ZK-Rollups are smart contracts that scale the Ethereum network by processing multiple transfers off the main blockchain. They then send validity proof back to the main chain as proof of validity. This reduces the amount of data being sent through the main block, enabling faster and cheaper transactions. ZK Rollups are one of the options being developed for layer 2 construction to increase scalability.Loopring (LRC) is a ZK rollup layer 2 solution that allows for high-throughput, low-cost trading and payments on Ethereum.
When it comes to investing in cryptocurrency, narratives often play an important role in identifying promising investment opportunities.
In 2017 we had Initial Coin Offerings (ICO’s), Ethereum Killers (NEO, for example), Interoperability (Wanchain & Icon), and zero transaction fees (IOTA & Nano/Raiblocks).
From 2020 – 2021 Decentralized Finance (DeFi) was the new narrative, bringing interest to cryptocurrencies such as MakerDao, Uniswap, Avalanche, etc.
Additional cryptocurrency narratives in 2021 included:
- Non-Fungible tokens/NFTs (Enjin, Bored Ape Yacht Club, Galactic Geckos, etc.)
- Meme Coins (Dogecoin, Shiba Inu, Floki Inu, etc.)
- Algorithmic Currency Protocols (Olympus DAO, Titan Finance, Wonderland, etc.)
- Binance Smart Chain “Moonshots” (Safemoon, for example)
- Metaverse & Crypto Gaming (The Sandbox, Decentraland, Axie Infinity, Illuvium, My Neighbour Alice, etc.)
Savvy investors caught on to these narratives early and made some spectacular gains on their investments.
However, this doesn’t mean you should always chase the next big narrative. In fact, I believe it’s best to focus on the fundamentals behind a cryptocurrency instead and build a long-term position.
But at the same time, it’s important to understand which narratives are attracting the most attention since the money usually follows soon after.
Once you know what the next narrative is, you can research cryptocurrencies within that narrative and build a position with the projects that have a good team and fundamentals behind them.
One narrative that is attracting a lot of attention right now is ZK-Rollups, and we’ll be looking at this technology in this post.
We’ll also look at three cryptocurrencies which use ZK-Rollup technology, with a secret, bonus cryptocurrency that is related to one of the platforms mentioned. Keep reading until the end and see if you can find it.
ZK-Rollups: Explain Like I’m Five (ELI5)
Explained simply, a ZK-Rollup is a smart contract that takes hundreds of transactions off the main blockchain and bundles them into a single transaction. It then sends a validity proof back to the main blockchain.
This reduces the amount of data being sent through Ethereum’s main blockchain (Layer 1), enabling faster and cheaper transactions.
For a more detailed explanation on ZK-Rollups, read the next section or skip ahead if you already understand how they work.
What are ZK-Rollups & how do they work?
Zero-Knowledge Rollups (ZK-Rollups) are smart contracts that scale the Ethereum network by processing multiple transfers off the main blockchain.
ZK-Rollups work by taking hundreds of transfers off-chain and combining or “rolling” them up into a single transaction. It then submits a SNARK (succinct non-interactive argument of knowledge) back the main chain as proof of validity.
Validating a block with a ZK-Rollup is faster and cheaper since less data is included.
ZK-Rollups are one of the options being developed for Layer 2 construction to increase scalability. Another option being developed is Optimistic Rollups.
If you want to see a more detailed explanation on ZK-Rollups and Rollup technology in general, I recommend the following resources:
3 ZK-Rollup Platforms With Their Own Cryptocurrencies
At the time of me writing this, there aren’t many ZK-Rollup-based platforms with their own native token, hence why only three are included in this article.
Loopring (LRC) is a ZK-Rollup Layer 2 solution that allows for high-throughput, low-cost trading and payments on Ethereum.
It aims to allow anyone to build non-custodial, order book-based exchanges on Ethereum by leveraging zero-knowledge proofs.
With ZK-Rollups, Loopring claims its exchanges can offer faster settlements for traders.
