There are three key ZK roll up projects that you need to understand and consider investing in: MATIC, LRC and IMX.
Founded by Vitalik Buterin and designed to allow developers to create decentralized applications (Dapps) through coding, Ethereum is the second most valuable crypto asset in the world after Bitcoin. Since its launch, Ethereum has experienced rapid growth in terms of both price and total value locked (TVL). Despite its tremendous growth, Ethereum has faced various challenges like network congestion, and high transaction fees (gas). ZK rollups (zero knowledge) have been proposed as one of several solutions with varying approaches. This article explains what a ZK rollup is and how the ecosystem is progressing.
What is a ZK proof?
Ethereum can be thought of as a group of computers that stores transactions and maintains a global state (who owns how many ETH, what smart contracts are available etc) of those transactions. But it was becoming increasingly difficult to perform these transactions without a spike in the transaction (gas) fees. This is where Ethereum layer 2 solutions like ZK roll ups come in.
A ZK-proof is a cryptographic tool that can be used to create ZK-rollups. With ZK-rollups, transactions can be processed but don’t require all transaction data to be posted on Ethereum. This helps to reduce the block space used on Ethereum, enabling it to scale and reduce gas fees. They achieve this by moving computationally intensive processes from the Ethereum mainnet (Layer 1) to a sidechain (Layer 2). A rollup submits just enough data to the mainchain so that any participant can recreate the transaction states and detect invalidity or errors. Security isn’t compromised, since the transaction data is stored on the Ethereum mainchain.
Best ZK-Rollup Projects
ZK rollups carry immense potential as an practical scalability solution for Ethereum. Therefore, to take advantage of this fast-developing technology, here we present the best zk rollup coins list.
Polygon network is a ZK-Rollup-based protocol that allows developers to build Dapps which combine the high-security features of Ethereum with the low gas fees and scalability of Polygon Network. MATIC is the native token powering the Polygon Network. It’s used to pay transaction fees, and can also be staked in the PoS consensus to earn passive income. The main reason to keep an eye on MATIC is the rapid growth of the Polygon network, with more interoperable projects launching on it. Also, Polygon has acquired the Ethereum scaling startup Mir Protocol for $400 million which boasts the fastest and most advanced ZK-proof technology, called Plonky2.
The Loopring network is a ZK-Rollup-powered project that enables developers to create decentralized exchanges (DEXs) with fast settlement for traders on the Ethereum network. Loopring DEXs offer low-cost trading and payment on the Ethereum blockchain, leveraging the high-throughput advantage of ZK proofs. LRC is the native utility token of the Loopring network. Traders pay in LRC when processing each trade. On Loopring, 80% of the funds are sent to the liquidity providers, and the balance is shared between insurers and Loopring’s DAO.
Immutable X (IMX)
Immutable X is a layer 2 scaling solution for non-fungible tokens (NFTs) on Ethereum. It uses ZK-Rollups to scale up trading, and to eliminate gas fees for NFT minting and trading, without sacrificing the security of users and assets. IMX is the native utility token of the Immutable X protocol. Users can earn IMX by trading and carrying out other activities on the network. IMX can be used to pay fees, to stake on the protocol, or as a governance token. Immutable X stands at the intersection of three popular narratives in the crypto space — NFTs, ZK-Rollups and Gaming ― making it a promising asset worth considering.