Written by: Thor Hartvigsen

Compiled by: TechFlow

The future of blockchain scalability is here! But what are zk-Rollups, zkEVM, L3, and modular blockchains? It’s time to dive in and improve our knowledge.

Based on some recent research on blockchain and DeFi technology, it is becoming increasingly clear that Ethereum will occupy a major position in cryptocurrency innovation and adoption.

The L1 narrative and rotation in 2021 is driven by:

  1. High block space requirements and low scalability of Ethereum;

  2. Unsustainable liquidity mining incentives drive demand for alt-L1 chains;

What is the situation of these knockoff L1s today?

Judging from the chart, DeFi has been falling most of the time.

However, when looking at the TVL of Arbitrum and Optimism, as well as their number of daily users, there are stark differences.

Please note that Arbitrum has no native token and no incentives.

The bear market proved that most on-chain activity occurred on Ethereum as gas fees dropped significantly.

Now that a scalable L2 is here and its security is inherited from Ethereum, it looks like the next cycle will be even more centered around the Ethereum ecosystem.

There are over 435,000 validators on Ethereum, while Solana has ~3500, and many other L1s have less than 1000. Scalability alone is not enough. The following chart further illustrates the significant differences between alt-L1 and Ethereum after the merger.

So now it’s clear that Ethereum and its scalability solutions will play a major role in the future of blockchain technology and DeFi at least.

But there are big differences between these different scaling solutions.

Rollups (L2) are designed to remove most of the load on Ethereum mainnet by keeping only a small amount of data per transaction and compressing the rest. This results in lower TPS (transactions per second) and lower fees.

As stated on the Ethereum website:

"Layer 2 is an independent blockchain that extends Ethereum and inherits Ethereum's security."

L2 is an independent blockchain that bundles transactions and sends them back to the Ethereum mainnet.

As a result, the second layer blockchain inherits a similar level of security and decentralization as Ethereum itself. This model allows Ethereum to focus on security/decentralization while the second layer focuses on scalability.

Now let's define some terms:

⬩Optimistic rollups: leveraging fraudulent proofs (Arbitrum and Optimism).

⬩Zero-knowledge (zk) rollups: leveraging proofs of validity (zkSync, Starknet, zk-EVM).

Fraud proofs (Optimistic rollups):

Information is exchanged between so-called ‘provers’ and ‘verifiers.’ The information is assumed to be authentic and is added to transaction batches, which are subsequently reviewed by ‘watchers’ to ensure there is no malicious activity.

Proof of Validity (Zk-rollups):

Here, the exchange of information between the “prover” and the “verifier” relies on cryptography and mathematics. Information is shared but never revealed.

There are two types of validity proofs: SNARKS and STARKS. STARKS are more scalable.

Validity proofs (zk-rollups) are more difficult to implement, but because they rely on cryptography, they have higher privacy and data security. The general consensus is that zk-rollups are the superior scaling technology in most aspects.

This is not to say that the future will be dominated by one party or the other. We have seen both Arbitrum and Optimism be very successful in building scalable models and growing large ecosystems/communities.

zk-EVM：

zk-EVM is one of the most anticipated scaling solutions, with several products coming out soon, such as Zksync and Polygon zkEVM.

This technology has been in the works for a long time and is finally ready to land.

zk-EVM uses zk-rollups to handle execution. More specifically, zk-SNARKS (a type of validity proof) are used to verify transactions.

According to Vitalik Buterin’s article, there are 4 different zk-EVM types:

  1. Completely equivalent to Ethereum;

  2. Exactly equivalent to EVM;

  3. Exactly the same as EVM except for the gas cost;

  4. Equivalent to Solidity;

All types face a trade-off between EVM compatibility and performance. Most current zk-EVM projects are between 2 and 4.

Polygon zk-EVM (Polygon Hermes) is type 2. It is still very compatible with Ethereum, but loses some compatibility for better performance.

Performance is measured in the time it takes to generate a zk-proof. The faster it is, the higher the scalability.

zksync is a type 4 zk-EVM — less compatible but higher performing. This type is harder to implement due to the lower compatibility.

zksync has created their own language that compiles Solidity into bytecode as well as their own virtual machine, ZinkVM.

Typically, the bytecode is fed to the so-called LLVM-compiler and then finally to ZinkVM.

Despite the lower compatibility, according to the zksync team, it is fairly easy to move dApps from the Ethereum mainnet to zk-EVM.

Judging from the zksync podcast on Bankless, it seems that many protocols are looking forward to this upcoming ecosystem.

zk-EVM is complex and I recommend reading more about it as this post only scratches the surface.

L3:

L3? Why are we even discussing this when layer 2 technology is still being developed?

L3 can be thought of as an application-specific Rollup and offers many use cases for companies looking to bring their business on-chain in a scalable and secure manner.

The following example is Starknet.

L3 is more specifically "validium" or "volition."

Validiums (a type of L3) is a zk-rollup where data is processed off-chain (e.g. on L2).

In the diagram below, StarkEx is the application-specific L3, while Starknet is the L2.

L3 generates proofs off-chain to improve scalability of transactions per second.

These proofs are then sent in batches to L2, just like L2 sends a large number of transactions to L1. So, is the same true for L4, L5, and L6?

The trade-off is scalability vs security. The further we get from Ethereum mainnet the less secure it becomes.

zkPorter (a product of zksync) is also an L3. Users can choose L3 with higher TPS but lower security or zkRollup (L2) with higher security but lower TPS.

The L3 structure I just described is the 'validium' mentioned earlier.

“Volition” is essentially a combination of L3 and Zk-Rollup L2. Therefore, in this case, users do not have to choose between security and TPS.

This is the end of this article, it has contained quite a bit of information and I recommend reading this topic several times if you want to really master it.

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