I. What is a zero-knowledge proof (ZKP)?
Zero-knowledge proof (ZKP) is a cryptographic methodology, the heart of which is a way by which one party can prove to another party (the verifier) that it knows a value of x, without needing to give any information other than the fact that they know the value of x.
A simple example to give you an idea of how Zero-Knowledge (ZKP) works:
A tells B that he can distinguish two identical boxes, but one has the dice in it and the other doesn’t.
“I can prove to you that I know the box has the dice, but I won’t show you how I know the answer,” said A.
A continued: “I will point to a box and remember which box I pointed to. Then he would blindfold me, swap the two boxes or even leave them where they were. Then I pointed to the box that I originally selected.”
B still doesn’t understand: “But it’s only a 50-50 probability, how do I know you’re not guessing?”
A replied, “Then do it 10 times. If I really knew which box had the dice. I can be right all the time. If I couldn’t tell the difference between them, then in 10 rounds combined I would have less than 1 in 1000 chance of guessing right. To be precise, the probability of a correct guess is 1/2 to a power of 10, or 1/1024″.
B has considered the options but really has no choice but to follow the protocol given by A. After 10 rounds, he actually pointed at the same box with very high probability (1023/1024 or 99.9) %), he can distinguish between 2 boxes without revealing any information about the difference he discovered.
Somehow, A has proven that he can distinguish the box with the dice from the box without the dice without giving B any proof.
II. The benefits and drawbacks of zero-knowledge proof (ZKP)
Zero-knowledge proof (ZKP), like all other forms of technology, has some benefits and some drawbacks of its own:
1. Advantages of Zero knowledge proof (ZKP) (ZKP)
- Scalability for Blockchain: Zk Rollup solutions leverage ZKP technology to boost throughput and scalability for Layer 1 Blockchains, some typical projects include StarkNET, Loopring and Zksync.
- Privacy and security: Zero-knowledge proof (ZKP) technology helps confirm the completeness and correctness of data without revealing critical information, so beyond the application in layers 2 helps boost Ability of expansion. Application layers for security and privacy also use zero-knowledge (ZKP) technology, as seen in Monero, Zcash,etc.
2. Limitations of the Proof of Zero Knowledge (ZKP)
- Requires large amounts of computing power: Large computational resources are needed because ZKP protocols frequently depend on intricate mathematical formulae. As a result, they need a lot of processing power to run and do calculations. Ordinary computers won’t be able to take part in the transaction validation process easily because of this.
- Not developer-friendly: One of the main purposes of Zero-knowledge proof (ZKP) is for Layer 2 technologies to improve scalability for Blockchain, but at the present, applications Zk Rollup’s use is currently confined to simple payments and transactions. Additionally, Zk Rollup does not currently enable compositing, and separate Layer 2 Zk Rollup programs cannot communicate with one another.
III. Two frequent applications of zero-knowledge proof (ZKP)
1. App for secure messaging
Users of conventional messaging apps must confirm their identities with a centralized server. ZKP technology enables end-to-end encryption of data in messaging applications, enabling the sending of messages in private.
Additionally, ZKP can enable someone to demonstrate their identification without divulging more personal information.
2. Using ZKP technology in the Blockchain field
One of the potential medium- and long-term scaling options for Blockchain is ZKP technology.
Zk Rollup solutions enable a quick transaction validation and verification procedure, enabling Ethereum and other layer 1 blockchains to scale strongly.
Additionally, blockchains utilizing ZKP technology, such as the Mina Protocol, promise to produce the most advanced blockchain in the cryptocurrency industry.
3. Blockchains applying Zero-knowledge proof (ZKP) technology
The overview article What is Zk Rollup? Three well-known Zk Rollup platforms are StarkNET’s StarkNET, Matter Labs’ ZkEVM, and Loopring’s ZkEVM. I have posted a list of the benefits and restrictions of Zk Rollup as well as several notable projects.
I’ll examine additional well-known Blockchain projects that use Zero-Knowledge Proof (ZKP) technology in this section of the post.
4. Secret Network
Secret network is the first anonymous smart contract platform to launch mainnet. Secret Network performs computation in Trusted Execution Environments (TEE) for better security and privacy.
In essence, a TEE is a component of a computer that has the ability to process calculations and store data that even the computer’s owner cannot access. This enables network nodes to carry out calculations while maintaining fully encrypted inputs and outputs.
After a big upgrade at the end of 2021, Secret network is actively creating its own ecosystem comprising many various sectors such as: Lending protocol, NFT marketplace, liquid staking protocol,etc.
5. Immutable X
Immutable X is a Validium for NFT on Ethereum (similar to Zk Rollup but with more off-chain data storage). Immutable is built on top of StarkEX. Currently, its primary use is for trading NFTs and other NFT-related tasks like minting.
One of the well-known NFT protocols utilizing StarkEX’s Zk Rollup technology is ImmutableX. Immutable X still has a lot of room to grow in order to draw in more users, as the platform’s trading volume is still significantly lower than OpenSea’s (an average of $50 million to $100 million per day).
6. dY dX
dYdX is a trading platform built on top of StarkEX. The platform supports trading of many types of derivative products such as: Spot trading (spot), Margin (margin) and Perpetuals (non-term contract).
dYdX has a TVL of $960M and a daily trading volume of around $500M, which can be considered as one of the leading decentralized derivatives exchanges today.
7. Polygon
Polygon is also another important player in the ZK Rollup space. In August 2021, the team successfully acquired the Zk Rollup Hermez Network solution for $250M.
A month later, Polygon launched Nightfall, a privacy-focused Rollup built in partnership with EY. On November 16, 2021, Polygon also introduced the Zk Rollup Miden solution to scale Ethereum and support dApps focused on use cases such as gaming, NFT, and social networking.
Basically, Polygon is deploying 3 Rollups to serve different purposes:
- Polygon Hermez (ZK Rollup).
- Polygon Nightfall (Zk Rollup on Privacy, in partnership with Ernst & Young).
- Polygon Miden (based on STARK, EVM Rollup).
8. Network at Dusk
A privacy-focused blockchain for financial applications is called Dusk Network. Smart contracts on the Dusk network are built using ZKP.
The Dusk network intends to be the first layer 1 to enable ZKP smart contracts. Developers can release financial applications with confidence knowing that user and transaction data will stay private and anonymous thanks to the Dusk network. Transactions are confirmed and verified using ZKP PLONK proof technology on the Dusk network.
On February 1st, 2022, the Dusk Network testnet is anticipated to start. The Mainnet will be made available soon when all features have been successfully tested. This might be the key factor behind DUSK’s remarkable rise during the last three months.
Above is a summary of what is the overview of Zero-knowledge proof (ZKP)? Advantages and limitations of ZKP technology, as well as a list of some outstanding Blockchain projects that use ZKP technology.
