Bessie Liu

Zero-knowledge rollup technology projects have been making headlines lately.



Polygon launched its zkEVM (zero-knowledge Ethereum virtual machine) technology on the Ethereum mainnet just three days after ZkSync Era <a href="https://blockworks.co/news/zksyncs-evm-era-opens-to-the-public">entered the public eye</a>. Other projects such as Scroll, a zk-rollup technology focused on scaling Ethereum and Starknet, are also gaining traction. 



All of these projects, despite their complicated terms, have the same goal — to scale the <a href="https://blockworks.co/tag/ethereum" target="_blank" rel="noreferrer noopener">Ethereum</a> blockchain.



Rollup technology is built on top of an existing blockchain. It is designed to batch or bundle transactions and execute them off chain, ultimately reducing the amount of block space required to make a transaction. This means cheaper gas fees as fixed costs are now shared between the batched user transactions.



Unlike optimistic rollup technology that assumes information in a transaction is accurate, developers have designed zk-rollups so that the technology itself can determine if the information is executed accurately without disclosing the information on the mainnet.



<h2 class="wp-block-heading">How are the rollups tracking?</h2>



Zk-rollup technology is still very much in its infancy, and iterations are still being made to the tech although it is now publicly available to users.



Arbitrum and Optimism still <a href="https://l2beat.com/scaling/tvl">hold</a> the majority of user funds, and their ecosystems boast the two most popular optimistic rollups. Arbitrum secures almost 67% of the market share and Optimism secures a little over 20%, information on <a href="https://l2beat.com/scaling/tvl">L2Beat</a> shows. 



Of the different zk-rollup technologies, zkSync has seen the most adoption, with an estimated <a href="https://l2beat.com/scaling/tvl">$244 million</a> bridged onto the layer-2. Of this, roughly $117 million has been deployed onto DeFi contracts on the layer-2, <a href="https://defillama.com/chains/Rollup">according</a> to information from DeFiLlama. 



By comparison, its competitors Starknet and Polygon’s zkEVm have seen roughly <a href="https://l2beat.com/scaling/tvl">$37 million</a> and almost <a href="https://l2beat.com/scaling/tvl">$5 million</a> bridged, respectively. 



ZkSync Era now has 22 protocols deployed on-chain, and Polygon’s zkEVM has 10 — its latest being the <a href="https://docs.uniswap.org/contracts/v3/reference/deployments">decentralized exchange Uniswap</a>.



Zk-rollup technology is still very new, and ongoing audits and iterations to ensure the safety and security of these layer-2s are still being made. <a href="https://www.blockworksresearch.com" target="_blank" rel="noreferrer noopener">Blockworks Research</a> recently published a research report offering <a href="https://www.blockworksresearch.com/research/zksync-a-peek-into-the-future-of-ethereum">a deep dive into the future of zk-rollup technology</a> and how it may impact Ethereum moving forward.



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Tracking Zero-Knowledge Rollups on Ethereum

Macauley Peterson

Ethereum has a new scaling solution reaching public mainnet, going live Friday. ZkSync’s EVM-compatible zero-knowledge proof-based rollup is open to the public from 10:00 am ET.



The zkEVM, which <a href="https://blockworks.co/news/matter-labs-rebrands-zkevm">rebranded to zkSync Era</a> last month, has been open to developers-only <a href="https://blockworks.co/news/zksync-sharpens-role-ethereum-200m-funding">since October 2022</a>. But now the proverbial training wheels are coming off and the public will have their first chance to interact with dapps on the platform.



ZkSync Era was previously known as zkSync 2.0, and its 1.0 cousin, launched by developer Matter Labs in December 2020, remains live as zkSync Lite.



A rival zkEVM from Polygon was <a href="https://blockworks.co/news/polygon-zkevm-beta-live-on-ethereum">announced in mid-February</a> and its equivalent offering, which the team calls “Mainnet Beta,” is expected to go live on Monday, March 27.



