Source
r/loopringorg•
SwagtimusPrime

zk rollups explained & why they are the future of blockchain scalability + privacy

Hello there r/loopringorg. Longtime contributor from r/ethfinance here.

With all the hype around Loopring and Gamestop, I thought I'd share some of the best articles around zk-rollups - this is a great chance to educate people about where the blockchain space is headed, and - after reading these articles - you will know zk-rollups are the future of everything. Yes, everything. I could attempt to explain it all in my own words, but I would be writing books. Instead, I'll provide you with the best resources we have.

Alright, here we go:

Ethereum-powered ZK-Rollups: World Beaters

Why rollups + data shards are the only sustainable solution for high scalability

Addressing rollup misconceptions

Why a single zk rollup can scale well beyond any L1 with fast full nodes

Layer 2 for beginners

Ethereum: Layer 2 rollups

What are zero knowledge proofs?

ZK STARKs vs ZK SNARKs

Ethereum's unique place in the new rollup-centric world

Okay, okay. I'll do a quick TLDR:

Blockchain networks currently function by having all validators/miners process all transactions. This is wildly inefficient, but it is paramount for network security. So how do we gain extreme scalability without compromising on security + decentralization?

The concept is fairly simple. It is based around "provers" and "verifiers". Instead of thousands of validators that all need to process all transactions, we instead take only a few validators that process transactions. These "provers" compute the transactions off-chain and generate a zero-knowledge proof of the computation. This zk proof mathematically proves that no fraud occurred - there is no possibility of fraud, mishaps, or anything that could lead to an undesirable outcome. It's mathematically verified.

These proofs are then verified by the "verifiers". These verifiers are light-weight and verifying proofs is much less computationally intensive than generating them, so anyone can run a verifier and check the proofs.

The best part? Rollup transactions get batched together. There can be tens of thousands of transactions in a single batch, which means the transaction fees get split up between all transactors. This means essentially zero gas fees, and fees will actually go down the more people transact.

So where does the scalability come from?

  1. off-chain proving saves thousands of validators from reprocessing every tx
  2. we only need a few provers for liveness to guarantee censorship resistance - if one goes down or doesn't want to compute your transactions, another one will.
  3. by doing this, we save immense amounts of hardware
  4. the proofs and call data are settled back to L1 (Ethereum mainnet). A large part of the computation never needs to hit L1 because we mathematically proved the results are correct
  5. batching of transactions amortizes gas fees among all participants -> 0 gas fees

Another benefit is that by achieving scalability through zk rollups, we can keep Ethereum mainnet lightweight, which makes it easier to run nodes on mainnet. The easier it is to run nodes, the more decentralized and secure the entire network becomes.

TLDR of TLDR:

zk rollups invert the blockchain trilemma and keep the base layer secure + decentralized.

While I have your attention: ETH 2.0 will not fix gas fees on L1. ETH 2.0 consists of a series of upgrades.

  1. The merge to Proof of Stake in Q2 2022, reducing energy consumption by 99.95% and making ETH deflationary

  2. Data sharding, which scales rollups by a factor of 100 at the very least, 10,000x within a few years

  3. Statelessness which makes it easier to run nodes on L1, improving decentralization and security of Ethereum even more

  4. a zkEVM, but this will be a couple years off.

Rollups fix gas fees, thank you for your attention.

Posted Nov 9, 2021, 4:42 PM UTC · edited

1.3K158
doomtop•

Not everyone picking up LRC understands the details of Loopring. More of this kind of post would go much further towards realizing the value of this platform and its token than the ridiculous volume of hollow posts yawping over short term price action.

Thanks OP!

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strongApe99•

thats why i keep saying +100$/token is not a meme

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Latespoon•

If the crypto world truly understood the potential of this tech, L2 tokens (plural) would be dominating the market in a major way already.

One of the biggest myths damaging L2 token adoption at the moment is the idea that Eth's merge to POS (aka eth2) is going to solve the problem of gas fees and network traffic. This is completely false.

Luckily, this problem for L2 will resolve itself. Once the merge happens and people wake up and smell the coffee, I would expect to see pretty rapid growth in the L2 space in terms of wallet count, trading volume and token price.

So now we just have to wait. Arguably the hardest part when you know you're on to a winner.

