Some Knowledge on Zero Knowledge
Zero Knowledge technology (zk) is a powerful enabler that holds the potential to revolutionize not only Web 3 but also various other industries. As a versatile technology, it offers a multitude of use cases. However, we are still in the early stages of discovering all the applications that zk can enable. Some evident zk use cases, such as transaction privacy and data compression (i.e., rollups), have already found real-world applications. Nevertheless, there are numerous potential use cases and technological advancements that must be realized to bring zk to mainstream adoption.
In this expanded analysis, we will explore the different applications of Zero Knowledge Proofs (ZKPs), discuss what could enable the next phase of this technology, and suggest some startup ideas that could benefit from zk.
Zero Knowledge Proofs (ZKPs) have made significant inroads in the crypto industry since their inception. ZKPs are essentially a cryptographic method that allows an entity to prove they possess specific knowledge or have completed a task correctly without revealing the information or details of the task execution. Due to their nature, ZKPs have been primarily employed in privacy-focused crypto networks. They have also been utilized to provide validity proofs for Ethereum layer 2 (L2) transactions on Ethereum's L1, introducing the concept of zk rollups. Additionally, ZKPs have found niche applications within various projects.
ZKPs enable privacy, particularly in decentralized networks lacking a central authority that can act as the source of truth. They allow a Web 3 user (the prover) to demonstrate to the network validators (the verifiers) that their transaction is valid (e.g., sufficient balance) without revealing transaction details, such as the amount, sender, or receiver addresses. ZKPs were initially developed to support shielded (private) payments in the Zcash network and later expanded to other networks, including privacy-focused L1s like Zcash, Horizon, Aleo, and Iron Fish; privacy smart contracts on general chains like Tornado Cash; and privacy-focused L2s like Aztec.
The other significant use case of ZKPs is generating rollup validity proofs on the underlying L1. General-purpose rollups optimize for throughput by not utilizing the privacy features of ZKPs. In this tradeoff, ZKP acts only as a proof of correctness for L2 transaction execution.
Furthermore, ZKPs have found applications in other blockchain protocols, such as Mina, which uses ZKPs to compress the blockchain state to a minuscule size, and Filecoin, which employs ZKPs to ensure storage providers correctly store the data they claim to store. Celo Plumo uses ZKPs to enable the creation of ultra-light network clients for use on resource-limited devices, while Dark Forest represents the most popular application of ZKPs in the gaming sector.
Currently, the zk development stack is not as well-developed as the AI stack. However, efforts are underway to build these abstractions. At the bottom of the stack are low-level ZKP libraries such as PLONK and STARK. Above that layer, high-level languages like Noir aim to abstract away the underlying zk cryptography, helping application developers focus on the application logic. Circom is another popular ZKP language that sits between these two layers, as it can be used to create complex zk backends and develop ZKP-based applications.
Another example of ZKP abstractions in Web 3 is StarkWare's Cairo language, which allows developers to implement general smart contracts that use STARK proving under the hood. To provide further abstraction, Nethermind's Warp tool enables Solidity developers to convert their Solidity code directly to Cairo. Using Warp, it was possible to transpile Uniswap V3 code to Cairo with minimal changes to the original Solidity code.
To foster the growth and development of ZKP technology, new startups can explore various opportunities, including:
Developing optimized execution engines for ZKPs: Startups can focus on creating dedicated GPU libraries or exploring FPGA and ASIC solutions to accelerate ZKP computations and reduce proving times.
Building software abstraction layers and tooling: Companies can invest in developing high-level languages, frameworks, and tools that simplify the zk application development process, making it more accessible to a broader range of developers.
Exploring novel applications of ZKPs: With zk technology offering a myriad of use cases, startups can identify and develop innovative applications in various industries such as healthcare, supply chain management, digital identity, and more.
Enhancing interoperability and cross-chain compatibility: Startups can work on solutions that enable seamless interaction between various zk-enabled networks and platforms, promoting a more connected and efficient Web 3 ecosystem.
As the technology matures and gains mainstream adoption, the potential of Zero Knowledge technology will become more evident. With continued research, development, and collaboration across industries, ZKPs could reshape the future of privacy, security, and trust in the digital world.