Key points

  • Validium is a type of Ethereum scaling solution that processes off-chain transactions and ensures their validity using zero-knowledge proofs.

  • Validium uses operator assistance to batch validate transactions to reduce on-chain data storage and gas fees.

  • Validium has the benefits of increased transaction speed and privacy, but also challenges such as data availability risks and potential concerns about centralization. 

Introduction

Blockchain technology has improved significantly over the years, but scalability remains an issue. In this article, we will look at a type of solution called Validium, which can improve the scalability of Ethereum.

What is Validium?

Validium is a type of Ethereum scaling solution that leverages off-chain data availability and computation to process transactions more efficiently. Unlike zero-knowledge rollups (zk-rollups), which store some data on-chain, Validium stores off-chain transactions and verifies their validity with using zero-knowledge proofs (ZKP).

How Validium works

Validium executes transactions off the mainnet Ethereum and ensures their validity and integrity using smart contracts on Ethereum. Let's look at the key aspects of Validium.

Transactions

When a user wants to make a transaction using Validium, they submit it to the operator. Operators are nodes that are responsible for executing transactions on the Validium chain. This can be one person or a group of people selected using the Proof of Stake (PoS) system. 

The operator groups transactions and processes them off-chain. When the batch is ready, the operator uses a special system - a verification scheme - to prove the correct execution of transactions.

State

Imagine the state of Validium, that is, a record of all accounts and their balances, as a large tree. It is called a Merkle tree. The root of this tree, that is, the root of the state, reflects the entire state as a whole. It is stored on Ethereum. 

When the operator processes transactions, it updates the state root to reflect new balances and account states. This new root of state is then sent to the mainnet Ethereum along with proof that everything was done correctly. 

Unlike ZK rollups, block producers on Validium do not need to publish all transaction details on Ethereum. If Ethereum confirms the proof, then the new state is accepted and Validium is updated.

Deposits and withdrawals

Users can deposit their funds from Ethereum to Validium. To do this, you need to send ETH or other tokens to a special contract on Ethereum. The contract will transfer the deposit to Validium and credit it to the off-chain account. 

When withdrawing funds back to Ethereum, users send a withdrawal request to the operator. The operator adds the request to the batch, and after it is confirmed on Ethereum, users can withdraw funds.

Validium and Ethereum Virtual Machine (EVM) Compatibility

Simple applications 

Validiums are effective for simple actions such as token swaps and payments, as Validiums can process many transactions quickly and do not store all the data on the Ethereum mainnet. This is ideal for tasks in which transactions are simple and do not require complex calculations. 

Problems with smart contracts 

Smart contracts are programs that run on the blockchain and often involve complex transactions. They are difficult for Validium to work with because it requires more computing power to prove that complex operations are executed correctly. This makes it difficult to support the wide range of functions that smart contracts offer. 

Possible solutions

Several projects are working to make Validium more compatible with Ethereum smart contracts. One approach is to create special versions of programming languages ​​such as Solidity (used to write Ethereum smart contracts). Such versions must be optimized for Validium. However, this method has limitations: such a language may not support all the functions of the regular Ethereum programming environment.

Benefits of Validium

Efficiency

Validium can process up to 9,000 transactions per second (TPS), offloading data storage and computation from the Ethereum mainnet. This is important for decentralized exchanges (DEX) and other scenarios where speed and favorable pricing are needed.

Cost reduction

Validium can significantly reduce gas fees by not hosting transaction data on-chain. Thanks to this, users pay lower transaction fees.

Increased security

By storing off-chain data, Validium can provide increased transaction privacy and an additional layer of security without sacrificing scalability.

Validium problems

Data Availability Risk

Since Validium relies on off-chain data, additional risks arise. If operators or data availability managers withhold transaction data, it will be impossible to generate the necessary evidence to withdraw user funds.

Risk of centralization

Proving the validity of Validium requires specialized equipment, which can lead to centralization. If the necessary resources are available only to a limited group of organizations, they will begin to dominate the network and undermine its decentralization.

Finally

Validium is a solution for scaling Ethereum by processing off-chain transactions. At the same time, Validium ensures the integrity of transactions using zero-knowledge proofs. Validium removes the limitations of on-chain data storage, so it can improve transaction throughput and help solve scalability issues.

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