09/10/24

In 2021-2023, the dominant narrative around zero-knowledge proofs (ZKPs) was focused on Layer 2 scaling solutions for Ethereum. Reminiscent of the ICO boom, the Ethereum “rollup” became the hot recent way to launch a token.

All rollups process transactions offchain before publishing their results onchain, thereby increasing transaction throughput and reducing costs. But two different approaches emerged: Optimistic rollups (e.g. Optimism, Arbitrum) would work through game-theory and retroactive fraud proofs in the event of disputes, whereas validity rollups (e.g. StarkNet, zkSync) would prove the integrity of their results by posting ZKPs onchain.

A ZKP proves a statement or computation is correct without requiring knowledge of any of the underlying details. ZKPs represent a novel, general-purpose cryptographic technology, but so far they’ve been reduced to an Ethereum scaling solution.

The optimistic projects focused on go-to-market strategy and shipped higher throughput technology faster than validity projects, with a promise of decentralizing in the future.



As a result, optimistic rollups have gained drastically more traction than validity rollups. Compare the top optimistic rollup, Arbitrum ($13.4B TVL), to the largest ZK rollup, Scroll ($1.1B).

ZK Rollups Have Not Failed For Lack Of Effort. In 2021-2023, Venture Capital Generally Believed That Mathematics Would Beat Game Theory, And Invested Heavily Into The Development Of Zero-knowledge Proving Technology. But This Line Of Development Faced Several Problems

Prohibitive research and development costs. Developing novel ZK technology proved to be more expensive than anticipated.
Talent scarcity. The number of ZK developers was too small, leading to churn in proof systems and slow progress.
Centralization. ZK companies were incentivized to develop proprietary provers, which did not appeal to a market that values decentralization and trustlessness.

The entrance of Base (Coinbase) and Blast (Paradigm) is

📌 Zero-Knowledge Proof-of-Work (India)
🏢 Zorp
📍 India