Instead of settling trades on the Ethereum blockchain directly (like other DEX’s do), ZK-Rollups enable Loopring exchanges to complete computations off-chain.
This reduces the number of transactions being submitted to the Ethereum network, increasing speed and reducing costs for traders.
Loopring has its own token (LRC), which you can find on Binance. US investors can use Kucoin to invest in LRC.
zkSync is a Layer 2 scaling solution that offers cheaper and faster transactions than the main Ethereum blockchain (Layer 1).
It uses ZK-Rollup technology to process transactions off the Ethereum blockchain while still maintaining its security and finality.
zkSync was developed by Matter Labs which received $50 million in funding from investors including Andreessen Horowitz (a16z), Crypto.com, Blockchain.com, Aave, and more.
zkSync’s benefits include:
- Low gas fees: Gas fees are equal to 1% of Ethereum gas & cheaper than using optimistic rollups
- High speeds: 2000+ transactions per second (tps) compared to 14tps on Ethereum
- Security: Secured by the main Ethereum blockchain
- Frictionless transfers: Easily move your crypto between Layer 1 and Layer 2 without delays
- Censorship resistance: You can move your assets back to Layer 1 at any time
zkSync does not currently have a native token, but they’re planning on releasing one. I recommend following their social channels if you don’t want to miss out.
Immutable X (IMX)
Immutable X is a Layer 2 scaling solution for trading Ethereum NFTs. It uses ZK-Rollups to enable instant trade confirmation, over 9,000 transactions per second and zero gas fees.
Since Immutable X is a Layer 2 for Ethereum, ownership of NFTs isn’t affected since it inherits the security and finality of the Ethereum blockchain.
Immutable X was developed by the company behind God’s Unchained, a Free-to-Play NFT trading card game similar to the popular Hearthstone.
The Immutable X marketplace will be used to trade God’s Unchained cards initially, but as time goes on, they intend to open up the marketplace to assets from other games.
Benefit’s of Immutable X include:
- Zero gas fees for peer-to-peer trading.
- Set your own trading fees.
- No custodial risk; users keep their private keys.
- Up to 9,000+ TPS.
- Not a centralized sidechain.
- Secured by Ethereum. A true Layer 2 inheriting security of Layer 1.
- Any NFT that is created or traded on Immutable X is 100% carbon neutral.
One of Immutable X’s huge benefits is the zero gas fees for trading NFTs. This simplifies the process of trading NFTs between users, making it easier for mass adoption.
Immutable X looks very promising, especially since it covers three major narratives in the cryptocurrency space: ZK-Rollups, NFTs, and Gaming. It’s also backed by an NFT trading card game that has the potential for mass adoption.
As the Immutable X exchange matures and attracts assets from additional game developers, I can see this project becoming huge.
Immutable X has its own token (IMX), which you can find on Kucoin. As a bonus recommendation, you find God’s Unchained cryptocurrency (GODS) on Kucoin too.
You can find Loopring (LRC) on Binance. If you live in the USA, you can find it on Kucoin.
Immutable X (IMX) is available on Kucoin along with God’s Unchained (GODS).
zkSync has not yet released a token for their platform yet, but you can follow their social channels to stay updated on a release date.
I hope you enjoyed this story; feel free to check out the useful resources below:
CEX Exchange — Good exchange to buy Bitcoin, Ethereum, Polygon (MATIC), Polkadot (DOT), Binance Coin (BNB), and more from anywhere in the world with cash. Available worldwide
BitPanda — If you live in Europe, one of the best exchanges to buy cryptocurrencies with cash, including Bitcoin (BTC), Ethereum (ETH), Polygon (MATIC), and many more. Only available in Europe, Canada, and Mexico
Kucoin – Great exchange where users can trade over 750 different cryptocurrencies, including new, low market cap cryptocurrencies. Available worldwide, INCLUDING the USA.
Binance – Exchange where users can trade over 500 different cryptocurrencies. Available worldwide apart from the USA
Ledger Wallets – Secure, buy and grow your crypto assets with the world’s most popular hardware wallet. Buy a Ledger wallet here.