The role of privacy technology in the blockchain industry is often underestimated. Privacy is often viewed in the context of protecting sensitive personal information from malicious actors or authority figures who may be prone to corruption.
The first applications in the blockchain industry to enforce privacy came from projects such as Zcash and Monero, both of which developed cryptocurrencies that allow users to transact without leaving a trail of breadcrumbs, which is a feature of all public blockchains the default setting for .
Zcash was the first to use a form of zero-knowledge proofs called zk-SNARKs, which use special cryptography to confirm transactions that occur on the Zcash blockchain without the node verifying them knowing details about the transactions. information.
Horizen later adopted the technology with its privacy-focused cryptocurrency, ZEN.
While privacy technology is still a staple in the crypto space, blockchain's evolution from a decentralized network for storing and exchanging value to a complex dapp ecosystem has changed how zero-knowledge proofs are applied.
Today, the power of privacy technology lies not only in protecting users' data, but also in simplifying the way nodes communicate, enabling the network to confirm transactions with greater efficiency and become more scalable.
Horizen evolves with the industry to become a zero-knowledge powered blockchain network. This means that Horizen utilizes privacy technology to not only hide transaction data, but also reduce the time and level of computation required to verify transactions that occur between the sidechain and the mainchain.
Horizen Architecture Overview
On a standard proof-of-work blockchain like Bitcoin, miners compete for the right to validate the next block. This involves using your computing power to perform the billions of calculations required to correctly guess the nonce value on the block header, which allows nodes to validate the block and earn block rewards.
On the Horizen network, the public main chain is a proof-of-work blockchain that operates similarly to the Bitcoin blockchain. There are also sidechains that split off from the main chain and run independently as their own blockchain.
These chains can run with their own consensus mechanisms, set their own privacy and transaction speed parameters, and are often highly customizable.
Sidechains are able to communicate and transfer tokens between each other using what Horizen calls the Cross-Chain Transfer Protocol (CCTP).
The Horizen mainchain acts as the final checkpoint for validating the state of the sidechain on the network, including withdrawing tokens from the sidechain to the mainchain.
How to use zk-SNARKs on Horizen to achieve scalability?
To understand how zk-SNARKs improve blockchain scalability, we first need to understand how data is transmitted and stored on the blockchain.
When a transaction occurs on the blockchain, it has to be broadcast to the entire network and then verified by specific nodes before it can be confirmed in the next block (a block is basically a batch of transactions). Blocks on the blockchain have limited space for storing data, but are responsible for storing key information such as exchanged transaction values, timestamps, and the hash of the previous block.
The block size on the Bitcoin blockchain is 1MB,per blockCan accommodate approx.1,500 transactions. Ethereum's latest block size is approximately0.07MB, each block can hold approximately160-200transaction.
What zk-SNARKs do is compress the amount of data that nodes need to process in order to verify that a transaction is correct before confirming it into the next block.
On Horizen, zk-SNARKs allow the prover (sidechain) to prove to the verifier (mainchain) that the transaction is valid, while the mainchain nodes do not know the details of the transaction (i.e. the address or value transferred).
The sidechain first validates the transactions in its blockchain as usual, and then builds a "proof", which is essentially a certificate that the transactions in the sidechain have been correctly verified according to the standard process approved by the main chain.
The certificate is used to accurately represent the state of the sidechains (i.e. account balances and total value in each sidechain), while containing far less data than the tens of thousands of transactions it represents.
Nodes on the main chain then use a special algorithm to verify this certificate, just like they would for any other transaction. If the algorithm confirms that the certificate/proof is correct, the main chain nodes will use this as proof that the transactions in the side chain have been verified correctly, without having to perform the verification process themselves.
In other words, the main chain can simply verify the "proof of calculation" of tens of thousands to hundreds of thousands of side chain transactions in a single block, rather than main chain nodes verifying every side chain transaction.
Compared to Bitcoin's limit of 1,500 transactions per block or Ethereum's limit of 200 transactions per block, it is clear that zk-SNARKs can significantly expand the number of transactions a blockchain can handle without compromising security or decentralization .
Different Approaches to Achieving Privacy-Based Scalability
Still other blockchains have realized that zero-knowledge proofs can be a tool for scalability through privacy. These networks employ a version of popular zk-proofs called ZK-Rollups.
ZK-Rollups is an innovation originally introduced on Ethereum that enables Layer 2 transactions to be transmitted and verified by the Ethereum network without Ethereum nodes knowing the details of each transaction. It aims to provide greater scalability to the Ethereum network by only requiring Ethereum nodes to verify proofs of computation rather than the transaction data itself.
While L2s like Loopering utilize ZK-rollup to achieve scalability on the Ethereum network, L2 networks are limited in their ability to operate with the same flexibility as standalone L1 blockchains.
L2 vs sidechains
L2 like LoopRing, Polygon, and Optimism are designed to scale L1 Dapps.
Developers can launch Dapps on L2, but ultimately all L2 transactions must be settled on the Ethereum network. This means that, despite the separation, periods of network congestion or potential security breaches on the Ethereum network could still adversely affect one's ability to withdraw and settle funds from L2 to Ethereum L1.
On Horizen, our sidechains are completely independent and customizable blockchains that can run with their own consensus mechanism and not depend on the mainchain for final settlement. The role of the main chain is to simply verify the state of all side chains by observing what we call cryptographically authenticated certificates from side chain maintainers.
Horizen is also able to implement ZK-Rollups, making sidechains behave like L2 on Ethereum. However, we believe our current implementation provides developers with greater flexibility and security as they are able to run their own independent, consensus-agnostic sidechains.
In conclusion, Horizen's zero-knowledge enabled blockchain network is changing the way privacy-preserving technologies are applied in our industry.
Through our unique sidechain structure, we transform zk-SNARKs from a technique for simply securing information to a solution to security by compressing a virtually unlimited amount of sidechain transaction data into a compact proof that requires minimal computation to verify. Techniques for scaling problems.
All in all, this makes Horizen one of the most unique and versatile projects to emerge from the crypto space in years!