So, the zkSync folks can lay claim to being “the world’s first zkEVM mainnet,” if only by a weekend.



Matter Labs’ co-founder and CEO Alex Gluchowski told Blockworks the timing is coincidental, and Era’s alpha launch milestone is arriving right on schedule, following the completion of a second public <a href="http://code4rena.com/contests/2023-03-zksync-era-system-contracts-contest">security contest</a> via Code4rena.



“Now we feel completely safe to launch,” Gluchowski said, stressing that the testing of the product has been extensive.



The developers spent $3.8 million on testing and auditing, according to a statement shared with Blockworks, including seven independent security audits — <a href="https://blog.openzeppelin.com/zksync-layer-1-audit/">one</a> with leading auditor OpenZeppelin — and an open-ended bug bounty program <a href="https://immunefi.com/bounty/zksyncera/">with Immunefi</a>.



“You really need this layered approach to security,” Gluchowski said, adding, “Now we feel comfortable, but I mean it’s still Alpha — people have to understand it’s still brand new technology.”



He pointed to the <a href="https://blockworks.co/news/euler-bounty-defi-flash-loan-attack">recent exploit of Euler Finance</a>, whose smart contracts were audited by a reputable firm and were live for the better part of a year, as an example of how audits alone aren’t enough.



The combination of external and internal audits, public security contests and bug bounties and a developer gated release, Gluchowki thinks should be industry standard practice.



The zkSync Era code is also fully <a href="https://github.com/matter-labs/zksync-era">open-source</a>, including the prover, which the team <a href="https://blockworks.co/news/zksync-sharpens-role-ethereum-200m-funding">sees as a competitive differentiator</a>.



“We open-sourced everything the moment we opened the network to developers — as we promised — under a permissive MIT Apache 2 License,” Gluchowski said, explaining the rationale is that they “believe it’s fundamental to crypto have the code open-source and forkable, because that’s tied to the ethos and values of Ethereum.”



Another key feature is native <a href="https://blockworks.co/news/what-are-smart-contract-wallets">account abstraction</a>, which will allow Era users to pay transaction fees in any token or even let dapp developers pay users’ fees.



<h2 class="wp-block-heading">Looking forward: Decentralization</h2>



There remain guardrails in place, such as a delay period for withdrawals, initially set to 24 hours, but which will be reduced gradually, Gluchowski said.



“In the initial phase, we will be still running the sequencer [and] we have the right to upgrade the contracts — it’s not yet fully decentralized,” he said.



The plan is to follow a similar approach to that of zkSync Lite, which has a <a href="https://blog.matter-labs.io/security-council-2-0-2337a555f17a" target="_blank" rel="noreferrer noopener">security council</a> that supervises protocol upgrades.



“We can’t guarantee that there are no problems, we encourage people to experiment slowly,” Gluchowski said.



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ZkSync’s zkEVM ‘Era’ Opens to the Public

Many centralized companies have fallen from grace this past year, but the DeFi ecosystem remained intact.



That’s not to say the many insolvencies in the centralized space left DeFi players unscathed — prolonged bear market conditions and damage to consumer trust in cryptoassets hurts — but there has been a silver lining.&nbsp;



What sets DeFi apart is that it’s more “robust, transparent, and scalable than CeFi,” Ryan Rasmussen, a crypto research analyst at Bitwise, <a href="https://blockworks.co/news/centralized-exchange-blowups-have-limited-impact-on-defi" target="_blank" rel="noreferrer noopener">previously told Blockworks</a>.



“Events like this spotlight the trade-offs that users make when they choose centralized services over decentralized ones,” he said. “It’s a harsh — and expensive — lesson, but it’s essential. That’s a long-term positive for DeFi.”



As the year comes to a close, Blockworks takes a look at some of the major trends we may see in 2023 as DeFi aims to climb itself out of the bear market.



