Why Ethereum’s next step is zero-knowledge

The following is a guest post by Rob Viglione, CEO of Horizen Labs.

In the past year, there have been some major milestones along the Ethereum roadmap that have leveled up the network. EIP-4844 (aka Dencun) introduced blobs and proto-danksharding, making data storage an order of magnitude cheaper for Layer 2s and resulting in far lower transaction fees.

Meanwhile, Layer 2s (mostly of the optimistic variety) have become more integrated and widely used in applications, making it possible to transact for less than a penny, and improving on Ethereum’s fundamental infrastructure.

However, as anyone who has paid attention to gas fees will know, there is still too much congestion on Ethereum, and as the real-world usage of blockchains grows, more and more dApps will be competing for block space and computation.

It doesn’t take an engineer or cryptographer to know that this is unsustainable. We’ve seen what happens when Ethereum gets too congested. In some particularly high-surge moments, users have paid more than 2 ETH just to complete a transaction, and some of those transactions still failed as users scrambled to have them prioritized.

In a perfect world, we would move as much of that computation offchain, and still be able to post a succinct, verifiable proof that ensures the data is correct and in the right place.

Zero-knowledge proofs make this possible, but it’s still challenging for blockchains to verify transactions with so many potential possibilities in the EVM, and it can quickly become expensive to go this route. Zk-rollups have to pay for specialized hardware that creates a ZK proof via a prover, and then that typically needs to be converted into a proof type that Ethereum can understand.

In short, optimistic rollups are relatively easy and affordable to verify, while zk-rollups are challenging and expensive. For small and even medium-sized businesses that want to do some of their business onchain and keep it confidential, zk-rollups are the way to go, but proof verification can be a prohibitive expense.