The top three ZK rollup projects to understand and invest in are MATIC, LRC, and IMX.
Ethereum, the second most valuable crypto asset after Bitcoin, was envisioned by co-founder Vitalik Buterin to be an open source platform for coded decentralized apps (Dapps). Since its inception, Ethereum has been a major driver in terms of both price and locked total (TVL). While its growth is commendable, Ethereum faces many challenges, including network congestion and high transaction fees (gas). Many solutions have been proposed with different approaches, one of which is the ZK (Zero Knowledge) rollup. This article defines what a ZK rollup is and the current progress of the ZK ecosystem.
Meaning of ZK certification
Ethereum can be thought of as a group of computers that store transactions and maintain the global state of those transactions (number of ETHs, available smart contracts, etc.). However, it has become increasingly difficult to carry out these transactions without a surge in transaction (gas) prices. This is where Ethereum Layer 2 solutions like the ZK Rollup come in.
ZK Proof is an encryption tool that you can use to create ZK rollups. You can use the ZK rollup to process transactions, but you don’t have to post all transaction data to Ethereum. This helps reduce the block space used by Ethereum, allowing Ethereum to expand and reduce gas charges. They do this by moving the computationally intensive process from the Ethereum mainnet (Layer 1) to the sidechain (Layer 2). The rollup sends enough data to the mainchain so that participants can recreate the transaction state and detect invalidities or errors. Transaction data is stored on the Ethereum mainchain, so security is not compromised.
Current top ZK-Rollup project
ZK Rollup has great potential as a practical scalability solution for Ethereum. Therefore, here is a list of protocols that implement ZK-Rollups and its coins to take advantage of this rapidly evolving technology.
Polygon network is a ZK-Rollup-based protocol that allows developers to build Dapps that combine Ethereum’s high security features with Polygon Network’s low gas rates and scalability. MATIC is a native token that enhances the polygon network. Used to pay transaction fees, you can bet on PoS consensus to earn passive income. The main reason for focusing on MATIC is the rapid growth of the Polygon network, and highly interoperable projects have been launched. Polygon also acquired Ethereum scaling startup Mir Protocol for $ 400 million. It boasts the fastest and most advanced ZK proof technology called Plonky 2.
Loop ring (LRC)
The Loopring network is a project that utilizes ZK-Rollup, allowing developers to create a decentralized exchange (DEX) for fast payments for traders on the Ethereum network. Loopling DEX leverages the high throughput benefits of ZK certification to provide low cost transactions and payments on the Ethereum blockchain. LRC is a native utility token for Loopring networks. Traders pay in LRC when processing each transaction. At Loopring, 80% of the funds go to the liquidity provider and the rest is shared between the insurer and Loopring’s DAO.
Immutable X (IMX)
Immutable X is a layer 2 scaling solution for Ethereum non-fungible tokens (NFTs). Use ZK-Rollups to expand your transactions and eliminate NFT casting and transaction gas charges without sacrificing user and asset security. IMX is a native utility token for the ImmutableX protocol. Users can earn IMX by performing transactions and other activities on the network. IMX can be used to pay fees, invest in protocols, or as a governance token. Immutable X is at the crossroads of three popular stories in crypto space (NFT, ZK-Rollups, Gaming) and is a promising asset worth considering.
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Disclaimer: This article was created by Giottus CryptoExchange as part of a paid partnership with The News Minutes. Investing in crypto assets or cryptocurrencies is susceptible to market risks such as volatility and is not guaranteed to be profitable. Do your own research before investing and seek independent legal / financial advice if you are uncertain about your investment.