A quarterly report focused on zero-knowledge (ZK) technology indicates that privacy, scaling and identity solutions are significant drivers of adoption in the blockchain space.
Validator service provider ZKValidator’s report titled “The State of ZK” explores insights from the zero-knowledge space, highlighting major and emerging use cases, research, product launches and notable investment rounds.
The key takeaway focuses on use cases of zero-knowledge proofs (ZK-proofs). The cryptographic method allows one party to verify data or a statement without exposing the information. Privacy stands out as the industry’s most significant driver of adoption at 12.9%. Scaling is the second most prominent use case for zero-knowledge technology, with 9.46%.
Identity solutions and new zero-knowledge use cases rank third and fourth, indicating that the blockchain ecosystem is interested in exploring how zero-knowledge technology can be applied in identity management and other novel applications. Zero-knowledge machine learning (ZK-ML) was also identified as the space’s most attractive new use case.
Insights were driven by the company’s work with industry participants, including ZK Hack, zkSummit, rhino.fi, Geometry and University College London. ZKValidator also gleaned data and information working with participants in the production and management of the Zero Knowledge Summit 9 in Lisbon on April 4.
The launch of Polygon and zkSync’s zero-knowledge Ethereum Virtual Machine’s (zkEVM) was also highlighted in zkValidator’s report, with key data from the two Ethereum scaling protocols.
Having launched over a month ago, zkSync Era has attracted more daily active users than Polygon’s zkEVM. The report speculates that rumors of a possible zkSync airdrop later in 2023 may be a reason for the gulf in user numbers between the two zkEVMs.
The report also covers the development of new products, including Geometry’s Semacaulk, a new zero-knowledge set membership protocol that offers gas savings over Merkle-tree constructions, while ensuring proofs can be generated quickly and verified for roughly the same gas cost.
2022’s $7 million ZPrize competition helped drive innovation of ZK technology, with multiscalar multiplication (MSM) on Android mobile devices stemming from the development competition aimed at fostering ZK solutions. According to ZKValidator’s report, MSM improved proof generation time from 2.4 seconds to around half a second, making mobile payments in ZK easier.
The report also mentioned a paper proposing a fast GPU-accelerated zero-knowledge proof system that reduces proof generation time in ZK-proofs by leveraging hardware similarities of GPUs. Graphics processing units (GPUs) have become highly useful hardware for cryptocurrency miners, given its ability to process data simultaneously, and its use for machine learning, video editing and gaming.
Various other zero-knowledge projects were also identified in the fields of decentralized identity, interoperability and payments within the Ethereum and Polkadot ecosystems in 2023.
This includes Telepathy, a Zero-Knowledge Succinct Non-interactive Argument of Knowledge (zk-SNARK) interoperability protocol for Ethereum. The protocol allows users to read Ethereum state on any chain while retaining the security of Ethereum’s light client protocol.
Sismo Connect was also mentioned, which is a privacy-preserving single sign-on method for applications on both Web2 and Web3. The technology allows developers to implement ZK technology in their applications.
Lastly, the Manta Network also expanded its ZK capabilities, allowing for privacy support for nonfungible tokens and soul-bound tokens.
Investments were also highlighted, with Ethereum research and development firm The =nil; Foundation raising $22 million to continue the development of the Proof Marketplace. The solution allows layer-1 and layer-2 blockchains to outsource the production of ZK-proofs.
Zk-proof developer Proven raised $15.8 million in a seed round, while Polyhedra Network raised $10 million for its blockchain interoperability infrastructure platform.
Zero-knowledge rollups have been in the spotlight throughout the first quarter of 2023. Polygon released its open-source zkEVM Ethereum scaling technology to mainnet on March 27, while several Ethereum decentralized finance protocols have adopted zkSync since its alpha launch in March 2023.