Two mainnet launches and a layer-2 airdrop have the market asking for more scaling action.
Arbitrum conducted its long-awaited airdrop on March 23. The buzz was so fierce that it led to the crash of the network’s main website and that of Arbiscan, as those eligible for airdrop rushed to claim their tokens.
Since then, two other scaling solutions have entered the market. They include Polygon’s zkEVM and zkSync. Ethereum co-founder Vitalik Buterin conducted the first transaction on Polygon’s new Ethereum scaling solution.
The two layer-2 protocols are relatively fast and have almost the same label warnings. Polygon calls its product ‘beta’ while zkSync is an ‘alpha’ launch. When asked how one could differentiate the two, zkSync’s director of engineering and former SpaceX engineer, Anthony Rose, said that these protocols would initially look similar, but after five or six months, users would be able to tell the difference.
But what exactly are these projects, and how do they work?
What are Rollups?
Arbitrum, zkSync, and Polygon’s zkEVM are known as Ethereum rollups. They work as a separate layer on top of the Ethereum blockchain to lighten its load. So instead of performing activities like trading or borrowing loans on Ethereum, you can execute them on layer-2 rollups.
These rollups combine multiple transactions, compress them into one transaction, and then send it back to Ethereum to be executed.
Rollups come in two types, namely, optimistic rollups and zero-knowledge rollups.
Notable optimistic rollups include Optimism and Arbitrum, while zero-knowledge rollups are StarkWare, Polygon’s zkEVM, and zkSync.
The two rollups differ in terms of how those compressed transactions are verified. As for zero-knowledge rollups, they use a significant amount of computation power in compressing the transactions into proofs. Conversely, Optimistic rollups do not do this. Instead, they assume all transactions performed on layer-2 are valid and legitimate, but they provide a 7-day window for users to contest that validity.
Which Layer-2 Dominates the Market?
Arbitrum is currently the largest layer-2 protocol with a total value locked of over $6.3 billion. It has a market dominance of 67%. Arbitrum was launched in September 2021.
But users have appeared to favor zkSync over the last few days. The total value locked of this layer-2 has surged 289% to $101 million since its launch on March 24.