ZkSync Sharpens Role in Future of Ethereum With $200M Funding

“No matter how bad this bear market gets, we are well positioned to grow our team,” Steve Newcomb CPO at Matter Labs says


Source: DALL·E


Good software development takes money and time. Despite the present crypto winter — generally regarded as having started in late May but turned blizzard by FTX going bust — venture capital has continued to flow into blockchain startups.

That may change now, as the full extent of the FTX contagion is just starting to emerge. But if it does, then Matter Labs, developers of Ethereum layer-2 zkSync, may have gotten in under the wire.

The company announced a $200 million Series C, Wednesday, co-led by Blockchain Capital and Dragonfly, with participation from LightSpeed Venture Partners, Variant, plus Andreessen Horowitz and other prior venture partners.

Read More: What Are ZK Rollups? The Future of Smart Contract Blockchains

Throw in Matter Labs’ $58 million in venture funding from its Series B and earlier rounds, and a previously announced — though not yet delivered — $200 million ecosystem fund from BitDAO, and the company claims $458 million in total funding lined up.

That should see the project through even the darkest winter days, according to chief product officer Steve Newcomb. 

“No matter how bad this bear market gets, we are well positioned to grow our team, ship our protocol, and ship our mission,” he said.

The stated mission is “to accelerate the mass adoption of crypto for personal sovereignty,” according to a statement, one which Newcomb said is simpatico with Ethereum itself.

In an interview with Blockworks, Newcomb embraced the concept of the “network state” featured in Balaji Srinivasan’s book of the same name. Ethereum co-founder Vitalik Buterin has called it “an ideological successor to libertarianism,” and “an attempt to sketch out a possible broader political narrative for the crypto space.”

Newcomb describes Matter Labs’ approach as the “Mission to Citizen model,” which prioritizes the overall development of Ethereum above “any normal competitive advantage that you could go after.”

The battle to out-open-source the competition

In blockchain software stacks, security through obscurity is a losing strategy. Open source software went from “a cancer” derided by Microsoft’s CEO in 2001 to becoming the norm in little more than a decade. It’s been a key part of the crypto ethos since the beginning.

The “ZK” in zkSync refers to zero knowledge proofs. Rollups using the technique bundle transactions, drastically reducing the amount of data needed to be passed to mainnet Ethereum while preserving a high level of security, proponents say.

The intended end result is an ecosystem that can reliably handle more transactions, faster.

Matter Labs is one of several teams vying to build ZK-rollup-based scaling solutions compatible with the Ethereum Virtual Machine (EVM). ZkSync 2.0 went live on mainnet on Oct. 28. Others include Polygon with its zkEVM, unveiled in July, Scroll and new entrant Taiko which are still early in their development.

StarkWare doesn’t support dapps written for the EVM and instead has pursued its own approach to an execution layer which is theoretically more scalable. Loopring, which launched a ZK-rollup exchange way back in February 2020 also falls into this category.

A key component of all ZK-rollups is the “prover,” which essentially guarantees correctness in the system as transactions are processed. Part of today’s announcement from zkSync is that it will apply an MIT Open Source license to the whole technology stack — including the prover — sometime before the end of 2022.

“It will be the first time that a general-purpose ZK-rollup’s technology is released that offers developers the freedom to 1) view the code 2) modify the code and 3) fork the code,” Matter Labs said in a statement.

StarkWare is only partly open source and uses a more restrictive license.

Building a prover is “a Herculean task in terms of math, engineering and software,” StarkWare president Eli Ben-Sasson, previously told Blockworks. “We have a team of 100 and have been at it for four years.”

Polygon told Blockworks by email that its prover “does not currently have an open source license as it undergoes audits,” but added, “it will be freely licensed in the future.”

The Polygon team also said “the best way to verify that a team has a working prover is to examine source code,” noting that it has already published its zkEVM in full.

Having a fully open source prover increases the chances that an Ethereum rollup ecosystem will form around one shared prover, Newcomb said, which would bring benefits such as obviating the need for bridges.

What if Polygon or StarkWare opt to adopt MIT open source standards too?

“It would be huge!” Newcomb said. Such a development “guarantees that a mission driven prover is the prover that wins.”

Dapps and decentralization

Both Polygon and zkSync have major DeFi projects planning to deploy on their respective zkEVMs, such as Uniswap, Aave, Curve and Chainlink.

In fact, Matter Labs says it has received commitments from more than 150 projects for its “Full Alpha Launch,” planned to coincide with the February 2023 ETH Denver conference, making it the “largest in history” for any layer-2 blockchain.

The company is incorporated in the Cayman Islands, per Crunchbase, with co-founders Alex Gluchowski and Alexandr Vlasov located in Dubai, UAE, and Montreal, Canada, respectively.

While some rollup projects have issued a token as part of their rollout — such as Optimism (OP) and, most recently, StarkWare’s Starknet (STRK) — zkSync does not, and Newcomb said that among all Ethereum L-2s they will likely be the last to have a token.

“Decentralization” is on the team’s roadmap for 2023, but they have no plans to follow others’ approach by launching a DAO or foundation, he said.

EVM-compatibility in a ZK-rollup is seen as a breakthrough technology thanks to the network effects of Ethereum — things like dapps, wallets, developer tooling, infrastructure — and one that was expected to take years to develop. Optimistic rollups, led by Arbitrum and Optimism have been viewed by developers as a stepping stone. But competing teams and years of research have accelerated the timeline to the point that we now have two ZK-based EVM implementations just months away from being live and ready for ordinary users.

Don’t miss the next big story – join our free daily newsletter.


Upcoming Events

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

MON - WED, MARCH 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience:  Attend expert-led panel discussions and fireside chats  Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts   Grow your network […]

recent research

Pyth Cover.jpg


Pyth is a low latency pull-based oracle. In a future that looks increasingly high frequency, with various alt L1s and L2s that have significantly shorter block times than Ethereum, and an explosion of “high-frequency” protocols such as oracle or CLOB perp DEXs, Pyth’s low latency oracle product looks much better positioned to capture a significant amount of market share in comparison to competitors.


Binance settlement “an important part of clearing the way for the next bull market cycle,” crypto hedge fund executive says


Hester Peirce reiterated Tuesday that court cases are not the only path to regulatory clarity for crypto, but her colleagues do not always agree


The indictment followed leaks Monday that a Binance settlement deal was forthcoming


The Binance executive is also reportedly set to make an appearance in a Seattle courtroom Tuesday


Monday developments reaffirmed the US as unfriendly to crypto while also offering a potential bullish outlook for segment firms, industry watchers say


It’s unclear what “actions” the CFTC, DOJ and Treasury will announce Tuesday afternoon