Unpacking Messari’s Newest Report About zkLink: The Industry’s Leading L3

On April 10th, Messari, one of the leading research enterprises in the blockchain and cryptocurrency industry, published an in-depth report about zkLink titled, “Understanding zkLink: A Comprehensive Overview.” Messari’s report provides a holistic analysis of zkLink, the first aggregated rollup and infrastructure technology provider developed to address challenges related to blockchain liquidity fragmentation by unifying Layer 2 (L2) and Layer 1 (L1) networks.

In this article, we’ll summarize the key points highlighted in Messari’s full report.

zkLink Overview: zkLink Nova & zkLink X

• Messari’s report begins by highlighting zkLink’s two core solutions: zkLink Nova and zkLink X. zkLink Nova and zkLink X both leverage zero-knowledge proof (ZKP) technology to offer users and developers unified access to liquidity from their respective connected networks.
• zkLink Nova is a general-purpose Layer 3 (L3) network designed to consolidate assets, liquidity, and decentralized applications (dApps) from Ethereum L2s into a single, efficient, and Ethereum Virtual Machine (EVM)-compatible platform.
• zkLink X is an application-specific scaling engine that facilitates multi-chain dApp deployment, liquidity aggregation, and performance enhancement across various blockchain networks, including L1s and L2s.

Background & Development Thesis

• zkLink originally started in 2021 as a multi-chain trading infrastructure using ZKPs to ensure reliable access to aggregated liquidity and support secure, customizable financial applications deployment.
• However, zkLink also recognized early on another issue, which is the lack of interoperability and fragmented liquidity between blockchains and networks. Layer 2 networks, despite scaling Ethereum, created challenges by functioning as isolated sub-ecosystems. These L2s also use varied technology stacks and proof techniques, which led to fragmented liquidity and complicated dApp development. This fragmentation impacts the user experience negatively, as transfers between L2s are often slow and costly.
• From these challenges, zkLink drew inspiration to address the significant issues of liquidity fragmentation and the complexity of dApp development across diverse tech stacks. This led to the creation of zkLink’s solutions that aim to unify these fragmented networks into a cohesive system, enhancing both liquidity management and the ease of dApp deployment.

zkLink Nova Key Features: Asset Aggregation, Token Merge, & zkEVM

• zkLink Nova leverages zk-SNARKs and zkLink Nexus (multi-rollup state synchronization) to securely aggregate assets from its connected networks. To interact with zkLink Nova, users first bridge assets from Ethereum and other connected L2s via a canonical rollup bridge. Once on zkLink Nova, assets can be aggregated and merged for interoperable transactions, allowing for the consolidation of liquidity and simplified use of ETH, Native L2 ERC-20 tokens, and stablecoins (from different networks on zkLink Nova’s Layer 3 platform).

• Token Merge unifies assets of the same value and kind from multiple L2s that have different token addresses. For example, USDC bridged from Ethereum and USDC from Arbitrum to zkLink Nova have two unique addresses. For users to interact with USDC bridged from both networks as a single asset on the L3, assets of the same value will be merged into one. zkLink’s protocol features an upgradeable token merge contract governed by a Governance Committee and a Security Council to address the issue of asset non-uniformity and enable the merging of tokens of the same value and kind from different networks into a single unified token on zkLink Nova.
• zkLink Nova is EVM-compatible because it is powered by the zkEVM of ZK Stack. Being EVM-compatible enables zkLink Nova to run programs created for Ethereum environments without modifying the underlying smart contract logic. The zkEVM provides a secure execution environment for zkLink Nova’s smart contracts, verifying every step of the program’s execution with ZKPs. As such, the L3 can execute transactions verified with ZKP computations in an EVM-compatible environment, enabling developers to easily deploy dApps already live on Ethereum and other L2s to the L3.

Technical Details & Architecture: zkLink Nova

• zkLink Nova uses a modular architecture divided into sequencing, data availability, execution, and settlement layers, leveraging ZKPs for secure, EVM-compatible transaction execution.
• Sequencing Layer: Monitors on-chain deposits into L3 smart contracts, maintains the state of the L3, and organizes transactions for processing and proof generation. It uses a sequencer to record incoming transactions, group them into blocks, and compile them into batches for cost-effective interaction with settlement layers.
• Execution Layer: Utilizes ZK Stack’s zkEVM to execute transactions. This ensures the secure execution of smart contracts, allowing transactions to be verified with zero-knowledge proofs in an EVM-compatible environment.
• Settlement Layer: Employs zkLink Nexus technology to enable settlement across multiple L2s and Ethereum, rather than settling only on Ethereum like traditional ZK Rollups. This involves multi-chain state synchronization and uses a primary chain for verifying and executing proofs while secondary chains handle state syncs. zkLink Nova includes additional security measures in the state synchronization phase to protect against deposit fraud and ensure the integrity of the transactions processed across its network.

• Data Availability Layer: zkLink Nova operates as a Validium, meaning it stores transaction data off-chain. This is maintained by a Data Availability Committee (DAC) that ensures the transaction data and state history are preserved effectively and cost-efficiently. However, the plan is to transition to external data availability solutions to enhance security.

Tokenomics & Ecosystem

• zkLink’s native token, ZKL, will play roles in staking, payments, and governance within the zkLink ecosystem.
• Several initiatives such as the Liquidity Alliance Program and Developer Grants Program are designed to support and grow the zkLink community and ecosystem. There are over 60 projects within zkLink Nova’s ecosystem across DeFi, tooling, social, gaming, and NFTs.

Network Activity On zkLink Nova

• Since its mainnet launch in March 2024, zkLink Nova has attracted substantial total value locked (TVL) — reaching a peak of $400 million as of April 14th, 2024 — indicating a growing interest in a unified, general-purpose L3 platform.

Layer 3 Competitive Landscape

• zkLink faces competition from other L2 solutions like Arbitrum, Optimism, and zkSync, each developing their approaches to improve Ethereum’s scalability and interoperability.

Future Plans & Roadmap For zkLink

• Plans include integrating decentralized sequencer solutions and supporting external data availability solutions to further decentralize and secure the network.

Conclusion

Messari’s overview highlights zkLink’s approach to solving critical issues in the blockchain ecosystem, emphasizing its dual solutions, zkLink Nova and zkLink X, and its commitment to an aggregated Layer 3 future. In particular, zkLink Nova, with its innovative approach to unifying and scaling blockchain networks, represents a significant advancement in creating a more interconnected and efficient Ethereum ecosystem.