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Concept Explainer - Ethereum’s scalability and zkSync
(DOMANI is an oracle-less Digital Asset Management platform that enables users to create, mint and manage ETF-style tokenized funds. The views expressed in the article below should not be taken as investment advice. Always do your own research.)
Ethereum average transaction prices reached over $50 in late 2021, that’s because Ethereum’s total fee formula is dynamically adjusted based on the number of users interacting with the network at any given time. This means that as more people use it, the higher the gas fees.
This presents a scalability problem for Ethereum, which is why Layer 2 scaling solutions exist, to move the bulk of transactions away from Layer 1 whilst still maintaining a link to the network. This means that L2 solutions can create a network that makes Ethereum transactions cheaper and faster, whilst still benefiting from Ethereum’s security.
ZK Rollups and zkSync
There are a decent amount of L2 solutions on Ethereum, in this article we will analyze Zero Knowledge (ZK) Rollups, specifically focusing on zkSync, as they begin their road to mainnet deployment. ZK rollups work by holding all funds in a smart contract on the mainchain, while all the computation and storage is performed off-chain.
The idea is instead of having to verify every transaction separately, transactions can be rolled up into a single item, which is then verified on the main chain and all approved simultaneously. In the case of zkSync, the system works by using a SNARK proof to verify transactions that happen on zkSync on the Ethereum mainnet.
This SNARK verification method is significantly cheaper than verifying transactions individually on Ethereum, and storing the transaction data off-chain is also significantly cheaper. This is why zkSync estimates that on top of the cost savings, zkSync’s SNARK verification also enables a boost in scalability, up to 200x of Ethereum’s capacity.
Not only does zkSync’s rollup architecture improve scalability and decrease transaction costs, it also maintains the security guarantees established on Ethereum by:
Ensuring validators cannot corrupt the state proof or steal funds
Ensuring that users can always retreive the funds from the zkRollup smart contract even if validators stop cooperating
Ensuring that users nor single trusted third parties need to be online to monitor zkRollup blocks in order to prevent fraud
With 64 days to go until the launch of zkSync 2.0 mainnet, DOMANI Protocol is committed to join Matter Labs on their mission of helping scale the most secure and adopted blockchain on the planet. Currently on the zkSync 2.0 testnet, nearly 5,000 funds have been launched on DOMANI and we look forward to launching on the zkSync mainnet as soon as possible.
About DOMANI Protocol
DOMANI Protocol is an asset management protocol that facilitates portfolio tokenization, rebalancing, and a multiswap DEX to trade a multi-token position in a single transaction.
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