Original | Odaily Planet Daily

Author | How to be a husband

The industry has at least determined a basic direction, that is, the multi-chain universe based on Ethereum is gradually taking shape. Although it remains to be verified whether it is centered on L2 or the entire ecosystem is connected through the Rollup method, one thing that can be determined is that the future narrative scenarios of related projects are large in scale and have the space to breed the next Alpha.

At this time, zkLink came into our sight because it announced a new round of loyalty points acquisition rules. When Odaily Planet Daily learned about its specific rules, it conducted research on zkLink and found that it was related to the potential trend centered on Rollup described by Paradigm.

Project Overview

zkLink is a multi-chain ZK-Rollup trading infrastructure that aims to solve the problems of insufficient liquidity in transactions and interoperability between EVM-based L1 and L2.

● Liquidity: The current situation is that different DEXs on each chain have their own liquidity pools, and the liquidity in the pools is relatively closed.

For example, if a user wants to use Token 1 on chain A to purchase Token 2 on chain B, the normal procedure is to exchange Token 1 for stablecoins on the DEX of chain A, then cross to chain B through the cross-chain bridge, and exchange Token 2 on the DEX of chain B. This process not only has high gas fees, but also lacks security. zkLink is used as a middleware to deploy contracts on different chains. Users with the above needs can complete these operations directly through the DEX on zkLink, using zero-knowledge proof as transaction proof, and using lightweight oracles between some networks to ensure the validity of transactions; at the same time, zkRollup is used to reduce gas fees.

● Interoperability: zkLink is the inter-chain transaction middleware of the Ethereum multi-chain universe. From the perspective of L1 based on EVM, zkLink belongs to L2. From the perspective of L2, zkLink belongs to L3. The boundaries of the two overlap.

Currently, zkLink supports most EVM-based L1 and L2, including Ethereum mainnet, BNB Chain, Polygon, Avalanche, zk-Sync, Starknet, Arbitrum, Optimism, etc.

Technical realization

The technical implementation of zkLink is mainly based on two technologies: ZK-Rollup and zkSNARKs. ZK-Rollup technology aggregates transactions on multiple chains and submits a summary of all transactions on the chain, thereby reducing the amount of transaction data and computing costs. zkSNARKs technology is used to compress transactions and ensure the correctness of transaction execution while protecting the privacy of transactions.

According to the zkLink network flow chart:

• Multiple DApps can share a Rollup state to achieve composability and cost-effectiveness. The specific ratio needs to be based on actual conditions.

• zkLink will deploy multiple Rollup states to improve performance. Multiple Rollup states will not directly share the same liquidity pool.

• DApp acts as a sorter and takes responsibility for sorting transactions. DApp needs to be designed to prevent MEV risk protection.

• Numerical Rollup states can further reduce costs through recursive curves, thereby increasing the network’s operating speed.

zkLink’s zk-Rollup

A normal zk-Rollup has three phases running in sequence: submission phase, proof phase, and execution phase. zkLink adds a synchronization phase to the proof phase and execution phase. Since zkLink is a multi-chain unification, the role of the synchronization phase is to unify the states of different chains.

The synchronization phase is the processing of the oracle network, which is to facilitate the exchange of final roots between different chains and compare whether the final roots of the two chains are consistent. The figure below is the Rollup process of zkLink.

zkSNARKs for zkLink

zkLink ensures the correctness of offline status and transaction validity through zkSNARKs, verifies the finiteness of offline status through zero-knowledge proof, and ensures transaction validity by introducing a lightweight oracle network in specific network requirements.

Application Scenario

zkLink has potential in multiple application scenarios. The official scenarios are as follows:

● Order book-based decentralized exchange for multi-chain atomic swaps: zkLink enables seamless multi-chain atomic swaps by aggregating orders on different chains together.

● Multi-chain AMM curve: zkLink supports AMM curves on multiple chains, providing high-performance and low-cost asset trading experience.

● Issuance and bridging of full-chain universal fungible tokens (OFTs): zkLink allows tokens issued on different chains to be aggregated, eliminating cross-chain risks and expensive bridging fees.

● Multi-chain NFT minting and trading: zkLink provides multi-chain NFT minting and trading capabilities, providing greater liquidity and interoperability for the NFT market.

We believe that in addition to the official application scenarios mentioned above, zkLink should be integrated with the current AA wallet. As an intent-based component, the AA wallet can cooperate with the zkLink multi-chain transaction uniformity protocol to form a one-stop transaction experience. Users only need to express the final purpose, and the intermediate process uses the zk method to ensure its correctness and stability. This method reduces the threshold for new users.

