Blockchain Fundamentals: What are ZK-Rollups?-banner-imageAcademy

Blockchain Fundamentals: What are ZK-Rollups?

Blockchain technology offers; The crypto asset ecosystem continues to evolve, thanks to features such as decentralization, transparency, and security. In addition to the unique features it offers, there is a triple deadlock, in other words the impossible trinity, which is also equivalent in the economy in blockchains. The Triple Dilemma or the Impossible Triad is a hypothesis that states that only two of the three different choices can be chosen in economics and the other should be abandoned. Today, blockchains have to choose some options similarly.

Blockchains, by their nature, consist of blocks in which transactions take place. Each block has a capacity. One of the Blockchain Triple Dilemmas is scalability. Even if transactions increase, the performance of the blockchain does not change. For example, the current version 1.0 of the Ethereum blockchain network is capable of processing approximately 15 transactions per second. For this reason, every transaction that occurs above the maximum transaction capacity on the network is put on hold. Miners charge more fees for transactions, and due to the density, there are large increases in both transaction times and transaction fees.

So how can the scalability problem be solved? In this article, we will talk about Zero Knowledge Rollup Technology, one of the Ethereum scaling solutions.

ZK-Rollups outperform traditional Tier 1 blockchains like Ethereum because they combine on-chain and off-chain processes. While the Ethereum mainnet explicitly uses on-chain activities to process transfers and validate blocks, Layer 2 ZK-Rollups solutions also offer off-chain functionality. One of the main components that allows ZK-Rollups to successfully validate transactions faster than Tier 1 solutions is Merkle Trees. Merkle Trees are an important mathematical structure that prevents the creation of fake data in the on-chain records of blockchains. Typically, ZK-Roll Ups consist of two Merkle Trees stored on the chain. One Merkle Tree works to store accounts, while the other stores all balances. All other data types generated and used by ZK-Rollups are stored off-chain.

The reason the ZK-Rollups solution outperforms its Tier 1 counterparts significantly is because data is stored off-chain. In this way, a large amount of processing power and time savings are achieved in blockchains by using ZK-Rollups. As a result, transaction fees are reduced as less capacity of the blockchain is used for transaction verification. ZK-Rollups are becoming increasingly popular with developers looking to increase usability and investors looking for faster and cheaper transactions.