4. What is zkRollup/zkSync? How does it help Phezzan Protocol?

Written by the Phezzan team

Many members joined Phezzan Discord server because of the interest in zkRollups. We feel we are obligated to explain what they are, and how it will benefit us.

zkRollup is a scaling solution that solves the blockchain trilemma.

Previously, for decentralization, security, and scalability, any blockchain can only choose two out of these three properties:

• Traditional blockchains like ETH 1.0 sacrifice scalability. As every node needs to verify every transaction, the bandwidth of the chain is limited by the computation power of the lowest performing node.

• High performance chains like Solana sacrifice decentralization. It raises the computational power requirement for each node, and reduces the number of total nodes in the network. So consensus is much faster to reach , but it lacks decentralization.

• Multi chain ecosystems sacrifice security. Because attackers only need to get consensus in one of the many chains.

zkRollup makes decentralization, security, and scalability all possible, by extracting out the computation layer of the blockchain.

On-chain computation is very expensive, since all nodes need to compute it. If one can move the computation off-chain, while guaranteeing the computation result is correct, then the transaction cost will be way lower.

The hard part is how to guarantee the computation result is correct. zkRollups computes a batch of transactions, and posts the result to the base chain in a highly compressed form. Each batch also includes a zkProof, which proves the computation result is correct. What’s really cool about zkProof is, no matter how complex the computation is, it is always very quick to verify the correctness of the computation. So on chain verification will be very cheap.

So, zkRollup solves scalability problems by moving computation off chain. Decentralization is also kept because ultimately these transactions are settled on-chain.

Right now the two leading zkRollup providers are zkSync and Starkware. zkSync 1.0 is released but is not for general purpose application, while zkSync 2.0 is in testnet now, and is EVM-compatible.

Now it takes around $0.3 to do a token swap on zkSync. With further optimization, such as potential EIP-4844, the transaction cost in theory can be $0.003. In the long run, we do believe the transaction cost will be negligible on zkSync, or zkRollups in general.

This will open up so much more design space for our DEX, such as we could finally run an orderbook on-chain, which will be more capital efficient than the AMM model. It will also make our DEX cheap, fast while maintaining decentralization. We believe there is a high probability that the future dominant perpetual DEX will be on one of the zkRollups.