- Zachary Williamson is the co-founder of Aztec Network, the first private ZK rollup in Ethereum.
- He analyzes why Ethereum Layer 2 solutions will be a bigger deal in the coming year.
- He shares why developers are sticking to Ethereum, despite the rise of other Layer 1 protocols.
The story of the growth of the Layer 2 platform aimed at making transactions on the Ethereum blockchain faster and lowering gas prices is already unfolding. Layer 1 protocols refer to the underlying main blockchains such as Bitcoin and Ethereum, while layer 2 networks are often third parties that can be combined with layer 1 blockchains to improve scalability and efficiency. Integration.
Ethereum’s privacy-focused scaling solution, Aztec Network, announced Thursday that it has raised $ 17 million in a series A round led by the paradigm and involving angel investors, including Ethereum co-founder Vitalik Buterin. Did. ConsenSys, the world’s largest blockchain software company, said it worked with payment giant Mastercard to launch a scaling solution at Ethereum on the same day.
There are two main types of Layer 2 scaling solutions. (1) Optimistic rollups such as Arbitrum and Optimism, (2) Zero-knowledge (ZK) rollups such as zkSync and Aztec Network.
According to The Block Research, the fixed sums for optimistic rollups and ZK rollups surged to $ 3.3 billion and $ 1.9 billion, respectively. Digital Asset 2022 Outlook Report..
“With the Ethereum 2.0 shard chain scheduled for 2022 and the possibility of token distribution to decentralize the L2 sequencer nodes, the rollup is ready for further adoption in 2022,” the report said. ..
Benefits of privacy-focused scaling solutions
For Aztec Network co-founders Zachary Williamson and Joe Andrews, the ZK rollup not only enables cheaper and faster transactions, but also helps protect user privacy.
“Zero-knowledge proofs are a kind of concise and proof of knowledge that can be used not only to compress the information sent to the chain, but also to hide certain parts of it.” Andrews said in an interview. “That’s how we get the privacy element.”
It’s easy to understand the benefits of cheaper and faster transactions, but the need for privacy to carry out financial activities on the blockchain is not intuitive. After all, blockchain is supposed to make data and information transparent. However, Williamson believes that it is the lack of privacy that is preventing blockchain technology from being mass-adopted in the mainstream.
“People pay US dollars using blockchains like Ethereum instead of Visa, MasterCard network, if everything is public,” said Williamson, who turned from a particle physicist to the founder of cryptocurrencies. I’m not going to settle. ” “If people’s Amazon payments, their salaries, and mortgage payments are all settled and streamed through a public ledger, it’s not really going to reduce mustard.”
Privacy-protecting scaling solutions allow users to one day pay a penny to trade on a decentralized blockchain instead of 2% to trade on a centralized network.
Most Ethereum Layer 2 networks do not have token distribution. polygon (MATIC) and Loop ring (LRC) and CoinGecko have returned 10,883% and 1,152%, respectively, over the past year, according to pricing.
Ethereum is still there
Despite the rise of rival smart contract platforms this year, Ethereum remains the most mature and fluid platform for builders like Williamson and Andrews.
As of Thursday afternoon, the total value locked to the Ethereum blockchain decentralized application was $ 163 billion, while the total value locked to all blockchain DeFi applications was $ 250 billion. DeFi llama.. Ethereum, the native token of the Ethereum network, was trading for about $ 4,008.
“Ethereum is currently undergoing a large amount of financial activity, margin lending, large-scale trading, and pairing,” Andrews said. “Privacy is becoming a kind of prerequisite for actually doing business on a chain. It’s easy once another chain reaches the same level of maturity and a mature financial product is built there. Can be expanded to. “
Ethereum is also a kind of user
It makes privacy essential.
“Privacy is meaningless without liquidity. We need to kick off meaningful value before anonymity begins to become an issue,” Williamson said. “Ethereum today is the crucible of this innovation. What’s happening within the blockchain ecosystem is all the connections of this economic creativity: where all the users are. Where all the money is. is.”
As a result, traders can benefit from the privacy of protecting their portfolios and trading strategies from the public eye, and authoritarian users can hide their financial position from abusive forces, he said. Added.