Hashflow (HFT) Price Prediction 2023, 2024, 2025 to 2030: Should
Best ZK projects to look out for in 2023
ZK-rollups, also known as zero-knowledge rollups, are a layer-2 scaling solution for blockchain technology. They offer a way to scale blockchain transactions without sacrificing decentralization or security, making them a popular choice for several decentralized finance (DeFi) platforms and applications.
The fundamental idea behind ZK-rollups is to take advantage of zero knowledge proof technology to bundle multiple transactions into a single, larger transaction. This bundle, or rollup, is then verified and processed on the blockchain, with the result of the transaction being recorded on the blockchain’s ledger.
This helps to reduce the number of transactions that are processed on the main blockchain, freeing up valuable network resources and reducing the overall cost of transactions.
In this article, we will take you through how ZK rollups work and the top ZK projects to look out for in 2023.
How do ZK-rollups work?
ZK-rollups work by creating proof that verifies the validity of all of the transactions within the bundle. This proof is generated off-chain, reducing the computational overhead of processing each transaction individually. Zk-rollups store all addresses and respective balances in a Merkle tree. The root of this “balance tree” is stored in an on-chain smart contract. The result of this off-chain computation is then sent to the blockchain for validation, with the proof being used to validate the entire bundle of transactions. Their three main tasks include Handling deposits, transfers, and withdrawals.
Due to the design of Ethereum, it comes with inherent scalability issues. The approach of ZK-rollups to scaling is highly secure, as the proof is generated using zero-knowledge technology, which allows for the proof to be generated without revealing any of the underlying transaction data. This protects the privacy of users and their transactions, while also ensuring that the integrity of the transaction data is maintained.
Another advantage of ZK-rollups is that they are highly flexible. They can be used to process a wide variety of different types of transactions, including traditional financial transactions, as well as more complex DeFi applications, such as decentralized exchanges, lending and borrowing platforms, and more. This flexibility makes ZK-rollups an attractive option for a wide range of blockchain applications, as they can be tailored to meet the specific needs of each individual application.
ZK related crypto projects to look out for
The leading popularity has resulted in ZK-related protocols such as $MINA, $LRC, $IMX and $DUSK outperforming. In fact, Haseeb, the Managing partner of Dragonfly also expressed his opinion that ZK-rollups are the next leading narrative to look forward to in 2023. He stated that “You’re going to see ZK rollups come to market. That’s going to be a very interesting space to watch.”
This recent price movement is likely due to speculation, as there has not been a corresponding increase in key on-chain metrics such as active users, transactions, and bridge deposits. Nevertheless, a continued upward trend may occur near or after the introduction of ZkSync, Polygon zkEVM, and StarkNet, particularly if there is an influx of new users and liquidity into the ecosystem.
To better understand the landscape, we have compiled a list of both existing and upcoming projects that utilize zk-related technologies.
Released ZK projects
MinaProtocol is a blockchain solution that claims to be the lightest in the world. It incorporates zk-SNARKs and a Proof-of-Stake consensus mechanism. The use of ZK-Rollups allows nodes to store smaller proofs instead of the entire chain. This makes the MinaProtocol blockchain smaller and more efficient. It significantly reduces the amount of data required for each user to download. The goal of MinaProtocol is to provide a scalable and secure platform for decentralized applications that can be easily accessible to users, even on resource-constrained devices.
IMMutable X (IMX) is a Layer 2 scaling solution designed specifically for Non-Fungible Token (NFT) trading and minting. It promises fast confirmation times and minimal transaction fees. IMX utilizes ZK-Rollups technology developed by Starkware to achieve scalability. The platform aims to support multiple Layer 2 and Layer 3 ZK-Rollups for various use cases. IMX positions itself as a developer platform for web3 games and has already been adopted by popular web3 games like Illuvium, GodsUnchained, Kongregate, and others. The goal of IMX is to provide a fast and efficient platform for NFT trading and minting while maintaining the security and immutability of the Ethereum network.
Loopring is a Layer 2 solution that aims to bring scalability, security, and efficiency to the world of decentralized cryptocurrency exchanges (DEXs). It is built on the Ethereum blockchain, which is currently one of the most widely used blockchain platforms in the world. It uses ZK Proofs to enable anyone to develop a high-throughput, non-custodial decentralized exchange (DEX). With its use of and connection to two powerful narratives, ZK and DEX trading, Loopring has the potential to become a major player in the decentralized exchange market. As the demand for DEXs continues to grow, Loopring with its focus on creating a better user experience is a project worth keeping an eye on.
Syscoin is a decentralized blockchain platform that was created in 2013. It provides a range of blockchain-based services including secure token issuance, decentralized exchanges, digital certificates, and more. The platform uses a unique consensus mechanism known as “Proof of Work with Merge Mining”, which enables it to merge-mine with other cryptocurrencies such as Bitcoin, providing enhanced security to the network.
It has a dual-layer structure, which allows for the creation of scalable smart contracts while maintaining network security. To achieve this, Syscoin uses a modified version of the Ethereum Virtual Machine (EVM) called the NEVM, which employs ZK proofs to provide an impressive capacity for processing transactions – up to 210,000 TPS.
This innovative architecture is what sets Syscoin apart and enables it to provide a wide range of services and applications. The visual representation of Syscoin’s architecture helps to better understand the structure and capabilities of this innovative platform.
