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The pursuit of interoperability among different blockchains has been ongoing for a while, with the crypto community quickly realizing the inability to move forward without robust communication between chains. Developers have been exploring various technologies, including zero-knowledge proofs (ZKPs). They have emerged as a powerful tool for improving existing cross-chain solutions by offering a means to verify data without disclosing it. In the following article, Tigran Bolshoi, co-founder of Kinetex, discusses the current state of cross-chain communication and how ZKPs can change it to better suit the needs of the ever-growing DeFi market.
Despite all the challenges, the crypto industry is seeing tremendous growth and is not slowing down. So many developers are dedicated to creating better products and services, while an increasing number of businesses and institutions are exploring the potential of blockchain technology and crypto assets, looking to invest or create their own. As a result, new blockchains, protocols, and dApps appear on the market, built considering both the experience of the blockchain pioneers and the downsides of the first solutions, and take the part of the users from well-established chains like Ethereum.
With the abundance of chains and networks, the interoperability problem has quickly started to feel more and more acute as managing coins and tokens across various networks became an increasingly daunting challenge for users and builders alike.
At the same time, a growing trend towards decentralized cross-chain bridges emerged, which were seen as a more private and flexible alternative to P2P cross-chain trading on centralized exchanges. However, no matter how useful, bridges have their limitations, particularly when it comes to building decentralized applications (dApps) and withstanding the increasing load of DeFi services.
Therefore, ensuring smoother and more efficient cross-chain communication will open up new possibilities for dApp builders to create innovative solutions that are truly integrated and seamlessly connected across multiple blockchains simultaneously.
A cross-chain bridge is a critical mechanism in the crypto ecosystem that connects chains together, allowing for asset and data transfer back and forth. However, the number of chains one bridge can link has been pretty narrow until recently, forcing users to use many bridges instead of one.
Concerned with a lack of interoperability and a limited number of assets supported by bridges, blockchain experts and developers focused on creating a new generation of multi-chain bridges that could seamlessly exchange a wider variety of crypto assets. Unfortunately, such bridges could not become a flawless solution right away as they could not fulfill developers' requirements concerning scalability, security, and cost-efficiency. Finally, in their search, developers came up with the concept of a cross-chain message protocol, which presents a more flexible and effective method for approaching communication between blockchains.
These protocols allow smart contracts from various chains to communicate with one another without having to send any assets between chains. It means dApps can start working with any token or DeFi service regardless of their original blockchain.
Theoretically, a fantastic solution, cross-chain messaging protocols are in the early stages of their development and need time to be perfected. For now, developers have difficulties implementing such protocols and making them an efficient part of omnichain dApps.
Another pressing concern when discussing cross-chain is undoubtedly the security of cross-chain bridges since they can pose substantial security risks to user funds. Unfortunately, bridges are often the weakest part of the system and thus can compromise all connected blockchains. Hackers frequently target bridges' smart contracts or supporting node validators to steal locked tokens or create new wrapped ones. Therefore, increasing security is a top priority in developing these systems.
This is where ZKPs may come into play since they have the ability to mitigate security concerns associated with cross-chain by, for instance, eliminating third-party validators from the cross-chain bridging process.
In order to better understand where exactly ZKPs fit in the process of cross-chain communication, let's look at the optimization techniques builders use. One such technique, popular among EVM-compatible networks, is using Merkle trees. They enable networks to store, organize, and validate data more efficiently (without downloading and validating it in full).
Merkle trees are created by separating data into smaller segments, hashing them, and then uniting resulting hashes into a root hash. The latter becomes a unique identifier for the complete data set, enabling quick and secure checks of the data's integrity through a Merkle proof. Integrity is confirmed if the hash calculated using the Merkle proof (consisting of the tree's hashes) matches the one stored in the block header.
Merkle proofs unquestionably decrease the amount of data that has to be shared and processed. Yet, they are still too large, and their verification is much more expensive than it could be. ZKPs can change that by significantly decreasing proofs' size and associated gas costs. Moreover, ZKPs allow for better composability, allowing builders to incorporate various proofs into one ZKP.
The next solution that allows for the optimization of cross-chain communication is light nodes. Although they may not be as secure as full nodes, they boost performance considerably. Rather than storing local copies of blockchain data and verifying all changes separately, light clients obtain the needed for operations data from full nodes or intermediate providers.
To stay in sync with the latest updates, the client verifies the data by checking the head of the chains without downloading block contents. By leveraging the advantages of light clients and ZKPs, projects can make communication between chains cheaper and quicker, opening a door for builders to work towards stronger interoperability.
Another solution related to zero-knowledge technology that contributes to improving blockchains' cross-chain interactions is ZK-rollups. They help boost chains' scalability by handling computation and state storage off-chain while preserving the transaction data on-chain on L1 networks.
ZK-rollups use zk-SNARKs to generate proofs, referencing the transaction on the chain and employing relayers to transfer funds deposited by a user to a smart contract. As a result, projects can merge hundreds or thousands of transfers into a single transaction, thus sharing fees and computation power among hundreds or thousands of users. Therefore, ZK-rollups can assist in executing more transfers within a smaller time frame and with reduced costs, leading to a significant improvement in the number of cross-chain transactions comfortably conducted on each particular blockchain.
As the cross-chain space continues evolving, so do the challenges appearing before the DeFi community. Zero-knowledge technology has a vital role to play in overcoming those challenges, preventing them from hindering cross-chain communication for too long. In essence, zero-knowledge technology will help to revolutionize the way we approach cross-chain communication in the DeFi ecosystem, enabling greater interoperability and unlocking new avenues for growth and innovation.
The Kinetex team is at the forefront of these changes, working on making the blockchain space more united and accessible. Kinetex employs ZKPs, particularly ZK-SNARKs, in the new generation of the Kinetex dApp, Flash Trade. This solution will redefine cross-chain trading for users, making it far more secure and advantageous.
Kinetex Network: Website | Kinetex dApp