<h3 class="wp-block-heading">1. Push toward real-world assets </h3>



Real-world assets (RWA) have already helped unlock large amounts of liquidity and utility by moving on-chain. 



Large DeFi lending players such as MakerDAO have <a href="https://blockworks.co/news/makerdao-adopts-real-world-assets-as-crypto-leverage-demand-wanes" target="_blank" rel="noreferrer noopener">passed proposals</a> to invest into US Treasurys and corporate bonds and <a href="https://blockworks.co/news/makerdao-opens-100m-dai-loan-to-huntingdon-valley-bank" target="_blank" rel="noreferrer noopener">partnered with traditional banks</a> to provide loans using RWAs as collateral.



These moves are likely to become more common in 2023 as many in the industry already view RWAs as a prime opportunity to marry traditional institutions with DeFi liquidity.&nbsp;



Marcus Leanos, co-founder and chief investment officer at Adapt3r, told Blockworks that partnerships with banks brings together one of the most realistic use cases for DeFi — describing it as “something that could scale and disrupt the real-world assets sector and connect DeFi to the banking system.”



<h3 class="wp-block-heading">2. Greater stablecoin adoption</h3>



Tied closely with real-world assets are stablecoins. Despite bear market conditions, stablecoins such as Circle’s USDC and Maker’s DAI continue to be some of the top cryptocurrencies by market capitalization.



Stablecoins are some of the more widely accepted cryptocurrencies with strong user cases. Most recently, Japan, a relatively strict country as far as cryptocurrencies go, <a href="https://coinpost.jp/?p=419032" target="_blank" rel="noreferrer noopener">revealed</a> that it would be lifting the ban on the domestic distribution of foreign-issued stablecoins in 2023. 



Read more: <a href="https://blockworks.co/news/the-investors-guide-to-stablecoins" target="_blank" rel="noreferrer noopener">What Are Stablecoins? The Complete Investor’s Guide</a>



These favorable changes to stablecoin trading that we see today can hasten the speed of stablecoin adoption and reduce time and costs on international remittances in the following year.



<h3 class="wp-block-heading">3. Focus on layer-2 scaling and ZK technology</h3>



The <a href="https://blockworks.co/news/whats-next-for-ethereum-in-a-post-merge-world" target="_blank" rel="noreferrer noopener">Ethereum Merge</a> was one of the most talked about events this year, but gas fees and transaction speed still remain obstacles to mainstream adoption. 



As one of the largest network undergoes its next evolution, dubbed “the Surge”, <a href="https://blockworks.co/news/zk-rollups-future-of-smart-contract-blockchains">zero-</a><a href="https://blockworks.co/news/zk-rollups-future-of-smart-contract-blockchains" target="_blank" rel="noreferrer noopener">k</a><a href="https://blockworks.co/news/zk-rollups-future-of-smart-contract-blockchains">n</a><a href="https://blockworks.co/news/zk-rollups-future-of-smart-contract-blockchains" target="_blank" rel="noreferrer noopener">o</a><a href="https://blockworks.co/news/zk-rollups-future-of-smart-contract-blockchains">wledge (ZK) technology</a> and layer-2s will continue to be a focus area for DeFi developers in the coming year.



A ZK proof is a digital verification method that will significantly improve scalability and performance for blockchain networks. The end result will be improved ecosystems that can reliability handle a larger amount of transactions in a shorter amount of time.



<h3 class="wp-block-heading">4. Security and compliance </h3>



Security will likely be a huge focus in the near few years.



ZK proofs will not only improve transaction speed and costs, it will also make on-chain interactions much more secure.



<a href="https://blockworks.co/news/crypto-hacks-2022" target="_blank" rel="noreferrer noopener">Billions of dollars have been stolen</a> from DeFi platforms over the past year. Enough that the <a href="https://www.ic3.gov/Media/Y2022/PSA220829" target="_blank" rel="noreferrer noopener">FBI cautioned</a> investors to remain wary of the space in general. 