Dusk Network is a decentralized Layer 1 blockchain platform designed to address the privacy, security, and scalability needs of businesses and individuals alike. This platform provides a number of privacy-focused features, such as confidential transactions, and also has strong security measures in place, making it ideal for sensitive transactions and data storage.
The Dusk Network uses a consensus mechanism called Segregated Byzantine Agreement (SBA), which provides a balance between safety and scalability. It is a blockchain platform that has been designed specifically for trading programmable, confidential, and compliant securities. The network utilizes a zero-knowledge proof (ZKP) system called ‘PlonKup’ to ensure the protection of sensitive data in a cost-effective manner. A visual representation of the consensus mechanism is also available to provide a clear understanding of the platform’s operations.
Mute is an open-source privacy-focused protocol for decentralized communication. It uses a combination of peer-to-peer and blockchain technology to enable secure and private communication for individuals and organizations. The protocol is built on top of the Ethereum blockchain and utilizes zero-knowledge proofs (ZKPs) to provide enhanced privacy and security features. Mute aims to provide a decentralized alternative to traditional communication platforms, where users can freely exchange messages and data without having to worry about privacy concerns.
UnReleased ZK projects
zkSync is a Layer-2 scaling solution for the Ethereum network that utilizes ZK rollup technology. This makes it possible to scale the Ethereum network to handle much higher transaction volume and provide faster, cheaper, and more secure transactions. It has garnered significant attention and support from major investors, having raised over $450 million from firms such as a16z, Dragonfly, Lightspeed, and more. Despite not having a fully launched Mainnet yet, the ecosystem around zkSync is already well-developed. The platform offers improved privacy features, allowing developers to create applications that preserve sensitive information while still benefiting from the security and transparency provided by Ethereum. The next step for zkSync is the “Fair Onboarding Alpha” phase, where protocols can begin to deploy on zkSync 2.0 in a controlled environment.
Starkware is a company focused on research and development in the field of secure and scalable decentralized systems. The company has created various products and services in the blockchain industry. One of their offerings is a Layer-2 scaling solution that utilizes STARK proofs to minimize the information transmitted to the Ethereum blockchain and ease network congestion.
SnarkNet is another product of Starkware that employs ZK-Rollup technology. It is a network that utilizes the technology developed by Starkware to offer fast and secure Layer-2 scaling for Ethereum. The use of zero-knowledge proofs enables efficient transactions that can be verified quickly and securely on the Ethereum main chain. Starkware has received substantial investment, with more than $285 million raised from investors such as Paradigm, Pantera, Sequoia, and the Ethereum Foundation. The company also boasts an extensive ecosystem.
Scroll is a type of zkRollup that is based on the zkEVM technology. This allows for compatibility with existing Ethereum applications and tools. Scroll is among the upcoming L2 solutions with a relatively high pre-market valuation, ranking fourth. And with a token launch on the horizon, there may be an airdrop opportunity here. They recently hinted at an airdrop, stating that they’re “creating an incentive mechanism to encourage participation.”
The pre-alpha testnet for Scroll includes both Scroll L1 and Scroll L2 test networks. The L1 network is a fork of Ethereum using a proof-of-authority consensus, while the L2 testnet is a zero-knowledge rollup deployed on top of the L1 network. There are several demo applications available on the testnet, including a faucet on Scroll L1, a bridge between Scroll L1 and Scroll L2 that will be based on the HopProtocol UI, a fork of Uniswap V2 that works on Scroll L2, and block explorers for both L1 and L2 that use Blockscout as well as a roll-up explorer.
Aztec is a protocol that provides privacy and security for decentralized applications built on Ethereum. It enables developers to create financial applications with privacy features and confidential transactions on the Ethereum network. This is achieved through the use of zero-knowledge proofs, which encrypt transaction data and keep it confidential, while maintaining the transparency and security of the Ethereum blockchain. Aztec is designed to be highly scalable, allowing for a large number of transactions to be processed at once. The company recently raised $100 million in funding, with the lead investor being a16z. There may also be potential for an airdrop in the future.
Polygon is a scalable and sustainable infrastructure for the Web3 ecosystem that is built on top of Ethereum. Its main goal is to offer fast and secure scaling solutions for decentralized applications (dApps) that operate on the Ethereum network. As a Layer 2 solution, Polygon processes transactions outside the main Ethereum blockchain while still relying on its security. The platform leverages a range of cutting-edge technologies, including sharding and off-chain transactions, to enhance the Ethereum network’s transaction processing capability.
Recently, Polygon acquired Hermez Network, a ZK-rollup, to work on their own zero-knowledge-proof enabled virtual machine (zkEVM) for Ethereum transactions. The integration of Hermez into Polygon has expanded the platform’s ecosystem and solidified the role of the $MATIC token as the network’s power source. zkEVM is designed to execute Ethereum transactions in a transparent manner, including smart contracts validated by zero-knowledge proofs.
Did you know there are other crypto narratives playing out out in 2023, and not just ZK rollups? Some of them are: China narrative, AI narrative, Derivatives narrative, layer 2 narrative, next generation layer 1, play to earn, and metaverse.
Investing in new projects can be done in various ways, such as receiving an airdrop, investing upon its release or investing in the individual ecosystem.
It is important to keep in mind that a lot of the interest and excitement in these projects are driven by speculation. Simply incorporating ZK technology does not guarantee success.
The approach to trading these projects should align with your personal strategy, but before investing, consider adopting a dollar-cost-averaging approach and clearly defining your time horizon and financial goals. Remember to always conduct thorough research.