Editor’s Note: Republic Crypto’s world-class team of strategists help accelerate the growth of web3 by supporting ambitious projects like zkLink. While zkLink is not an active investment offering on Republic, this series of overview articles offer an exciting look into the unique dynamics of the entire crypto ecosystem.
The decentralized finance (DeFi) landscape has seen an explosion in innovation and adoption, but until recently, protocols were restricted to the liquidity and assets available on a single blockchain, resulting in higher costs, complicated user experiences, and security risks for users, while also limiting the utility and scope of DeFi products.
zkLink, a new multi-chain L2 interoperability network, enables safe, fast, and easy trading across different blockchains and tokens using the unique security and scalability properties of zero-knowledge proofs and aggregated liquidity pools, to provide a unified source of liquidity for users and projects.
Here’s what you need to know about this promising new DeFi infrastructure project.
zkLink can be thought of as a trading-focused interoperable multi-chain L2 network secured by zero knowledge technology.
It solves three key problems in the multi-chain DeFi world:
- Liquidity segmentation: Trading across blockchains presents considerable complications, due to the differences in security, throughput, finality, and consensus of each chain, leading to silos of liquidity isolated on each chain.
- User experience: Trading multi-chain is currently a lengthy process that takes significant time and effort, involving several networks and gas fee payments. Users are forced to move currency from one chain to another in order to trade on the destination network.
- Security: The biggest technical challenge in chain interoperability is guarding asset security during chain-to-chain communication, which is vulnerable to many potential hacks and exploits.
Massive multi-chain liquidity aggregation
With zkLink’s unique design, stablecoins from different blockchains and of different types are safely and efficiently aggregated into one single coin: vUSD.
This vUSD stablecoin forms a deep liquidity pool, and can be used as a unified currency for trading on the zkLink L2 ecosystem. A single wallet can be used for every connected chain, and there is minimum friction and finality time.
Rapidly deployed API-driven dApps
Developers can leverage this unified liquidity via a number of API-driven solutions on top of its L2 network, which is connected to different L1 chains and L2 protocols.
Current use cases include AMM DEX and an Order Book DEX, and soon Derivatives trading, NFT marketplace, LaunchPad, and an L2 Wallet.
You can try out these use cases on zkLink’s testnet website right now.
Trust-minimized security with zero-knowledge proofs
zkLink’s two-step security guarantee of verification plus judgment, is a unique ‘checks and balances’ approach to implement a complete separation of powers in the zkLink network, to guarantee no single party (not even zkLink) controls asset security or is capable of malicious behavior.
To ensure the validity of each multi-chain transaction, the first step generates cryptographic zero-knowledge proofs, from which a 'final root' is generated on each chain. These 'final roots' are then mathematically verified on each connected blockchain.
To double-check the verification was correct, the second step performed by an independent network of oracles judges the consistency of the two generated 'final roots' sent to each connected L1. This additional check by an independent third-party gives peace of mind and guarantees consistency, while keeping the details of the trade completely private.
zkLink envisions a multi-chain world - a future where decentralized assets can seamlessly be used on multiple Layer1 and Layer2 chains.
Use case demos are already live for Ethereum, Binance Smart Chain, Polygon, and Avalanche, with Solana and others coming online later.
Team and investors
zkLink’s global team of engineers and experts are based around the world, having studied at ENSPM Paris, Imperial College London, HIT, Duke University, Peking University, and Tsinghua University, with research and work experience in cybersecurity, cloud computing, cryptography, and zero-knowledge proofs.
zkLink will announce its token economy and distribution plan after mainnet launch.
A look ahead
The zkLink mainnet is expected to go live later in 2022.
“Until now, the technical divide between individual chains has slowed adoption and put up major barriers for innovation in the DeFi-verse. zkLink addresses this limitation, providing a unifying ecosystem for token liquidities that would otherwise be isolated on individual chains, and open the door to a secure multi-chain future.” — zkKevin, CTO and Co-founder.
zkLink is poised to tackle some of the most pressing problems in DeFi, while unlocking new possibilities for protocols, traders, and investors.
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