Ethereum scaling protocols drive zero-knowledge proof use in 2023

Ethereum (ETH) scaling protocols are dominating the use of zero-knowledge (ZK) rollups, with major launches, new research and healthy competition key points in a sector report published by ZK Validator.

The node infrastructure operator’s “State of ZK Q2” report reflects on significant events across the ZK ecosystem, with notable launches of ZK-powered layer 2’s highlighting the use of the technology on scaling in comparison to other market segments.

ZK-proofs use cryptography to allow one party to prove to another party that certain information is correct, without revealing any data. They present a solution to trust and privacy in digital environments and have been pivotal in scaling layer-1 blockchain protocols.

A poll put out to some 18,000 followers of the Zero Knowledge Podcast provided the sample for a community gauge on the most important applications of ZK-proofs. 42% of respondents selected ZK for Scaling as the segment that would experience the highest growth in the coming 12 months.

*ZK use cases. Source: State of ZK Report Q2 2023.*

ZK for privacy and identity followed at 23.8% and 22.2$% respectively, while zero knowledge machine learning was the least selected segment.

The poll reflects the real-world applications of zero-knowledge proofs, with a number of major Ethereum scaling protocols hitting mainnet in the first half of 2023.

This includes Polygon’s announcement of its forthcoming “2.0” multichain system which will use zk proofs to transfer assets between networks and zkSync Era’s ZK Stack which will allow developers to build zk rollups and proprietary layer-3 “hyperchains”.

Consensys also began onboarding partners to its mainnet Linea network on July 11. Linea is another prominent layer-2 that allows developers to build or migrate decentralized applications for Ethereum.

The sector has also attracted investment across a number of segments, including new zk-based layer 2’s and zkEVMs (Ethereum Virtual Machines) as well as zk-proofs for off-chain computation.

Ethereum scaling firm Starkware, which helped pioneer zk technology, as well as Ethereum co-founder Vitalik Buterin invested in Kakarot, which is a zkEVM running on Starkware’s technology that aims to build layer-3 applications.

The report also highlights a $115 million raise by Worldcoin to continue the development of its zk-powered digital identity application and ecosystem. Swiss nonprofit Anoma Foundation also features in the report, after its latest $25 million raise to continue building its third-generation blockchain architecture for decentralized applications.

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