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strongApe99•

been on that train for 10monts now with GME. i am zen af and can wait for months to come 😂🚀🚀🚀

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Latespoon•

Cheers to that brother ape 🍻

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SwagtimusPrimeOP•

This is 100% correct, and multiple zk rollup tokens are set to launch within the next 3-9 months. If you can, spread the word around zk rollups, link them to this post, and explain that the merge will not fix gas fees and isn't supposed to fix them.

zk rollups are the future of this entire space.

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colligative_karma•

Where can I read more about zk rollups? Getting back into crypto after selling all my Bitcoin back in 2015, still pretty bitter that I didn’t hold but I’m excited to learn more about projects like Loopring

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[deleted]•

[removed]

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Hirsutism•

Merge? As in loopring and eth or loopring and gme?

Doesnt eth2 claim exactly that: to eliminate gas fees?

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SwagtimusPrimeOP•

I'll give some context here.

ETH2 was originally planned to introduce Proof of Stake and sharding to the Ethereum blockchain. Sharding means splitting up the blockchain into 64 or more distinct chains which would enable us to parallelize transaction execution and achieve exponential scalability gains.

However, as it turns out, this is extremely difficult to do without compromising on decentralization (one of the core values of Ethereum is to remain as decentralized as possible); and we would sacrifice composability between the shards.

ETH2 nowadays is a deprecated term. It was always a set of upgrades, referred to as ETH2, but now we simply talk about the upgrades themselves instead.

So here's what's happening with Ethereum:

  1. The merge to Proof of Stake. We will shut off wasteful Proof of Work in Q2 2022.
  2. Data sharding. Wait, didn't I just say we don't do sharding? Correct. But there's two types of sharding: execution sharding (described above) and data sharding. Data sharding essentially means that we can use the validators on L1 as dumping grounds for data. They will not have to execute arbitrary transactions like in execution sharding, but just serve as pure bandwidth. You may be asking, bandwidth for what? Rollups. zk rollups will see another 100x boost in transaction capacity at the very least - by the end of the decade, we may be looking at a 10,000x - 100,000x boost.

After these two upgrades are done we'll implement statelessness for Ethereum nodes which makes it extremely easy to verify the blockchain, which increases decentralization and security once again.

Beyond that we'll zk-snark the entire EVM, and so on. But that's at least 5 years off.

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Latespoon•

Eth 2 is the old name for the merge.

You've confirmed my point - that is a complete myth, the merge will do nothing for gas fees. It's probably the most widely believed myth in crypto.

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midgetforce2k•

Ethereum is largely used for DeFi applications (and other dapps) right now. Until Loopring L2 can interact with the most popular Dapps it will be inferior to L1 and other L2 protocols like Polygon. Loopring also needs a way to on board FIAT without going through the L1 before there can be mass adoption.

By investing in LRC I am speculation that Loopring will solve those issues and generate a lot more traffic and more fees. Based on the fundamentals alone of the current state of Loopring, LRC is not a good investment

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SwagtimusPrimeOP•

Based on the fundamentals alone of the current state of Loopring, LRC is not a good investment

Usually people invest in things before they are amazing, finished products. I understand the sentiment, but all of these issues are being worked on by Loopring and several other zk rollups, and CEXs have already announced support for Ethereum L2s.

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NowImTaylor•

This is exactly why I aped in. Even $10 isn’t going to be a bad price.

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[deleted]•

[removed]

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bpon89•

Thanks for explaining zk rollups. I kept shilling it but have no idea what it means, other than Vitalik saying it’s the future of layer 2s for ETH, and that it’s a superior technology than Optimism (Arbitrum and Optimism). With Polygon acquiring Hermez zk rollups, they should be working on this too. Seems like LRC already has this technology. Hope to see more posts about what Loopring is about. As new investors come in from the GameStop rumors, it’ll be huge to keep everyone updated about the potential of LRC. Even when and if GameStop verifies the rumors I think it’ll out LRC on the map and on its way to a top coin!

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_lil_mermaid_•

most ppl won't understand even after reading everything. i worked as the only web person in an entire ad agency of 200 employees, i know how technologically challenged almost everyone outside of tech is, this is why gme rumors finally got this rocket moving, and i am more than excited that loopring is finally getting the recognition they deserve!

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Mug_Lyfe•

The token is essentially just a share of the company, correct?