Token Economy

zkLink’s utility token and governance token are ERC 20-based ZKL, which has not yet been allocated or announced details (mainnet not yet launched).

ZKL has the following functions:

1. zkLink block fee: As a payment token for DApps to access zkLink services and pay for network block space usage fees. When the dApp server submits a block to the zkLink contract, it needs to use ZKL to pay the validator service fee, which is calculated based on the unit price and the sum of the transaction units in the block.

● DApp needs to pledge ZKL to obtain access to the management contract.

● Validators also need to pledge ZKL as a deposit and obtain ZKL as a reward by generating zero-knowledge proofs.

● Users holding ZKL can also obtain privileges and special benefits, such as discounts on transaction fees.

2. Governance: ZKL holders can pledge ZKL to obtain veZKL to initiate proposals and vote on proposals to participate in the governance and development of the protocol.

Airdrop Mechanism-Loyalty Points

Currently, zkLink is launching a new loyalty point mechanism on Galxe, which is expected to start in the fourth quarter of this year. The loyalty points will be used as the standard for airdrops. According to the figure below, the points rewards currently displayed on Galxe are from previous activities.

Loyalty points are obtained based on the completion of relevant tasks, and previous points are still being counted. The new activity will officially start in the fourth quarter of this year, and the specific rules have not yet been announced.

Ecological status

Currently, zkLink is in the testnet stage, and the DApps on the chain include ZKEX, zkJump, and OpenWorld.

ZKEX is the first decentralized multi-chain order book exchange based on zkLink. (Testing phase)

zkJump is a cross-chain bridge based on zkLink, which currently supports 12 chains including BNB Chain, Avalanche, zk-Sync, Starknet, Optimism, etc. (Testing phase)

OpenWorld is a decentralized derivatives exchange based on zkLink. (Testing phase)

Since zkLink has not yet been officially launched, its ecological construction is still in a relatively early stage. However, based on the operation process of the zkLink network, it may be relatively difficult to build DApps on zkLink. After all, some DApps are required to act as the sorter function of zkRollup.

Competitive product comparison

zkLink is positioned as a middleware for multi-chain interconnection related to Ethereum. It realizes transaction interconnection through zkSNARKs and zkRollup. It is essentially part of the cross-chain track. Layerzero is currently developing well in this track, but the implementation methods, paths, and functions of the two are different.

Layerzero is a universal cross-chain infrastructure that uses relayers, oracles, and Endpoints (contracts deployed on each chain) as tools for cross-chain transmission. The relayer is responsible for delivering transaction proofs on the chain, the oracle is responsible for reading the block header information of the source chain and delivering it, and the Endpoint is responsible for serving as the endpoint for receiving or delivering.

● The data and destination to be transmitted are packaged and sent to the oracle and relayer through the Endpoint of the source chain.

● The oracle reads and confirms the block header. After determining that the block has been confirmed several times on chain A, the oracle sends the block header to the Endpoint on chain B.

● The Endpoint on the target chain queries the relay through the received block header, and the relay receives the transaction proof of the source chain.

● After the off-chain verification is passed, the oracle and relay will send the relevant transaction information to the target chain to complete the cross-chain communication.

Layerzero transmits block header information and transaction proofs separately to achieve relatively secure cross-chain communication. The risk here is to ensure that the repeater and oracle do not collude, which depends on the degree of decentralization of the two.

Through the above introduction to Layerzero, although both deploy contracts on different target chains to collect transaction proofs, zkLink is more inclined to the application layer, improving the interoperability between L1 and L2. Layerzero, as L0, is responsible for the synchronization between chains, etc. The two have different focuses.

Some thoughts

What exactly does Paradigm’s Rollup-centric multi-chain Internet look like?

As for multi-chain interconnection, people want to change it through multi-chain interconnection due to the slow speed of Ethereum mainnet and high gas fees. In the past few years, projects such as Cosmos and Polkadot have attracted much attention, but the ecosystem is still lacking. When L2 develops, the demand orientation changes from the interconnection between L1 and L1 to the interconnection between L1 and L2, and between L2.

Therefore, I think the current mainstream direction of Web3 is the interconnection of the multi-chain universe (based on EVM or L2) with Ethereum as the core. For the interconnection centered on Rollup, zkLink explains that Rollup is used as a tool to package the transactions of each chain into the Rollup state of zkLink, realizing the unification of the two based on zkLink; increasing the correlation between L1 and L2, improving interoperability, and lowering the participation threshold for new users.

Finally, let me end this article with a metaphor to describe the role of zkLink:

If the Ethereum multi-chain universe is described as an archipelago, zkLink is equivalent to a ship. It only needs to have a dock on each island to be responsible for the connection between each island.