The lack of interoperability with ever-emerging platforms is diminishing the network effect that could exist between these platforms.
Blockchain technology is still far from mass adoption despite its ability to provide a transparent, efficient, secure, and decentralized ecosystem. Interoperability has been a significant challenge for the industry, as enabling trustless exchange between different blockchain networks has been difficult to achieve.
DeFi has witnessed growth in innovation and adoption, but the limitation of protocols to a single blockchain has hindered scalability. The limited operability has resulted in complicated user experiences, high transaction costs, and security risks.
zkLink, a trading-focused multi-chain L2 network, aims to address the interoperability challenge by utilizing the unique properties of zero-knowledge proofs and aggregated liquidity pools. Doing so will allow for fast, secure, and easy trading across different blockchains and tokens while providing a unified liquidity source for users and projects.
zkLink wants to set itself apart by enabling intuitive cross-chain exchange across multiple blockchains. It wants to tackle interoperability with a user-focused approach making it easier for anyone to participate in secure, safe cross-chain asset swaps.
“This security-focused L2 network secured by zero-knowledge technology aims to unify the world’s blockchains by making multi-chain crypto trading dApps more secure, efficient, and easy to use for developers and users.”
In this article, we shall examine how zkLink plans to deliver on its claim while delving into the concept of Zero-Knowledge Proof or ZKP.
Zero Knowledge Proof
To oversimplify, a zero-knowledge proof establishes a fact between parties without revealing the underlying information.
An encryption scheme proposed in the 1980s, Zero-knowledge proof, has origins in both computer science and cryptography. It's a powerful tool for verifying the authenticity of information without revealing any underlying data.
Several forms of zero knowledge technology exist, each with its strengths and weaknesses and suitable for different types of applications.
Listed below are the various forms:
- zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge)
- zk-STARKs (Zero-Knowledge Scalable Transparent Argument of Knowledge)
- Bulletproofs
- SONIC (Scalable, Non-Interactive, Compact)
- PLONK (Permutation-based, Linear, Optimized, Non-Interactive Knowledge)
How do ZKPs work?
A "prover" creates proof using knowledge of a system's inputs, which is then verified by a "verifier" without seeing the actual information.
ZKPs make it possible to verify a dataset's accuracy while preserving the data's privacy. Zero-knowledge adopts validity proofs based on mathematical verification as opposed to fraud-proof that relies on probability theory (assumed correct unless contested).
Using mathematical techniques to verify information without revealing the actual data is game-changing and solves a multitude of existing issues, including privacy and security.
ZKPs also offer the advantage of compressing a substantial amount of information in a concise proof. The reduction in data required for verification enhances efficiency, particularly important in blockchain applications, where storage and processing capacity are typically limited.
Such proofs can be utilized to validate batches of transactions or state transfers within a single update, thereby providing a secure, privacy-preserving solution that improves efficiency.
Zero-knowledge Proofs with Zero Security Compromise
zkLink wants to be the first on-chain protocol to deliver a CEX-like feature set (multi-chain stablecoin liquidity aggregation) in a decentralized manner for which security is of utmost importance.
Two major areas of concern during cross-chain data transmission are - Correctness of the computation and Validity of cross-chain states.
In most chain interoperability projects, a multi-sig (group of nodes within a POS network) checks and signs the validity of cross-chain states. Utilizing multi-sig means asset security depends on the reliability of the committee and the vulnerability of the verification program, making it prone to external hacks/internal malicious activity.
zkLink, through its security architecture design, intends to prevent hacks, minimize on-chain attacks and create a safe and secure trading platform. It adopts a two-step security process involving zero-knowledge technology (zk-SNARKs) to ensure computation correctness and multiple permissionless oracle networks (forming a light oracle network) for validating cross-chain state.
zkLink's use of SNARKs enables it to mathematically verify cross-chain transactions and minimize the amount of data needed to judge the verification process. A light oracle network judges the accuracy of the roots generated from the verification process. The strategy safeguards the protocol against economic attacks from external hackers/internal stakeholders by ensuring that no single party possesses too much power.
For more details, please refer to zkLink docs
To summarize it technically, zkLink's check and balance security design entails verification of each multi-chain transaction by ZK-SNARK that generates a final root on each chain. The judgment on the consistency of final roots is achieved through a light oracle network that passes final roots from one chain to another. This is followed by the oracle comparing the final roots, and only if they match is the transaction executed.
zkLink - Unifying Multi-chain liquidity & Securing a bridgeless future
Trading across multiple blockchains is plagued with liquidity segmentation, poor user experience, and weak security, making chain-to-chain communication vulnerable to big hacks and other exploits. zkLink wants to address these issues by providing better security, low latency, low cost, and compatibility extending beyond EVMs (support any smart-contract-executable chains), enabling users to operate seamlessly in DeFi.
Before we delve into how zkLink is creating a multi-chain token merge infrastructure to tackle the problem of liquidity segmentation and low capital utilization, let’s understand why bridges are not the future of crypto.
While bridges instead of true blockchain interoperability solutions have managed to connect siloed blockchains somewhat, the technology is far from perfect. It is true bridges are the most widely used tool for cross-chain transfer, however, in their current state, they’re prone to hacks and exploitation. They form the weakest link in the chain and increase the attack surface available to bad actors. And despite their widespread use, liquidity in DeFi still remains fragmented. Moreover, their maintenance shall become impractical as the number of chains increases.
Imagine a scenario wherein a protocol enables any reputable stablecoin or stablecoin LP shares to be collateralized and minted into a unified form through a unique design. The disparity of stablecoins and origins is eliminated from the equation to aggregate liquidity on the protocol.
Bridgeless interoperability of this kind is bound to avoid attacks that hackers have been surviving on across the industry as well as provide improved asset functionality.
This is what zkLink plans to do, wherein stablecoins of different types and from different blockchains will be safely and efficiently aggregated into one single coin. Case in point, there would be no difference in USDT-Ethereum and USDC-Solana on the zkLink L2 network, making it the first on-chain protocol to deliver multi-chain stablecoin liquidity aggregation in a decentralized manner.
The goal is to become the ultimate decentralized trading solution by providing liquidity as deep as CEXs, helping users avoid congestion on L1s, and enabling transactions with significantly lower gas fees and higher processing speeds.
The protocol, through its design, aims to tackle all of these problems that no DEX or bridge has been able to resolve so far.
zkLink will power AMM and order book solutions with a secure infrastructure. These innovative offerings are envisioned to allow developers and traders to tap into the combined liquidity of disparate blockchains and L2 protocols. By enabling seamless communication and interaction between isolated chains, zkLink wants to create a more convenient and secure trading environment, paving the way for a truly interconnected DeFi ecosystem.
Although the proposed outcome may appear straightforward, the integration of non-native and non-interactive tokens presents a formidable obstacle. Achieving interoperability has proven to be a significant hurdle, and a breakthrough solution like this would be truly groundbreaking. Many projects with mind-boggling ideas have failed to deliver the desired outcome or have been stuck in an eternal cycle of research.
Only time will tell how zkLink fares, but for now, the concept seems promising, and if it works could result in seamless interoperability.
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