What Is ZKSync? The Ultimate Guide to the ZKSync Ecosystem

ZKSync is a zero-knowledge rollup (zk-rollup) scaling solution to the Ethereum blockchain. Ethereum layer-two (L2) scaling focuses on two solutions: zero-knowledge rollups and optimistic rollups.

In our dive into Ethereum L2s ecosystem of decentralized applications (DApps), after looking at the Arbitrum ecosystem and Optimism ecosystem as part of optimistic rollups, we now turn to zkSync — a zero-knowledge rollup scaling solutions for Ethereum. In this guide to the zkSync ecosystem, CoinMarketCap Academy looks at:

What is zkSync
A comparison of zkSync and other L2 solutions
zkSync's investors and its roadmap
zkSync Token and Potential Airdrop
How to use zkSync
The zkSync ecosystem

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What Is ZKSync?

ZKSync is a layer-two blockchain for Ethereum using zk-rollups as scaling technology. Like optimistic rollups, zk-rollups roll up transactions off the Ethereum mainnet and submit the transaction proofs to Ethereum. This means hundreds of transactions are batched into one, which is verified and secured by Ethereum.

Zero-knowledge-proof systems have proactive cryptographic security. For instance, zk-rollup solutions ascertain that a certain transaction is true without revealing the proof of it. In simple terms, zk-rollups follow a “trust me on this” approach. Although this may sound inconsistent to a layperson, zero-knowledge proofs are considered one of the most promising scaling and privacy solutions for Ethereum. Here is a short video explaining zk-proofs in more detail:

One of the advantages of zkSync’s technology is the low gas fees on the L2 blockchain. Gas fees can be up to 100 times lower compared to Ethereum while still inheriting the ETH mainnet security.

Furthermore, zkSync is releasing an update with its V2 version to a throughput of over 100,000 transactions per second (TPS) once ETH2 data sharding is available, estimated at the end of 2022. This is made possible by zkPorter, a protocol combining zk-rollups and sharding. zkSync 2.0 also supports arbitrary smart contract capabilities through via Solidity and Zinc, its internal programming language.

Source: l2fees.info

ZKSync vs Optimistic Rollups vs Starkware

ZKSync has two main competitors: the L2s using optimistic rollups (Arbitrum and Optimism) and another L2 solution using zk-proof scaling technology (Starkware). Here are the main differences between zkSync and optimistic rollups:

On-chain processing speed on zk-proof solutions is higher because there is no waiting period during which the transaction can be disputed.
However, zk-proofs need a lot more computing power, so they are less suited for DApps with a lot of on-chain activity.
Optimistic rollups run smart contracts on the Ethereum network directly, zk-rollups do not.

There are also differences between zkSync and Starkware, both zk-proof solutions:

Starkware started earlier (05/2018 compared to 12/2019) and has raised more money so far.
Starkware is further in its development (Series C round closed) and has a bigger ecosystem.
Starkware has slightly superior and faster rollup technology than zkSync.

Overall, both zk-proof solutions have valid approaches to scaling Ethereum. zkSync is considered the more “grassroots” ecosystem, while Starkware has a lot of big backers and technological know-how behind its product.

ZKSync Team, Investors and Roadmap

ZKSync is founded by Matter Labs, a German-based company working on scaling Ethereum. It began working on the zkSync solution in December 2019 and released its zkSync v1.0 in June 2020. This first iteration was able to scale to 300 transactions per second.

The development of zkSync 2.0 saw the release of the alpha version of zkEVM, which enabled the compatibility of Ethereum Virtual Machine (EVM) in the rollup environment. Furthermore, with the development of zkPorter, a sharding solution, zkSync is working on increasing throughput from 3,000 tps (in its 1.1 version) to 20,000 tps.

Matter Labs raised $2 million in a seed round in September 2019 and another $6 million in a Series A round in February 2021 from crypto companies like Binance, Aave, Curve and Coinbase Ventures. Its Series B raise in November 2021 saw another $50 million raised from venture capital funds like a16z, Dragonfly, and Placeholder. In January 2022, the company was backed with another $200 million by BitDAO.

ZKSync Token and Potential Airdrop

ZKSync does not have a native token yet. However, the company explicitly states on its tokenomics page that there will be a zkSync native token that will be used for staking and to become a validator in the zkSync network. Users of the zkSync network could likely be rewarded with an airdrop, similar to the Optimism airdrop.

Interested in receiving an airdrop? Check out our guide on what crypto airdrops are.

