Crypto Notebook

Enzo Notebook

Crypto Alpha

zkLink

Questions & Suggestions(PM perspective)

Notes

Background

zkLink is the first multi-chain integration DEX based on ZK-Rollup technology, which aggregates the liquidity of different ecosystems, and makes it possible for native assets on different chains to interact and pair with each other.

The platform adopts zero-knowledge technology and the DAO governance model to ensure the security and consistency of multi-chain asset interoperability, creating multi-chain DeFi scenarios such as swapping, loaning and revenue aggregating with a secure, efficient and low-cost user experience.

What can zkLink offer?

“One-click” cross-chain asset swap

Mirror

Lighting

Effortless asset management

Loan with cross-chain assets

A safer, cheaper and faster user experience

Let’s dig deeper into zkLink with Enzo

Main uniqueness of zkLink:

Easy token cross-chain experience: One click exchange and better UX

Security and validity: same security level as Ethereum Layer1, and it supports roll back states

Dencentralization and non-custody

zkLink believes that “a multi-chain, multi-layer infrastructure would be the future of blockchain”

The consensus mechanism, the ledger, and the underlying technology are incompatible.

So what is the painpoint?

Chains & layer2 projects are relatively isolated, opportunity cost and risk cost for long-tail users to swap multi-chain assets via a CEX can be unbearably high.

What is zkLink solution?

Imagine that the liquidity from separate chains and Layer2 protocols are connected with each other, wherein multi-chain, multi-layer transaction can be directly executed — it will hugely boost productivity for the DeFi ecosystem as a whole and for the whole blockchain world.

The "globalization" of public chains in blockchain world

Connect isolated chains & Layer 2 projects!

Uniswap is Defi 0 to 1, the direct interaction of cross-chain assets is the cornerstone of 1 to 10

Key features:

zkLink enables fast cross-chain swaps between tokens from different Layer1 ecosystems without requiring users to first deposit tokens on Layer2.

Normal cross-chain transactions take 10-15 blocks(10min) to complete, zklink takes less than 1 min.

Achieve cross chain loan: Pledge UNI on Ethereum to borrow BUNNY on BSC in a safe environment .

Cross-chain farming

ZkLink

Let’s talk about what is zklink.

Zklink is a chain-to-chain DEX which connects separate public chains and layer2 protocols. ZkLink supports the connection between EVM-compatible public chains and EVM-incompatible chains.

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zkLink could help with token swapping without intermediation by connecting Layer 1 with Layer 2 network. Users will see the pairs that have never been seen before like CAKE-SUSHI!

zkLink does not require user to deposit token on Layer 2 first for faster cross-chain swaps.

FastSwap - a chain-to-chain trading tool based on zkLink.

Better UX

AMM based on zkLink multi-chain Layer2 liquidity aggregation

Security supported by zero knowledge

Support varies kinkds of tokens

Layer 1 DEX Aggregator

Example:

User initiates a cross-chain request, X to Y

X is on Zklink L2 liquidity pool or not

If not, then compare different Layer1 DEXs

Find the most cost-effective route and exchange rate

Swapped into an "initial token Z" on zkLink Layer1 DEX Aggregator

“Initail token Z” was deposited to zkLink Layer2, and then directly swapped into target tokens Y based on the AMM liquidity pool.

Y goes to a broker's Layer2 wallet, then broker transit same amount of Y to user from Layer 1

Above process happens in few mins

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Bridge

Fast Bridge is a multi-chain token mapping instrument on top of zkLink's high-performance and secure chain-to-chain infrastructure, boosting DeFi projects with their multi-chain deployment.

Different from most cross-chain bridges where assets security relies on the "bridge" itself, in virtue of zero-knowledge technology, zkLink bridge can achieve the same security level the source and destination chains in the way that zkLink protocol is equipped with on-chain data availability, and can rollback to the correct account status in case of attacks.

The main difference is how users interact with zkLink Layer1 smart contracts. During Fast Cross Chain Swap, users transit tokens to zkLink smart contract on the source chain, and vice versa on the target chain; while for Bridge, zkLink smart contracts take the responsibility of burning tokens one side and minting on the other.

L2 Swap

zkLink supports direct swapping with assets which are native for projects of different ecological types and public chains.

Based on AMM

Transaction in secs

No intermediary

Users are able to swap UNI on Ethereum for CAKE on BSC via zkLink with only one click.