Unless plans to improve security in the space over the next few years bear fruit, it will be difficult to onboard the masses.



<h3 class="wp-block-heading">5. DAO growth</h3>



Though <a href="https://blockworks.co/tag/ooki-dao" target="_blank" rel="noreferrer noopener">regulatory uncertainty remains an issue</a>, DAOs have mostly been able to stay out of trouble this past year. 



Nick Almond of FactoryDao, who goes by drnick on Twitter, believes that stalwart performance, coupled with structural maturity, ought to lead to a “large exit out of centralized institutions into decentralized ones.” A <a href="https://blockworks.co/news/daos-see-ftx-silver-lining" target="_blank" rel="noreferrer noopener">potential win for DAOs</a>.



The rise of DAO governance in 2023 may bolster the legitimacy of these organizations, and eventually make decision-making in the space much more transparent, preventing another FTX-like collapse.



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5 Trends in DeFi for 2023

John Gilbert

John Lee Quigley

Talk and excitement around the zero-knowledge rollup is heating up as layer-1 protocols take significant steps toward implementing the solution at scale. The technology promises to remove a critical bottleneck in the development of Web3: cost and scaling ceilings. Layer-1 blockchains such as Ethereum struggle to meet full user demand because of high transaction fees and congestion, which work in conjunction with one another.&nbsp;



While various types of rollups and layer 2 solutions have been created to address this problem, the ZK rollup hasn’t been tested at the scale needed to open Web3 to the masses. While rollup technology introduces new advantages, it also brings some new challenges in regards to how they manage data availability in a way that is decentralized and censorship resistant. Implementing rollups without first addressing this issue is like putting the cart before the horse. The path to mass adoption needs to lead with decentralization and security first in mind.&nbsp;&nbsp;&nbsp;



Some blockchains are closer than others. For example, <a href="https://syscoin.org/" target="_blank" rel="noreferrer noopener">Syscoin</a> announced a PoDA (Proof-of-Data Availability) solution, which is already working on testnet, that will work hand in hand with rollups once they are deployed on mainnet. Unlike other approaches, its rollup can effectively inherit the security of the base layer, which is Bitcoin in Syscoin’s case, by protecting against censorship and centralization vulnerabilities. But before explaining how they achieve this we need to explain zero-knowledge proofs and the various approaches to ZK rollups.



<h2 class="wp-block-heading">What are zero-knowledge proofs?</h2>



Zero-knowledge proofs (ZK proofs) are a digital verification method where the prover can show that they have access to a piece of information without necessarily revealing it. MIT students Shafi Goldwasser and Silvio Micali introduced the concept in a <a href="http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.419.8132&amp;rep=rep1&amp;type=pdf" target="_blank" rel="noreferrer noopener">research paper</a> in 1985.&nbsp;



ZK proofs have evolved significantly since then, finding real-world use cases in developing privacy and security-oriented systems. Unsurprisingly, ZK proofs also enhance cryptography and powers privacy-oriented coins such as Zcash.&nbsp;



However, ZK proofs can do much more for cryptocurrency. They are a fundamental block for building rollups — solutions that significantly improve scalability and performance for blockchain networks.



<h2 class="wp-block-heading">What are rollups, and how do they differ?&nbsp;</h2>



Rollups are layer-2 scaling solutions that bundle millions of transactions into one, which is then submitted on the base layer (e.g., Syscoin) as a single transaction. Rollups spread the single transaction cost across many users, thus making them a cheaper option. Additionally,&nbsp;the off-chain process ensures that rollups offer a faster settlement, thus easing the load on the base layer and unlocking mainstream-level capacity for blockchain networks. There are currently two main types of rollups: Optimistic and ZK rollups. Both approaches solve the blockchain scalability issue but with unique advantages and disadvantages.



