ZK-rollups step into the limelight after the quest to scale Ethereum evolves

Since years, scaling on Ethereum (ETH), has been a source of contention in the cryptocurrency ecosystem. This is mainly due to high fees as well as network congestion during peak demand periods.

Zero-knowledge rollups (ZK rollsups) are the latest solution to Ethereum’s scaling woes. This is a method of scaling that runs computations on-chain and then submits them to Ethereum via a validity verification.

Zk rollup season
— cryptowarlord.eth – deg?deg (@CryptoWarlordd), December 7, 2021

Early in the year, optimistic rollups like Optimism or Arbitrum were the most talked about and were touted to be the best way to scale Ethereum. However, traders have noted that even optimistic rollups can charge higher fees than desired when there is high demand.

Early successes in 2021

While optimistic rollup solutions were the focus, protocols adopting the ZK model for rollups quietly showed their potential.

Through its partnership with StarkWare’s StarkNet network, dYdX was among the first to adopt ZK-rollup technology.

The platform has had a lot of success to date and sometimes managed to trade more than Coinbase 24 hours a day.

Loopring (LRC), another protocol, has used ZK-rollups in order to lower transaction costs and increase its throughput capabilities. This has helped push the price to $3.83 at an all-time high in November.

LRC/USDT 1-day chart. Source: TradingView

Related: Ethereum layer two TVL hits all-time high

ZK-rollups may be the next “rotation” for traders

ZK-rollups are back as a hot topic in the crypto sector following last week’s market-wide selloff.

The announcement of Polygon’s acquisition of Mir, a project that developed two subcategories for zero-knowledge proofs, PLONK, and Halo, has made Polygon, an Ethereum layer-two platform, headlines.

Polygon’s 250 million MATIC token investment was made by Sandeep Nailwal, co-founder of Polygon. It already has some of the lowest fees on the Ethereum network.

Another protocol in the pipeline is zkSync. This scaling solution was created by Matter Labs and secured $50 million in a Series A round that was led by Andreessen Horowitz. It gained traction in November.

zkSync total deposits vs. total unique users

Digital Delphi reports that the main projects currently available on zkSync are ZigZag (a decentralized exchange) and Gitcoin (a funding platform).

According to Delphi Digital analysts,

According to L2 fees token swaps through ZigZag via zkSync have lowest fees.” You should research all aspects of trading and investment before making any decision.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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