L2 Mirror(Stable Swap)

zkLink supports one-click swapping with stablecoins on different chains or of different kinds.

Stablecoin-specialized AMM

Lower slippage

Fast Withdraw

Token withdrawal from Layer2 back to Layer1 wallet takes a long time: hours/even a day

zkLink uses "broker mechanism" with small amout of extra fee

Fast & Secure. Target token will be received in trader's Layer1 wallet in only one block's interval. (～15s on Ethereum, ～0.4s on Solana, and ~3s on Binance Smart Chain)【instead of 15 blocks】

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Steps:

User send Fast Withdraw request

zkLinks L2 receives Fast Withdraw request, notify a broker

Initiate a transaction from L1 wallet on the target chain to the one of the trader's, via zkLink smart contract.【Only takes one block】

ZK proof of this L2 transaction is verified【30min-1hr】

zkLink L1 contract transit the right amount of tokens to the broker's L1 wallet

User enjoys on-chain transaction

L2 Liquidity

AMM-based, L2 liquidity pools(LP) = L2 Swap + L2 Mirror (Stable Swap).

LP providers would receive high rewards by easy steps without firstly depositing to L2, fully utilizing the LP tokens they’ve earned from other DEXs - reaping twice with single staking.

No need to manually deposit to Layer2 in advance.

Easy earning with no extra effort by staking LP tokens ALREADY EARNED from other AMM protocols.

One-coin LP

zkLink supports one-coin LP to lower the threshold for providing liquidity.

Users are give more flexibility and can add only one kind of token at any amount.

Cons of holding two kinds of tokens:

Risk of the price fluctuations from two tokens

Unless you happens to hold EXACTLY the right proportion of two tokens, your fund utilization rate can never reach 100%.

Cannot earn extra interests under the condition of same total amount

Reaping twice with one stake

For some commonly used pairs, zkLink has created a "never-been-easier" process for players to provide liquidity on zkLink from Layer1 while earning double rewards.

Take 3CRV(Ethereum)-3EPS(Solana) as an example - when a user adds 3CRV liquidity from its Ethereum Layer1 wallet, instead of locking up on zkLink's Layer1 smart contract, zkLink stakes it to one of the yield farming protocols such as Convex, helping the liquidity provider to secure the first half of earnings. In the mean time, zkLink mints the same amount of mapped-3CRV on our Layer2 network, adds liquidity to the correct pool, generating the second half for the LP. When the LP chooses to remove liquidity or to harvest earnings, the two parts of earnings will be collected together and received at once.

When a user provides liquidity into a pool, an unique NFT (ERC-721) which can be seen as liquidity tokens on other Dexs will be minted and sent to the provider's Layer1 address. This NFT represents the LP's contribution (or "share") to the given liquidity pool, and can be further staked to zkLink Layer1 contract in order to receive farming rewards.

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Chain-to-chain Interoperability

The two major concerns during chain-to-chain data transmission are:

The correctness of computation

The validity of cross-chain states(relies on a network composed of multiple oracles similar to a multi-sig group)

Most cross-chain protocols are indifferent to the correctness of computation or authenticity of cross-chain data, since a multisignature (multi-sig) group usually handles these two concerns to 'sign off' on a trade.

zkLink sends batch to the main chain contains a cryptographic proof (a ZK-SNARK, succinct non-interactive argument of knowledge), which proves that this series of transactions is correctly approved and signed by the users and that the update of the account balance is correct from the previous Merkle root to the new Merkle root.

In most chain-interoperation projects, the consistency of the multi-chain status is checked by a multi-sig group, meaning the state validity depends on the logic of the program - or the competence of the people who actually wrote the code.

Oracles are data feeds that connect Ethereum to off-chain, real-world information so that you can query data in your smart contracts. For example, prediction market dapps use oracles to settle payments based on events.

Stable triangle of governance

The data security of zkLink is logically similar to the 'checks and balances' structure of a functioning government: executive, judicial and legislative, equivalently as 3 branches in zkLink as the sequencer, oracle network, and DAO.

The sequencer transmits the result of running the circuit to Layer1 smart contracts, while the oracle network has the power to approve or halt it, and the change of members in each oracle network or the sequencer can be voted on by the zkLink DAO.

Such separation of powers is well designed to guard against economic attack from both external hackers and internal stakeholders, by ensuring no single branch has too much power.

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