<h3 class="wp-block-heading">Optimistic rollups explained</h3>



Optimistic rollups are layer-2 scaling solutions that scale throughput by assuming (optimistically) that each transaction bundled within a rollup is valid. Hence, even though transactions on the layer-2 network are processed instantly, there is a window (usually seven days) for users to contest fraudulent transactions. However, these users are not required to wait 7 days, as there are bridges that front liquidity across the chains that let people exit. Barring any challenges, the network automatically adds the rollup transactions on the parent chain for final settlement at the end of the window.



The waiting period guarantees security as the second layer can reverse fraudulent transactions before updating the state on the parent network. However, it also introduces a significant bottleneck. Users must wait a long while to withdraw deposited funds from the layer-2 network. Further, the model fosters censorship, as the project team or a limited group of validators manages core infrastructure and can potentially reverse transactions. This is true for ZK rollups as well if the sequencer is centralized. Therefore, one must decentralize the sequencer as Syscoin is doing, so it’s not an issue on either type of rollup.



Arbitrum and Optimism are the most popular examples of layer-2 solutions already utilizing optimistic rollups to scale Ethereum. However, another type of rollup – ZK rollups – seems to be the end game for the technology because of the unique capabilities it brings to the table.



<h3 class="wp-block-heading">So what are ZK rollups?&nbsp;</h3>



ZK rollups are another suite of layer-2 scaling solutions that handle computation and process dozens of transactions off-chain before submitting a rolled-up version on the parent chain. The critical difference is that zero-knowledge rollups offer near-instant settlement on both layers, unlike optimistic rollups.&nbsp;



ZK-rollups tap into their zero-proof technology to submit regular validity proofs to associated smart contracts on the parent network, confirming the accuracy of the transactions on the layer-2 network. The reliance on zero-proofs also reduces the volume of shared transaction data,&nbsp; thus making ZK rollups privacy-focused by default.



In addition to privacy, ZK rollups eliminates the need for users to wait several days before withdrawing funds from the layer-2 solution. However, the technology&#8217;s nascent nature is its most significant disadvantage.&nbsp;



ZK rollups are more complex to build, requiring a heavy reliance on a few developers to maintain the entire system. Additionally, the network structure often involves setting up sophisticated and otherwise expensive hardware to validate transactions. And depending on the approach, ZK rollups can present some of the same censorship risks if the validation sequencing is centralized. Because not all ZK rollups are the same, these centralization factors need to be examined independently.&nbsp;



The primary ZK solutions utilized in cryptography are zk-Stark, zk-Snark and Validium. The latter is a novel ZK rollup already pioneered by Syscoin to scale blockchain systems.



<h3 class="wp-block-heading">zk-Snark vs. zk-Stark</h3>



Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (zk-Snark) are proof systems that enable the prover to publicly verify that they own vital information, such as the private key to a cryptocurrency address and the amount they&#8217;re trying to transfer. Once the user provides cryptographic proof, they can transfer funds without disclosing essential details such as the associated addresses, transaction history and balances. The Zcash cryptocurrency project implements zk-Snark to enable anonymous and private transactions for users. Notably, zk-Snark has a fundamental risk. The requirement of trusted third parties to set up the system increases centralization and makes it vulnerable to attacks.&nbsp;



Zero-Knowledge Scalable Transparent Argument of Knowledge (zk-Stark) solves the initial setup risk with zk-Snark by eliminating the involvement of a few trusted parties. It handles off-chain computation and immediately relays only an insignificant amount of secure data on the parent chain for validation. Zk-Stark technology provides excellent scalability, and privacy features which are immensely valuable to smart contract blockchains.



