Zero-knowledge technology has seen significant growth in adoption within the blockchain space in 2023, according to an inaugural quarterly report published by ZKValidator.
A quarterly report focused on zero-knowledge (ZK) technology indicates that privacy, scaling and identity solutions are significant drivers of adoption in the blockchain space.
Validator service provider ZKValidator’s report titled “The State of ZK” explores insights from the zero-knowledge space, highlighting major and emerging use cases, research, product launches and notable investment rounds.
The key takeaway focuses on use cases of zero-knowledge proofs. The cryptographic method allows one party to verify data or a statement without exposing the information. Privacy stands out as the industry’s most significant driver of adoption at 12.9%. Scaling is the second most prominent use case for ZK technology, with 9.46%.
Identity solutions and new ZK use cases rank third and fourth, indicating that the blockchain ecosystem is interested in exploring how ZK technology can be applied in identity management and other novel applications. Zero-knowledge machine learning (ZK-ML) was also identified as the space’s most attractive new use case.
Insights were driven by the company’s work with industry participants, including ZK Hack, zkSummit, rhino.fi, Geometry and University College London. ZKValidator also gleaned data and information working with participants in the production and management of the Zero Knowledge Summit 9 in Lisbon on April 4.
The launch of Polygon and zkSync’s zkEVMs (Ethereum Virtual Machine) was also highlighted in zkValidator’s report, with key data from the two Ethereum scaling protocols.
Having launched over a month ago, zkSync Era has attracted more daily active users than Polygon’s zkEVM. The report speculates that rumors of a possible zkSync airdrop later in 2023 may be a reason for the gulf in user numbers between the two zkEVMs.
The report also covers the development of new products, including Geometry’s Semacaulk, a new zk set membership protocol that offers gas savings over Merkle-tree constructions, while ensuring proofs can be generated quickly and verified for roughly the same gas cost.
2022’s $7 million ZPrize competition helped drive innovation of zk technology, with multi-scalar multiplication (MSM) on Android mobile devices a result of the development competition aimed at fostering zk solutions. According to zkValidator’s report, MSM improved proof generation time from 2.4 seconds to around half a second, making mobile payments in zk easier.
The report also mentioned a paper proposing GZKP, a fast GPU-accelerated zero-knowledge proof system that reduces proof generation time in ZKP by leveraging hardware similarities of GPUs. Graphics processing units (GPUs) have become highly useful hardware for cryptocurrency miners given their ability to process data simultaneously, in addition to their use for machine learning, video editing and gaming.
Various other zk projects were also identified in the fields of decentralized identity, interoperability and payments within the Ethereum and Polkadot ecosystems in 2023.
This includes Telepathy, a zkSNARK interoperability protocol for Ethereum. The protocol allows users to read Ethereum state on any chain while retaining the security of Ethereum’s light client protocol.
Sismo Connect was also mentioned, which is a privacy preserving single sign-on method for applications on both web2 and web3. The technology allows developers to implement zk technology in their applications.
Lastly the Manta Network also expanded its zk capabilities allowing for privacy support for nonfungible tokens (NFTs) and soul bound tokens (SBTs).
Investments were also highlighted, with Ethereum research and development firm The =nil; foundation raising $22 million to continue development of the Proof Marketplace. The solution allows layer 1 and 2 blockchains to outsource the production of zk proofs.
Zk-proof developer Proven raised $15.8 million in a seed round, while Polyhedra Network raised $10 million for its blockchain interoperability infrastructure platform.
Zero-knowledge-rollups have been in the spotlight through the quarter of 2023. Polygon released its open-source zkEVM Ethereum scaling technology to mainnet on March 27 while a number of Ethereum DeFi protocols have adopted zkSync since its alpha launch in March 2023.