It may not be enough to think of the crypto economy as just a technological change. Many Crypto practitioners or hobbyists find it difficult to adapt. The main reason is that the cycle here is too obvious and the fluctuation is too drastic. Ordinary people can indeed earn ten times or even one hundred times as much money in a Crypto bull market, but they will lose a complete mess in a bear market. In the final analysis, no matter who, as long as entering Crypto, an investment compulsory course is inevitable.
The Federal Reserve’s interest rate increase, and the capital fundamental tight, is the main cause of this bear market. DeFi has long said no to the crazy yield of 20%. The yield of the current mainstream lending agreement is generally lower than 2%, but the yield of the US Treasury bond in the real world has exceeded 3%, which is the main motivation for institutional investors and stablecoin project parties to continuously move Crypto funds into the real world to buy Treasury bonds.
Since the 1980s, the Federal Reserve has experienced six cycles of interest rate raises, each lasting one to three years, and the average number of interest rate raises reached as many as 10 times. The slower the rate increase, the worse the effect, and the more difficult it is to suppress inflation. For example, the sixth rate increase from 2015 to 2018 was very slow, and the raw materials led by crude oil not only could not suppress but also rose higher and higher. Crude oil prices still remained firm since October 2022 which will keep the Fed on track to raise interest rates aggressively. There is no doubt that the global stock market and Crypto market will continue to be under pressure from the withdrawal of institutional funds in 2023. The bottom of the bear market has not yet arrived. Never catch the bottom too early.
The Ethereum zkRollup solution is a firm bet
However, if we don’t talk about the big capital market cycle, only from the technology change brought by Crypto, and the Web3.0 wave is likely to happen later, we firmly believe in Ethereum and its zkRollup expansion scheme, especially the zkRollup scheme based on the new generation of zkEVM.
Vitalik Buterin said “the next step for Ethereum after the Merge is scalability” at Circle’s Converge22 conference on Sept 30th, 2022. Scalability is really central to the problems that are preventing a lot of the cryptocurrency and blockchain applications from going mainstream.
With the strong support of Vitalik, Rollup has become the mainstream solution for Ethereum scalability. The Rollup schemes can be divided into Optimistic Rollup and zkRollup according to their technical types. The main difference between them is the transaction validity guarantee schemes. Optimistic uses a fraud-proving scheme and zkRollup uses zero-knowledge proof of mathematics.
Optimistic Rollup network has the role of challengers who can prove fraud on data submitted to Ethereum and then roll back invalid transactions via network consensus. As for zkRollup, it uses zero-knowledge proof technology when processing transaction data in batches. On the basis of ensuring the validity of the transaction data, it directly submits the proof to Ethereum to achieve the final consistency of the state immediately.
Compared with Optimistic Rollup, zkRollups carry out mathematical verification by using zero-knowledge proof which will have more technical advantages. Starkware and zkSync are the projects that have been prospectively explored in this field for several years.
However, there is a problem. EVM was not designed to support zero-knowledge proof, which makes it difficult to build Solidity-compatible and zero-knowledge-friendly virtual machines. For example, Starkware can’t support Solidity to write the smart contract.
For resolving the problem, Scroll, Polygon, and Fox Tech are developing one kind of Solidity-compatible virtual machine that supports zero-knowledge proof computing called zkEVM. Unlike ordinary virtual machines, zkEVM can prove the correctness of execution, including the validity of inputs and outputs used in an execution.
Why need to redesign the zkEVM
Polygon compiles the bytecode into micro-operation code and uses STARK to generate the validity proof of state transition and uses SNARK to verify the correctness of the proofs and then submits them to Ethereum for verification. Scroll’s scheme is somehow similar to Polygon’s but just uses Halo 2 as its zero-knowledge proof approach.
ZkSync compiles the contract code written by Solidity into Yul, an intermediate language that can be compiled into bytecodes of different virtual machines and then recompile Yul bytecode into a customized, circuit-compatible bytecode set specially designed for zkSync’s zkEVM.
Are these systems above good enough to go into production? Do we need to redesign a better zkEVM? zkRollups generally use the zero-knowledge protocol to prove and aggregate all transactions before publishing the summarizations to the chain. In principle, this means that the Layer 1 chain can verify short “proofs” covering thousands of complex transactions, with no possibility of cheating. However, people eventually understand how things actually work out after the release of Scroll and Polygon zkEVM’s testnets——It’s horribly slow that it needs dozens of minutes to execute several transactions.
Fox redesigns the zkEVM which is more efficient than all the existing zkEVMs by optimizing the structure of the zkEVM. By applying a skillfully-designed Layered Table Structure, Fox is able to compress the redundant and wasted spaces in the circuits, which helps to reduce the size of the polynomial to be committed and ultimately shorten the time to generate proofs. Its Sequencer runs an Ethereum node, receives transactions from the users, and generates new states and a special zkEVM-friendly Trace. Fox Folder is the proof generator, taking the trace from the sequencer, and processing it inside the zkEVM using a large number of small tables, rather than a surprisingly large table, which will significantly reduce the redundancy and increase the speed of generating proofs.
Why need a faster Zero-Knowledge Proof
SNARK is succinct but less efficient than the newer one STARK. However, STARK is also out of date at the advent of FOAKS. It’s meaningful to compare the efficiency of computation because the speed is the bottle of the zkEVM. STARK gets the quasi-linear proof time and verification time. It’s faster than SNARK but obviously slower than FOAKS. FOAKS is the world’s first realized ZKP with linear proof time and sublinear verification time, which reaches the theoretical extremum. FOAKS is transparent. It doesn’t need any trusted setup, which means it maintains the highest level of security.
Fox Tech designs the FOAKS which stands for Zero-Knowledge – Fast Objective Argument of Knowledges. FOAKS is based on linear-time encodable codes that gets the fastest proof time among all existing ZKP schemes. Moreover, FOAKS proof size is reduced to one-seventh of the existing schemes of its kind by using its recursion technique, so that the end users can enjoy Ethereum Layer 2 services for just one cent.
Why need an independent data availability layer
The zkRollups today are majorly focused on reducing the computational burden of verifying transactions. This is particularly important for Ethereum where verifying complex smart contract executions is quite costly. However, Ethereum nodes are still expected to store the raw transaction data at the same time. It is not wise enough because Ethereum is good at working as a consensus layer, rather than working as a storage layer, which means scaling bottlenecks still exist — they’ll just be hit when nodes run low on bandwidth and storage instead of computation.
That is why Ethereum needs an independent data availability layer to keep these raw transaction data around in order to prevent the freezing of an entire smart contract in place due to the breakdown of zkRollup servers or Ethereum nodes. What is more, it unbundles the cost of Layer 2 from Layer 1 and further reduces the zkEVM-based zkRollup transaction cost by more than half.