<h3 class="wp-block-heading">Validium on Syscoin</h3>



Validium, a ZK-rollup solution deployed on the Syscoin network, is a unique kind of zero-proof technology with potentially higher throughput than both zk-Stark and zk-Snark. Validium&#8217;s core proposition is its data storage location.&nbsp;



Validium enables Syscoin to handle up to four million transactions per second (TPS), a remarkable feat for a smart contract blockchain. Unlike existing ZK-rollups that store such transaction information on-chain, <a href="https://docs.syscoin.org/docs/intro/syscoin-roadmap/#validium" target="_blank" rel="noreferrer noopener">Validium stores data off-chain</a>. This allows the technology to free up additional space on the base layer.



<h2 class="wp-block-heading">The different ZK rollup projects</h2>



Despite being in their infancy, ZK rollups are seeing broad adoption across the crypto industry because of the immense benefits the system brings to decentralized applications. These applications expand far beyond the Ethereum ecosystem, with more use cases expected to emerge as the technology improves.



For example, zkSync is a popular scaling solution utilizing ZK rollups. The earliest version of the protocol enabled privacy-focused and cheap token transfers and payments. However, the solution recently launched zkSync 2.0 will unlock the ability for developers to deploy dapps on the network.



StarkNet is another ZK rollup project enabling Ethereum-based applications to scale throughput. Leading decentralized protocols like dYdX and ImmutableX already implement StarkNet’s solution, allowing low-cost transactions and fast settlement on their platforms.



Outside of Ethereum, advanced networks like Syscoin harness ZK rollups (and Optimistic) in a way that provides full scalability without sacrificing decentralization by storing data off-chain.&nbsp;The result is unprecedented scaling and a mainstream-ready solution for dapp developers.&nbsp;&nbsp;



<h2 class="wp-block-heading">The data availability problem and Syscoin’s solution</h2>



Blockchain transactions involve significant volumes of data that only grow as the network expands. The data demand especially takes its toll on smart contract blockchains where users perform complex transactions. As the data volume increases, every network faces a data availability challenge.&nbsp;



The challenge involves devising a means for participants (both validators with sophisticated hardware and light-client nodes) to verify that a block producer included all transaction data in a proposed block. This verification is essential to show that the block producer did not censor participants by enforcing any restrictions that would prevent them exiting the rollup. The ultimate goal is to inherit the security of the base layer.&nbsp;



There are several approaches to solving the data availability challenge. Ethereum’s previous, vision was to roll out sharding, a process that practically splits the network into different bits (shards). But after a recent change in their roadmap, their plan is to go a different route that uses KZG commitments to shard data blobs.&nbsp;Reducing the data into smaller segments makes it easier for validators and light-node operators to access the data.&nbsp;



Both the Ethereum and Syscoin dev teams independently arrived at similar solutions around the same time. But while Ethereum sharding is at least a year away from production, Syscoin’s PoDA (Proof-of-Data Availability) is already on testnet. It uses the Syscoin blockchain to verify that the correct execution data was provided and confirmed by the network, giving the opportunity for any person the ability to store it and retain censorship resistant properties. In addition, it will automatically use a committee of trusted safe-keepers as well as decentralized storage options such as filecoin/arweave and others for long-term archiving.This approach frees up the base layer for greater scalability. It also minimizes the data availability challenge since a zero-knowledge implementation generates less data than a public smart contract blockchain.



<h2 class="wp-block-heading">The future of blockchain scalability and virtual machines</h2>



Syscoin offers the most advanced smart contract platform secured by Bitcoin’s impeccable proof-of-work (PoW) through merged mining. Syscoin also delivers remarkable scalability on the <a href="https://syscoin.org/news/nevm-and-related-changes-to-syscoin" target="_blank" rel="noreferrer noopener">Syscoin NEVM</a>, which supports the deployment of Ethereum-native applications.&nbsp;&nbsp;



Syscoin is paving the future of blockchain scalability and virtual machines by implementing secure rollups and increasing data availability. They are implementing scaling solutions that not only account for technical bottlenecks, but also regulatory ones. They integrated a base layer of opt-in regulatory compliance for all smart contract tokens. This will let token issuers provide users the necessary tools to stay compliant — a tool that would prove useful against complaints from regulatory authorities. They have implemented this feature on their UTXO side and are working on it for the NEVM side for compliant rollups. Mainstream-scale blockchain adoption is possible and can be served over secure and high-performant networks that offer a seamless experience for all network users.



