Intro
Gm friends,
Hope you had a fantastic week.
In this week’s topic, we explain zero-knowledge (ZK) rollups and why they are critical for scaling blockchains.
Enjoy,
Gustaf Baavhammar and the Janus team
Topic of the week: What are ZK-rollups and why are they important?
Scalability remains one of the biggest challenges to reaching mass adoption for blockchain technologies. Today, Ethereum can only support c.20 transactions per second – compared to VISA’s 24,000 transactions per second. While the Ethereum merge from proof-of-work to proof-of-stake was successful, all eyes are now set on the next phase of the transition which includes solving the scalability problem.
One of the potential solutions is ZK-rollups – a layer 2 scalability solution that enables blockchains to validate transactions faster and at a cheaper rate. It does so by combining many layer 2 transactions to execute them off-chain at once and submitting them as just one transaction on Ethereum’s blockchain. This is possible thanks to zero-knowledge proofs - a method which allows you to prove the truth of a statement, using algorithms, without sharing the statement's contents or revealing how you discovered the truth.
Hence, ZK-rollups have a few key advantages:
Faster transaction times and higher throughput: As ZK-Rollup compiles all transactions into a single one, only the latest state needs to be communicated between nodes, allowing quicker and more efficient processing.
Cheaper transaction fees: Since transactions are bundled, users share the gas cost among themselves, allowing for a significant cost reduction (which may only be a few cents per transaction with enough users).
Decentralized and secure: Since ZK-rollups use zero-knowledge proofs, only the validity proof is needed to retrieve the data instead of the transaction data. Hence, this allows for security while also allowing the protocol to scale.
Web3 News
Dogecoin Outpaces Bitcoin and Ethereum Amid Musk’s Twitter Takeover. Usually you would find Bitcoin and Ethereum setting the pace for other coins, however, this week they took a backseat to other impressive rallies. Bitcoin gained 3% over the last seven days and currently trades at $21,200. Ethereum rose nearly 2% during the week and trades for $1,600. Both were looking fairly positive, but the U.S. Federal Reserve’s announcement on Wednesday of another 0.75% interest rate hike (the fourth this year) quickly stunted their growth. Interest rate hikes are typically met with bearish sentiment among investors who go for riskier assets like crypto or equities. The reason being that higher rates make it harder for people to borrow money, so investors tend to hold onto their wealth. Dogecoin rocketed 22% over seven days and topped 12 cents. Similar to last week, the memecoin is still responding positively to the news of Twitter’s new executive manager, Elon Musk. The most impressive rally was Polygon, which ballooned 28% over the week in the wake of Reddit’s booming Polygon NFTs and an announcement on Wednesday by Meta that Instagram would integrate Polygon for its upcoming NFT minting feature.
Solana unveils Google partnership, smartphones, Web3 store at Breakpoint. During Solana Breakpoint, a four-day conference in Lisbon, the company made a series of launch announcements as it prepares to go mainstream. Solana’s roadmap includes the launching of smartphones, decentralized application (DApp) stores and a partnership with Google Cloud, among others. Solana smartphones will be available for pre-order in early 2023. “It’s made for the people,” said the Solana mobile team. A differentiating feature of the Solana phone lies in its ability to securely store the private keys of crypto wallets. The Solana smartphone will be powered by a Qualcomm chipset sporting an Arm-based SoC, allowing for higher productivity. Google Cloud is soon to become a Solana node validator. The ecosystem’s partnership with Google Cloud evidently stole the limelight. Google Cloud is building a block-producing Solana validator to participate in and validate the network. Google Cloud’s Blockchain Node Engine, (first announced on Oct. 27), will feature on the Solana chain from 2023. The integration will allow users to launch a dedicated Solana node in the Cloud. Additionally, Google Cloud will index Solana data and bring it to BigQuery- a fully-managed, serverless data warehouse- by next year, making it easier for the Solana developers to access historical data.
Nexo-backed NFT technology provider, MetaQuants, launches real-time appraisal algorithm for NFTs. The alpha version of the new algorithm product is designed to aid NFT lending, market, overpricing, and market manipulation penalties. In a bid to facilitate real-time collateral appraisal for NFTs, marketplace, and wallet analytics, Nexo-backed MetaQuants, a provider of NFT solutions, has unveiled its algorithm product. MetaQuants, aided by Nexo’s financial and strategic investments, has been launching numerous solutions geared toward fostering transparency, accuracy, and risk management in the volatile virtual space. Nexo, as a leading regulated institution for digital assets, believes in a real-time mark-to-market NFT algorithm that offers efficient valuation estimates for assets that are vulnerable to market manipulation for its retail and corporate customers. Notably, the new solution by MetaQuants enables the execution of such a technique.
Standard Chartered invests in JPMorgan blockchain platform. Multinational investment bank Standard Chartered announced a financial commitment to JP Morgan-backed blockchain protocol, Partior. With the investment, Partior will gain support from the financial institution to enhance its international outreach. This development will allow Partior to broaden its currency offerings beyond the first slate of eight global currencies – USD, SGD, GBP, EUR, AUD, JPY, CNH, and HKD, by 2023. The investment also guarantees Standard Chartered’s role as the first Euro settlement bank for Partior. “Our investment in Partior will allow us to deliver the speed, efficiency, and visibility of domestic settlement systems to cross-border transactions, simplifying and improving the experience for our clients.” Additionally, SC Ventures, a Standard Chartered division specializing in innovations and ventures, announced in July that it would launch a crypto brokerage and exchange platform for institutions in the UK and Europe.