[Written in partnership with Huobi, but the editorial team had full control over the content.]
When you hear the word Ethereumthe first things that come to mind are cartoon monkeys, gas charges, and blockchain technology.
For those unaware, Ethereum is actually the name of the blockchain-based platform, which functions as a digital ledger that tracks transactions.
Unlike Bitcoin, it does not intend to be an alternative to physical currencies like the Malaysian Ringgit, Singapore Dollar, and US Dollar. Instead, Ethereum’s currency, known as Ether (ETH), is used to interact with digital vending machines, known as “smart contracts”.
For example, if you want to buy a car in real life, you will have to pay dealer fees, which are around 20% on top of the real price of the car. However, with Ethereum, you pay directly to the “car vending machine” to distribute a new car to you, essentially eliminating the middleman.
Ethereum’s big problem
Since its inception on July 30, 2015, Ethereum has grown in popularity due to its multitude of applications in several key areas including finance, arts, gaming, technology, and more.
There had been issues where transactions were taking longer to validate because too many of them were happening at the same time. Additionally, gas prices began to climb rapidly due to increased demand.
For example, the Ethereum blockchain platform experienced congestion issues when a decentralized application called Cryptokitties was introduced in 2017. The game took the crypto industry by storm, accounting for around 10% of total transactions on Ethereum, driving up gas fee prices at that time.
Due to ongoing network congestion issues, many people in the crypto space have opted to use other blockchain platforms instead, due to lower gas fees and network congestion. .
To alleviate the transaction congestion issues mentioned above, Ethereum 2.0 (ETH2.0) was developed to fill the gaps of Ethereum 1.0 (ETH1.0). Going further, ETH1.0 can only reach 45 TPS, while ETH2.0 is expected to reach up to 100,000 TPS.
Not only that, but by moving from a Proof of Work (PoW) consensus protocol to a Proof of State (PoS) consensus protocol to confirm transactions, the Ethereum Foundation claims that ETH2.0 will use up to 99, 95% less energy compared to its predecessor. .
With this in mind, mining on ETH2.0 will have a much lower environmental impact than mining on ETH1.0.
In addition to what has been mentioned, another way to solve the congestion problem is to use Layer 2 scaling solutions such as Optimistic (OP) Rollup and Zero Knowledge (ZK) Rollup.
Based on research made by Huobi, both Layer 2 scaling solutions can achieve significantly higher TPS. Unfortunately, they are not without drawbacks.
Withdrawing funds from OP Rollup scaling solution will take exactly 1 week, while withdrawing from ZK Rollup only takes a few minutes. Another thing is that the latter can perform 10 times more transactions at once, while having lower gas fees than OP Rollup.
Although ZK Rollup may seem like the best solution, it is much more difficult to implement and is not compatible with most decentralized applications. This is why 70% of the Layer 2 market has chosen to adopt OP Rollup instead.
Why zkEVM will change everything
A new solution is currently being developed called Zero Knowledge Ethereum Virtual Machine, or zkEVM. This has the advantages of both ZK Rollup and OP Rollup, such as high TPS, fast withdrawal time, and compatibility with current EVMs.
By using a new algorithm called “Plonk Zero Knowledge Proof”, zkEVM can produce proofs much faster, while using less compute and storage resources. As a result, the chances of the Ethereum network encountering network congestion will be much lower.
But how does this benefit the average user? On the one hand, low consumption of compute resources equates to significantly lower gas costs for the user. Second, if you need to make a withdrawal, you don’t have to wait a week for the withdrawal to be approved.
Since the solution is also more efficient, network congestion is less likely to occur. That said, the Ethereum blockchain could once again be an attractive platform for trading crypto assets for most users.
zkEVM can be implemented in 1-2 ways
As of this writing, there are 2 main strategies for developing a zkEVM solution. The first strategy is to develop a solution that fully supports existing EVM opcodes, to ensure maximum compatibility with existing development tools and ecosystems.
The second strategy, on the other hand, is to develop a new EVM, allowing it more flexibility as it wouldn’t have to adhere to the constraints of existing opcodes. Because it’s created entirely from scratch, adapting it to existing systems requires a bit more work.
Although the two strategies mentioned work slightly differently from each other, their goals are basically the same.
Currently, organizations like Hermez and zkSync 2.0 are developing zkEVM which uses the first strategy, while AppliedZKP focuses on the second strategy instead.
As zkEVM is still in active development, we can expect more strategies to appear in the near future.
Lessons learned from zkEVM development could be adapted to other cryptocurrency platforms
The zkEVM has the potential to completely revolutionize the Ethereum blockchain platform, giving users and developers more options to work with. The research and lessons learned could also be used to benefit other similar blockchain platforms.
Huobi said the development of Layer 2 scaling solutions will not stop there, as there will always be a way to make the blockchain platform more efficient.
- Learn more about blockchain technologies here.
Featured image credit: Material laboratories