A comprehensive guide to ZK Rollups | by Satvik Sharma | The Capital Platform

Layer-2 solutions keep blockchains running faster. ZK Rollup is a type of L2 solution. Here is how it works:

ZK Rollups are a class of layer-2 technology deployed on the Ethereum blockchain for faster and smoother processing of blockchain data. Layer-2 solutions are additions to a blockchain that increase the base blockchain’s functionality, speed, or security.

Using ZK Rollups for blockchain transactions not only reduces the load on the blockchain but also increases the throughput.

How do ZK Rollups work?

It is important to remember that blockchains are just a collection of computers running the same software. Therefore, blockchain operations, like exchanging Bitcoin and USDT, are just mathematical functions. And performing these mathematical functions requires computational power and storage.

But what if the system cannot afford to run a blockchain node? Well, you outsource it to a computer that CAN handle these transactions. This is the working principle of ZK Rollup technology.

How it works:

External computers connect to the Ethereum blockchain. These computers are not part of the blockchain. Additionally, the tech behind these computers needn’t be web3 at all. If a calculator can perform the calculation, why bother with a smart contract?
The input data is sent to external computers (ZK rollups). These ZK rollups then compute and store the data.
Logs and proofs of the transaction are sent back to the Ethereum blockchain.
The blockchain uses the output data in the logs to conduct further transactions.

What does ZK Rollup stand for?

There are two parts to this name. Let us understand them both separately. ZK Rollup = ZK (Zero Knowledge) + Rollup

Zero-knowledge refers to the knowledge-sharing policy of ZK Rollups. When your blockchain’s data is sent to the external computational device, that device is only there for computing. The computer isn’t given any context about the transaction. It doesn’t know whether the output will be for a P2P transaction or a smart contract.

Rollups refer to the ‘rolling-up’ of transaction data in bundles and shipping them to the external validator. The data is then transacted in batches, and the result goes back to the layer-1 blockchain.

Yes, the ZK part is much more complex than the Rollup part!

But why would the Ethereum blockchain trust a random off-chain transaction?

When setting up a ZK Rollup on a node, appropriate smart contracts are deployed to connect the Rollup with the Ethereum blockchain. These smart contracts act as the bridge between the external computer and the blockchain.

Additionally, these smart contracts verify the validity of each transaction.

In a layer-1 system, the transaction is performed and verified by the blockchain. But in a ZK Rollup-based system, the transaction is done by the Rollup.

The blockchain is only there to take the transaction to its destination!

Prominent ZK Rollups:

If ZK Rollups are so great, then what are some projects using the tech?

I’m sure you have heard of at least a couple of these:

Immutable X: Immutable X is a DeFi trading platform built on the Ethereum blockchain for NFTs. Immutable is based on a type of ZK Rollup technology called Validium. In theory, validium-based systems can go to 9000 TPS!
Loopring: Loopring is one of the most popular Ethereum layer-2 solutions. I’d say it counts somewhere in the top 5 solutions near Arbitrum and Optimism.
zkSync: The zkSync era is here! zkSync is constantly popular on Twitter. Its mission is to make Ethereum popular and it is doing that job very well.
Polygon Hermez: Polygon is EVERYWHERE. If you are building on Ethereum, you WILL come across a Polygon solution for whatever you build. It’s absurd!
I wrote a whole about this phenomenon here:

Want the tl;dr version of this article? Recently, I wrote a Twitter thread about ZK Rollups and their version. Make sure to follow me over there!