the transaction details. With that said, transactions initiated on zkSync (at the L2 execution level) are transparent, just like Ethereum today. Anyone can see the sender, the recipient, and all the details of the transaction through a zkSync transaction explorer. Per the protocol’s governance docs, the team is focused on building out scalability first and will be implementing private transactions later.
Efficiency of transactions: In terms of the gas/data costs, zero-knowledge rollups use less gas at the L1 level since only the proof of the data is sent. Optimistic rollups post the entire transaction data to the L1 — making them more costly.
Capital efficiency: Because there is no 7-day fraud-proof period, users can withdraw funds almost immediately with zk proofs vs the significant wait for optimistic rollups today.
Transaction costs: Zk rollups cost more at the L2 level since they are more complex/technical — making the computation more expensive than optimistic rollups today.
Complexity to build: From a technical/math perspective, zk rollups are more difficult to build than optimistic rollups today.

Takeaways:

1. Both technologies are relevant.
2. Strong teams are building zk solutions as well as optimistic solutions.
3. We expect consensus to eventually form amongst app developers in terms of which types of applications should be built on zero-knowledge rollups vs optimistic rollups.
4. We haven’t seen anything to indicate clear consensus has formed in the market just yet — an indication that we are still in the sandbox/experimentation phase of innovation.
5. Depending on who you speak to, you’ll hear differing opinions from various developers and engineers as to which technology will be more important in the years to come.
6. At the end of the day, successful teams will out-execute their competition over a very long period. In some cases, optimistic rollups will incorporate zk rollups and vice versa — as we are already seeing with Optimism. More on that in the section that follows.

I will continue my article as part 2 tomorrow.ıf you liked my article you can check out my other articles on my profile.