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SwagtimusPrimeOP•

https://medium.com/loopring-protocol/lrc-tokenomics-v2-1e6fd99e9e9c

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doomtop•

No, it explicitly not that.

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o-_l_-o•

On top of this, if anything ever goes wrong with the ZKRollup chain, you can just move your assets back to Ethereum. You don’t have to worry that a chain shutting down or censoring you means that it can steal/lock up your assets. This is a real advantage of something like Loopring over using a centralized system or a different layer 1 blockchain.

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SwagtimusPrimeOP•

Very important addition. If a prover should try to censor you, there's an escape hatch that allows you to transfer your funds back to Ethereum.

In reality, this will likely never happen. With enough provers, liveness is guaranteed, because provers earn fees for proving transactions. Same goes for verifiers.

And this is only for censorship resistance - on a zk rollup, it is impossible to get your funds stolen. Darth Vader could be running a prover + verifier, he could not steal your funds no matter what. But he could censor you - for that reason, there are multiple permissionless provers + the escape hatch.

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Western_Resort•

How many coins do you need to be either a prover or verifier?

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SwagtimusPrimeOP•

None at all. All existing and upcoming zk rollups have committed to fully decentralize - that includes permissionless verifiers and provers. Anyone can verify the proofs, and anyone can compute transactions and generate proofs.

I shall note that being a prover requires good hardware, but that's the only "limit". And as mentioned, we don't need that many provers. 100-200 distributed across the world is more than enough to avoid censorship/liveness failures.

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Western_Resort•

So that’s different than “staking”. I’m still learning the ins and outs here.

So I’d be providing computing power to the chain to make transactions occur.

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turtlemix_69•

Are there benefits to being a verifier or do people just do it for fun/principle?

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DarthVaderIzBack•

Dammit

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SwagtimusPrimeOP•

better luck next time!

3
savage-dragon•

ZK ROLLUP IS THE FUCKING FUTURE!!! ETHGMELRC HOLY FUCKING TRINITY. Name a better trio. I dare you. This is not bullish. It's apeish as fuck.

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imabigfanofcereal•

Loopring's momentum is totally detached from its project right now. It's all fomo, apes, memes, and rumors. I mean it's the same formula that has made people a lot of money in alt coins so no bashing it. Just wish more informative posts like this would cover the front page versus the ape crap.

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SwagtimusPrimeOP•

I agree. That's why I posted :)

15
dopamingo•

As one of the apes who has very little understanding of loopring, I just want to thank you for your post. This is the first piece of information I’ve come across actually explains the structure of this protocol (am I using that word correctly?), and why it’s important / useful.

I’ve found tons of articles and posts explaining why loopring is significant (it’s quick, safe, cheap, etc.) but I haven’t found anything that explains how it’s significant, i.e., how it actually does what people claim it does.

So thanks!

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SwagtimusPrimeOP•

That was exactly my goal and I'm glad it worked out!

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boootybeef•

Only had a vague idea about it but now I like this even more. Cheers brother!

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odinsr•

Thank you for sharing!

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Cramer02•

Thanks for the write up, hoping this gains some traction in here 👍

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sambrojangles•

Thank you for this wonderful summary and explanation, I would also like to add that Loopring is also deflationary with a burn rate and the coin supply is capped. So what you own right now can’t be diluted.

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sirron811•

Thank you for this - been reading on zero knowledge proofs/rollups this morning and just saved your post to share with others. Brilliant stuff, OP

7
pseudotheos•

I would also recommend Vitalik's blog if you want to dive deeper.

https://vitalik.ca/general/2021/05/23/scaling.html

6
kidwellb•

Ape here. Never been this early on anything and don't know what to do with my hands. Does LRC have any direct competitors? Surely others are trying to do the same, no?

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SwagtimusPrimeOP•

Yes, Loopring has formidable competitors that are currently sailing under the radar because a) they don't have the GME hype b) zk rollups currently only support transfers, NFTs and some app-specific code.

most zk rollups are currently working on supporting the EVM which enables arbitrary and composable smart contract deployment. This opens up the holy grail - every Ethereum dapp can be ported over to these rollups where users enjoy low fees and fast transactions.

Loopring is working on this as well, but it isn't the first to market.

First to market will be Starkware this month with an alpha version, followed by zkSync 2.0 within 3-4 months, followed by Polygon Hermez, and Loopring will happen in the timespan between zkSync and after Hermez.