This content is sponsored by <a href="https://syscoin.org/news/nevm-and-related-changes-to-syscoin" target="_blank" rel="noreferrer noopener">Syscoin</a>.



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What Are ZK Rollups? The Future of Smart Contract Blockchains

Jack Kubinec

<div id="highlights-block_62d8dff24d48f" class="highlights">
 <ul>
 <li>The announcement represents the first actualized zero-knowledge bridge</li>
 <li>The company says the bridge will be cheap, scalable and capable of performing all the same functions as Uniswap</li>
 </ul>
 
</div>



After a flurry of <a href="https://cms.blockworks.co/tag/ethereum/" target="_blank" rel="noreferrer noopener">Ethereum</a> security-oriented so-called “rollups” were unveiled recently, another layer-1 blockchain has decided to throw its hat in the ring.



Syscoin, a “dual-layered blockchain” merge-mined with <a href="https://cms.blockworks.co/tag/bitcoin/" target="_blank" rel="noreferrer noopener">Bitcoin</a> and running Ethereum-compatible smart contracts, is launching a zero-knowledge cross-chain bridge. The bridge, dubbed ZKCross, will have minimal fees and will facilitate cross-chain decentralized exchange, Syscoin told Blockworks. It is expected to be ready to demonstrate in September.



<a href="https://cms.blockworks.co/cross-chain-bridge-thefts-top-1b-in-2022/" target="_blank" rel="noreferrer noopener">Hackers have stolen</a> more than $1 billion from cross-chain bridges in 2022, leading to a proliferation of proposals meant to put investors at ease when moving assets between chains. The cross-chain bridges hacked in recent years employed multi-signature or multi-party computation (MPC) to validate their trades.



Syscoin’s zero-knowledge mechanism operates an off-chain automated market maker (AMM) that avoids exploitable consensus protocols, and can be used to manage liquidity and trading across multiple chains.



The accuracy of the transactions are verified with a zero-knowledge proof — essentially a fast and private way to authenticate data — before a bundle of transactions are rolled up and compressed to be settled on Syscoin’s base layer.



Syscoin believes the bridge technology allows for economies of scale — with a worst-case security scenario of the AMM going offline and users being forced to exit to the base layer.



“If it’s not this bridge, someone else will release a zero-knowledge bridge and that’ll be the bridge solution everyone is using. I really think this is where things are headed,” <a href="https://www.linkedin.com/in/jagdeep-sidhu-2a7bb76b/?originalSubdomain=ca" target="_blank" rel="noreferrer noopener">Jagdeep Sidhu</a>, lead developer at Syscoin, told Blockworks.



Helping the transition is the (relative) cheapness of zero-knowledge bridging. Sidhu says the only cost to bridge users will be that of their own CPU.



Zero-knowledge technology still has its shortcomings — a lack of decentralization being one of the most prominent. In essence, investors trade scalability and low cost for the risk of censorship.



“All the rollups are centralized right now,” Sidhu said. “We’ll start with a centralized sequencer, but the goal is to create a decentralized sequencer down the road.”



Syscoin hopes to create a zero-knowledge <a href="https://cms.blockworks.co/tag/evm/" target="_blank" rel="noreferrer noopener">Ethereum virtual machine</a> (EVM), the much-hyped proof system for Ethereum smart contracts, like the <a href="https://cms.blockworks.co/polygon-unveils-zkevm-the-holy-grail-of-scaling/" target="_blank" rel="noreferrer noopener">zkEVM protocol</a> launched Wednesday by Polygon. 



Sidhu does not believe anyone in crypto has yet created a “proper EVM” but emphasized that all protocols will need to move into the space eventually.



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