How to Use ZKSync

You can use zkSync following these steps:

Connect your browser-based wallet to the zkSync wallet.
Fund your account and activate it.
Transfer funds to another zkSync account (optional).
Explore the zkSync ecosystem.

You can find a detailed guide to using the zkSync ecosystem in the official tutorial.

The Best DeFi DApps on ZKSync

Some of the best DeFi DApps on zkSync include:

Curve: a stablecoin exchange.
Yearn Finance: a yield optimizer.
ZigZag: a non-custodial exchange.
Mute.io: an AMM exchange and launchpad
Taker Protocol: DAO-based liquidity protocol

According to @ZK_Daily, a zkSync-focused educational account, there are over 100 projects building on zkSync:

You can find a detailed overview of the zkSync ecosystem on the official zkSync ecosystem site.

Curve

Curve (CRV) is a stablecoin decentralized exchange (DEX) that was one of the first exchanges, alongside Uniswap, to popularize the AMM model. Although Curve on zkSync does not yet have the massive total value locked (TVL) it has on other blockchains, it could grow bigger as zkSync becomes more popular.

Yearn Finance

Yearn Finance (YFI) is a yield-compounding protocol that employs different investment strategies to generate an ROI on its vaults.

Yearn Finance first grew popular on the Ethereum blockchain and eventually spread to other chains. It currently supports Ethereum, Fantoma and Arbitrum on its platform, but users can access Yearn on zkSync via Argent, a wallet provider.

ZigZag

ZigZag is a zkSync-based decentralized non-custodial order book exchange, offering spot trading powered by zk-rollups. Due to zk-proof technology, traders can swap tokens and engage in spot trading directly from their wallets without paying gas fees, according to the project. ZigZag also offers one of two bridges that are live and connect zkSync with Ethereum.

Mute.io

Mute (MUTE) is an AMM exchange, farming platform and IDO platform. It is purely based on zk-rollups and governed by a DAO. Mute offers lightning-fast transactions, limit orders and improved privacy, all while saving gas fees thanks to zk-technology, according to the project.

Taker Protocol

Taker Protocol is a DAO-based liquidity protocol for crypto assets. It allows users to liquidate and rent different types of crypto assets, including non-fungible tokens (NFT), synthetic assets and tokens. Users can also engage in NFT lending and renting. Taker Protocol is currently available in testnet.

The Best zkSync Bridge

Some of the most popular bridges to zkSync are ZigZag and Orbiter Finance.

Orbiter

Orbiter is a decentralized cross-rollup layer-two bridge connecting zkSync and Ethereum. It also allows transfers between zkSync and other L2 chains like Arbitrum, optimism, Polygon, and Immutable X. Orbiter transfers Ethereum-native assets instantly and safely and at a very low cost to the sender.

The Best NFT Marketplace and Tools on zkSync

zkSync has several NFT marketplaces that are already live:

Reddio: it enables developers to embed NFTs into their web and mobile apps without gas fees.
Homespace: a decentralized metaverse with NFT-based economics.
Tevaera: a decentralized metaverse using NFT technology.
tofuNFT: an NFT marketplace focused on GameFi.
OpenStars: a play-to-earn space strategy game.
Mintsquare: an NFT platform.

Reddio

Reddio builds economic infrastructure for blockchains by allowing developers to build user-friendly applications. It aims to allow businesses of every size to embed NFTs in their apps without paying gas fees.

Homespace

Homespace is a futuristic virtual world platform combining NFTs and artificial intelligence. It aims to create a personal virtual world, where users can design the home of their dreams on the decentralized platform. Furniture and decorations can be added as NFTs or non-NFT format. Furthermore, they will also be able to travel to public virtual worlds featuring entertainment venues, educational institutions and game zones.

TofuNFT

TofuNFT is an NFT marketplace focused on GameFi and collectibles. It is available on 21 blockchains at the time of writing, and will also launch on zkSync in the future.

Tevaera

Tevaera is a gamified metaverse with utility NFTs. In its so-called Tevaverse, players will build digital civilizations in a 3D environment with VR experience and use the utility NFTs as in-game assets. Tevaera claims to be the first gamified and decentralized metaverse on zkSync and will launch a TEVA token in the future.

Mintsquare

Mint Square is an NFT marketplace, which enables NFT trading with cheaper transactions and faster confirmation time. It aims to build the best multi-chain ZK-rollup and onboard the next 100 million people to mint and trade NFTs. Mint Square is also available on StarkNet.

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