Starkware and zkSync have no tokens yet, but very likely will sometime in the future. Polygon Hermez has the MATIC token, but it's been around for a while and has appreciated in price.

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kidwellb•

This is excellent info. Apes are powerful but sounds like proof of concept/notable adoption will be the differentiator

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SwagtimusPrimeOP•

zk rollups are early and it shouldn't be underestimated what effect the Gamestop partnership (if there is one) can mean in terms of adoption for LRC. In general, nearly all zk rollups will do good because they represent a paradigm shift in blockchain scalability.

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Baikken•

Immutable X also has prominent adoption in the nft space.

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SwagtimusPrimeOP•

ImmutableX is powered by Starkware, but yes you are very right.

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[deleted]•

[removed]

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Liberosist•

So nice to see more people learning about zkRs!

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SwagtimusPrimeOP•

Multiple of the articles I linked were written by this person - if you have any in-depth questions, don't be afraid to ask u/Liberosist or myself.

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[deleted]•

[deleted]

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CraftingAmbition•

Came for the hype. Stayed for the tech. LRC to the moon!

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_Dew_it_•

Upvoted, wrinkly brained ape. Inject these fundamentals directly into my veins.

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The_Superfist•

Damn, best TLDR i've read so far. Thank you!

4
Bob-Rossi•

Great post OP. Do you have an opinion on why something like ZK Rollups are better then a sidechain like xDAI or Matic?

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pseudotheos•

Not OP but an Eth dev. Sidechains do not inherit the native security of Ethereum, because they are secured by their own system. Matic and xDai are currently Proof-of-Authority (PoA) systems which sacrifice decentralization in the so-called Scalability Trilemma (Low Cost, Decentralization, Speed). Rollups are on top of Ethereum which mean they can have low cost and speed without sacrificing decentralization, because they are secured by Ethereum itself.

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Pkmnpikapika•

But i don't like paying gas fees to move my loopring coins to layer 2. I already paid gas fees to buy them, why do i have to pay gas fees to transfer them again to L2

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SwagtimusPrimeOP•

This is a short term issue. Exchange support is coming, so you can completely avoid L1 gas fees in the future. These are still early days.

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Pkmnpikapika•

Source?

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SwagtimusPrimeOP•

https://blog.coinbase.com/coinbase-protocol-team-advances-crypto-community-aa9b3748bac5

Integrating with Ethereum Scaling Solutions One of the most exciting projects our Protocol team is working on is to help scale Ethereum through an integration with L2 and other scaling solutions. Scaling Ethereum will help address some of the biggest challenges, including high prices and long settlement times. We want to allow our customers to quickly and cheaply withdraw directly onto a supported L2 solution. Our hope is that we can help level the playing field and ensure retail users don’t get priced out of being able to participate in this burgeoning ecosystem. Just as we announced support for the Polygon network for both Coinbase Wallet and extension, we plan to integrate Polygon as our first scaling solution for Coinbase. Our goal is to explore similar scaling initiatives with L2s such as Optimism, Arbitrum, and Starkware over time.

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Pkmnpikapika•

Oh i thought it will be loopring who will make the L2 ramp

1
emale27•

Real question - before I ask I hold xxx Loopring so I have a genuine interest here - my understanding is that you do not need to hold any LRC in order to use zk roll ups or wallet function provided by Loopring so what incentive is there for users to buy LRC? What will create the demand to push this coin to $100+? If people can just use the system without the coin where does the inherit value in the coin lay?

I’m no doubting the value here I’m just trying to better understand the ecosystem upon which it is built.

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SwagtimusPrimeOP•

Try this post: https://medium.com/loopring-protocol/lrc-tokenomics-v2-1e6fd99e9e9c

I mean, you're asking this for a token that's connected (or rumored to be connected) to Gamestop, which is a meme stock. It's no surprise that LRC may shoot well beyond its actual value. I'm not here to say it has or hasn't.

If Gamestop builds on Loopring, protocol fees may be significant depending on what they are actually building. It will also depend on adoption of the protocol, etc.

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emale27•

Thanks dude.

2
Upstairs-bangers-69•

What do you think about hbar? They say they solved the trilemma.

1
Fryeboy•

That was a great read - thanks!

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semipeeled•

Thanks a lot for this, very very helpful

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