The top 3 ZK roll up projects to understand and invest in are MATIC, LRC and IMX.
Ethereum, the most valuable crypto asset after Bitcoin, was conceived by its co-founder Vitalik Buterin as an open source platform for decentralized applications (Dapps) through encryption. Since its inception, Ethereum has seen tremendous traction both in terms of price and total value locked (TVL). While its growth is commendable, Ethereum has faced many challenges such as network congestion, high transaction fees (gas). Many solutions have been proposed with different approaches and one of them is ZK (zero knowledge) rollups. In this article, we define what a ZK package is and the current progress in the ZK ecosystem.
Meaning of the ZK test
Ethereum can be thought of as a group of computers that stores transactions and maintains a global state (who owns how much ETH, what smart contracts are available, etc.) of those transactions. But it was becoming more and more difficult to carry out these transactions without an increase in transaction fees (gas). This is where Ethereum layer 2 solutions such as ZK packages come into play.
A ZK Proof is a cryptographic tool that can be used to create ZK stacks. With ZK-rollups, transactions can be processed but do not require all transaction data to be published to Ethereum. This helps reduce the block space used on Ethereum, allowing it to scale and lower gas fees. They achieve this by moving computationally intensive processes from the Ethereum mainnet (Layer 1) to a sidechain (Layer 2). A digest sends just enough data to the main chain so that any participant can recreate transaction states and detect invalidity or errors. Security is not compromised as transaction data is stored on the Ethereum main chain.
Main ZK-Rollup projects currently
ZK Rollups have immense potential as a practical scaling solution for Ethereum. Therefore, to take advantage of this rapidly developing technology, here is a list of protocols that implement ZK-Rollups and their coins.
Polygon Network is a ZK-Rollup based protocol that allows developers to create Dapps that combine the high security features of Ethereum with the low gas fees and scalability of the Polygon Network. MATIC is the native token that powers the Polygon Network. It is used to pay transaction fees and can also be staked on PoS consensus for 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. In addition, Polygon has acquired Ethereum scaling startup Mir Protocol for $400 million, which has the fastest and most advanced ZK-proof technology called Plonky2.
Loop Ring (LRC)
The Loopring network is a project powered by ZK-Rollup that allows developers to create fast-settled decentralized exchanges (DEX) for traders on the Ethereum network. Loopring DEXs offer low-cost transactions and payments on the Ethereum blockchain, leveraging the high-throughput advantage of ZK proofs. LRC is the native utility token of the Loopring network. Merchants pay in LRC when processing each transaction. At Loopring, 80% of funds are sent to liquidity providers and the balance is shared between insurers and the Loopring DAO.
Immutable X (IMX)
Immutable X is a layer 2 scaling solution for non-fungible tokens (NFTs) on Ethereum. Use ZK-Rollups to expand trading and eliminate gas fees for minting and trading NFTs, without sacrificing user and asset security. IMX is the native utility token of the Immutable X protocol. Users can earn IMX by trading and doing other activities on the network. IMX can be used to pay fees, stake the protocol, or as a governance token. Immutable X sits at the intersection of three popular narratives in the crypto space: NFTs, ZK-Rollups, and Gaming, making it an up-and-coming asset worth considering.
Use promo code TNM51 at www.giottus.com/profile#promo after registration to get Rs.51 worth of Bitcoin for free.
Disclaimer: This article was written by Giottus Crypto Exchange as part of a paid partnership with The News Minute. Investments in crypto assets or cryptocurrencies are subject to market risks, such as volatility, and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about investing.