Matter Labs Raises $50M to Scale Ethereum with Zero-Knowledge Rollups

Ethereum Scaling Solutions and the Rise of Rollups

With several leading cryptocurrencies achieving record highs, an increasing number of new users and decentralized application developers are adopting the Ethereum network. They are quickly realizing, however, that the blockchain can be quite congested for conducting transactions.

Ethereum’s limited network capacity results in sluggish transaction speeds and excessively high fees – a challenge well-known to experienced developers within the ecosystem.

The Emergence of Ethereum Rollups

A significant development is the growing accessibility of Ethereum “rollup” scaling solutions. These tools aim to alleviate congestion on the primary Ethereum blockchain.

They accomplish this by transferring the intensive task of transaction processing to secondary, more efficient chains. These chains then record batches of transaction data onto the main Ethereum network.

This approach allows developers to benefit from faster and more affordable transactions without compromising the security inherent in the Ethereum ecosystem.

Matter Labs and zkSync: A New Contender

Matter Labs is among the blockchain startups developing advanced rollup products. The team is confident that their solution, zkSync, is poised to surpass its competitors.

Recently, the startup announced the completion of a $50 million Series B funding round, spearheaded by a16z Crypto, following a Series A round led by Union Square Ventures just months prior.

Competition in the Ethereum Scaling Landscape

Ethereum scaling is a highly competitive field dominated by a few key players.

a16z Crypto has already invested in this area, leading the Series A funding for developer Optimism in February.

In August, Lightspeed Venture Partners backed Offchain Labs, the creators of Arbitrum – another Ethereum scaling solution attracting substantial developer interest.

While both Optimism and Arbitrum are building “optimistic rollups,” Matter Labs is developing a “ZK rollup,” which employs a distinctly different methodology utilizing zero-knowledge (ZK) proofs for transaction scaling.

This approach offers a fundamentally more secure, though computationally demanding, method.

Optimistic vs. ZK Rollups: A Technical Distinction

The core difference between these two types of rollups lies in how transaction legitimacy is verified.

Blockchains rely on network nodes reaching a consensus on the verified transaction history.

Optimistic rollups initially assume transactions are valid, delaying withdrawals for a period to allow network participants to challenge potentially fraudulent batches.

Conversely, ZK rollups utilize complex mathematical proofs to enable the Ethereum network to swiftly verify and confirm the validity of transaction batches.

Matter Labs’ Advantage: Solidity Compatibility

Although several groups are building ZK rollup products, Matter Labs possesses a key advantage.

They are already well into testing a solution that enables Ethereum developers to not only process transactions within zkSync but also to deploy and operate smart contracts written in the Solidity programming language directly within the platform.

The Importance of Solidity Support

“Historically, ZK-based scaling solutions have often required developers to learn a new programming language,” explains Ali Yahya, a general partner at a16z Crypto.

“Matter Labs has successfully created a compiler for Solidity that translates standard smart contracts from Ethereum into zero-knowledge proofs, allowing them to be used with [zkSync].”

Short-Term and Long-Term Outlook

Currently, optimistic rollups offer some immediate benefits, primarily their existing availability to developers and broad functionality.

While zkSync is already operational on the Ethereum mainnet, support for smart contracts is scheduled for release in early next year.

However, Matter Labs CEO Alex Gluchowski anticipates that ZK rollups will ultimately become dominant, a view shared by Ethereum co-creator Vitalik Buterin, who predicted in a January blog post that “in the medium to long term ZK rollups will win out in all use cases…”

The Future of Blockchain Scaling

“I don’t foresee optimistic rollups remaining relevant in the long run,” Gluchowski states.

“If cryptocurrency achieves the widespread success envisioned by its proponents – with the entirety of the world’s digital economy operating on blockchains – then zero-knowledge proofs will be essential.

We simply lack alternative technologies capable of supporting such massive scale.”