The State of Zero-Knowledge Proofs: From Research to Serious Business 

Protocol Labs
Protocol Labs
The State of Zero-Knowledge Proofs: From Research to Serious Business

# Introduction

In today's digital landscape fraught with data breaches, privacy concerns and online vulnerabilities, establishing trust has never been more critical. Zero-knowledge proofs (zk proofs) offer an innovative approach that allows the verification of sensitive information without revealing the information itself. These cryptographic primitives present an elegant and cutting-edge solution to true data confidentiality.

This report includes access to exclusive research and expert commentary on the properties of zk proofs, use cases, challenges, potential disruptors, signs of momentum and future outlook.

This original analysis is based on first-hand insights gleaned from leading companies within Protocol Labs (opens new window), an expansive innovation network comprising more than 250 startups and teams. These entities share a common mission: to shape the future of computing. Notably, PL network teams, including Cryptonet (opens new window), Gensyn (opens new window), Ingonyama (opens new window), Lurk Lab (opens new window), Polybase (opens new window), Rarimo (opens new window), Starkware (opens new window) and Zama (opens new window), have made significant contributions to the realm of zk proofs over the years, and share their exclusive insights within this report.

# The Inflection Point

The primary focus of our research is on the transition of the zk proof landscape from research initiatives to serious business. Leading experts assert that zk proofs hold the potential to disrupt a wide array of industries, including finance, healthcare, luxury fashion, and decentralized systems like blockchain, ushering in a new era characterized by enhanced security and confidence.

Independent research (opens new window) indicates that zk proof generation is set to grow to a $10 billion market by the year 2030. The forecast for 2030 anticipates a staggering demand for nearly 90 billion zk proofs to power Web3 services, with an industry-wide capability to execute 83,000 transactions per second.

Companies like Lurk Lab (opens new window), a team in the PL network, zero in on the complex mathematical models that form the basis of zk proofs. They believe the zk proof space is poised for growth:

“There’s been a decade of work to improve zk protocols that are leading to real business – we’re even seeing boutique venture capital firms that exclusively invest in this space. We are at an inflection point of better technology and more capital moving towards zk proofs. It’s a Cambrian explosion.”

John Burnham (opens new window), co-founder of Lurk Lab (opens new window).

# What are ZK Proofs?

Simply put, zk proofs represent a revolutionary cryptographic concept, allowing one party to verify the truth of a statement to another party without disclosing any specific information.

Imagine you're browsing properties in an upscale neighborhood and come across your dream home. You want to inquire about its price without revealing your entire financial situation. Here's where zk proofs come into play. With a zk proof, you can confirm your ability to make a down payment without exposing your complete bank balance. This empowers you to safeguard your financial privacy while enabling secure transactions, identity verification without revealing sensitive data, and enhancing digital privacy.

In cryptography, a zero-knowledge password proof is another type of zk proof that allows one party to prove to another party that it knows the value of a password, without revealing anything other than the fact that it knows the password to the verifier.

Versatile Use Cases

ZK proofs find applications in diverse domains, including banking, healthcare, energy and politics. They facilitate secure transactions and confidential data sharing, redefining how authentication and confidentiality are achieved in digital interactions. Here are five real-world examples:

  • Cryptocurrencies: Zcash (opens new window) may be the most notable cryptocurrency dedicated to preserving privacy – and zk proofs play a crucial role. They enable confidential transactions where the sender, receiver, and transaction amount are hidden, while still ensuring the validity of transactions. ZK proofs can also verify the correctness of smart contracts without revealing the underlying data.
  • Decentralized Finance (DeFi): ZK proofs are used to validate transactions and operations off-chain, while providing cryptographic proof of their correctness on-chain. This reduces the computational load on the blockchain and speeds up transaction processing. ZK proofs can also be used in decentralized exchanges to prove that users possess the necessary funds for trading without disclosing their exact balances.
  • Supply Chain Transparency: ZK proofs can be used to verify and authenticate the origin, movement, and authenticity of products within a supply chain without revealing sensitive proprietary information. This can enhance transparency by allowing different entities to independently verify the accuracy of claims made about products, such as their source, quality, and journey through the supply chain.
  • Environmental Standards: ZK proofs can be applied to verify compliance with environmental standards without revealing sensitive business data. For instance, companies can demonstrate that they meet certain emissions reduction targets without sharing specific emission levels or proprietary information.
  • Healthcare Data Security: ZK proofs can also be used for sending the results of a medical diagnosis without revealing the patient's medical records to any third party. This could help to protect the patient's privacy while ensuring that they receive accurate care.
  • Voting Systems: In a zk proof-based voting system, voters can prove that their vote is valid without revealing the actual choice they made. This maintains the secrecy of individual votes, while ensuring that the total count is accurate. ZK proofs can be used to verify properties of the election process, such as the absence of double voting or the integrity of the tally, without revealing specific voter information.

Rarify Labs (opens new window) is a service provider and community member dedicated to advancing the next-generation interoperability protocol, Rarimo (opens new window). Rarimo focuses on the identity space, which is one of the most mature and promising markets for zk proofs:

“The zk proof market is highly promising and already moving towards tangible use cases. Identities are at the heart of the rapidly expanding decentralized social layer, including decentralized social media, DAOs, reputation systems, and on-chain gaming. Moreover, the use of zk proofs is accelerating due to the urgency with which identity credentials are needed both within Web3 and Web2 as AI-generated bots and deep-fakes make it increasingly difficult to discern humans – and human-generated content – from machines and AI-generated content.

# 4 Exciting Bets in ZK Proofs

The zk proof landscape is dynamic and poised to revolutionize multiple industries. In the evolving landscape of zk proof technology, there are several projects and cutting-edge techniques that are pushing the boundaries of what's possible, with a primary focus on enhancing efficiency, scalability, and usability:

  1. zkEVM (opens new window): Promoting integration with Ethereum for wider adoption, zkEVM is a concept within the Ethereum ecosystem aimed at developing a zk proof system that is compatible with the Ethereum Virtual Machine (EVM).  This would allow zk proofs to be used for a wide variety of Ethereum applications. After raising $200 million in Nov 2022, Matter Labs (opens new window) launched their zkEVM mainnet, zkSync Era (opens new window), in Feb 2023 – an important development in the industry.

  2. zkSync (opens new window): A zkSync is defined as a method and project focused on developing zk rollups (opens new window), a type of Layer 2 scaling solution for Ethereum. ZK rollups use zk proofs to bundle multiple transactions together, verify them off-chain, and then submit a single proof to the Ethereum mainnet. This significantly reduces the computational load on the Ethereum network and enhances its scalability.

  3. zk-STARKs (opens new window): Showcasing an evolution in the zk proof landscape, a zk-STARK is a type of zk proof system that is even more efficient and scalable than previous systems. This could make zk proofs practical for a wider range of applications.

  4. Recursive zk proofs (opens new window): A recursive zk proof is a technique that allows for the aggregation of multiple proofs into a single proof, drastically reducing the computational overhead of verification. This innovation has contributed to improved scalability in zk proof systems, making them more efficient for applications with a high transaction volume.

As these projects continue to mature and gain traction, the potential for zk proofs to revolutionize industries beyond cryptocurrency becomes increasingly evident, offering a promising future where privacy and security are paramount in our digital interactions. We will deep dive on each of these projects in this report.

ZK proofs have challenges as well as benefits. Ingonyama (opens new window) solves for hardware limitations by building semi-conductors to accelerate zk-SNARKs, a type of zk proof. Here is why Ingonyama stresses the importance of privacy in the next iteration of the internet:

“Information is the most valuable currency in the world. Every one of us is guilty of oversharing online all the time to third parties. If you just want to prove your age or address, you upload your ID that contains so much extra information: full names, address, country citizenship, etc. This situation happens every day in the digital world. This problem can be solved by zk proofs, considered the most powerful cryptography that exists today for hiding data while proving assertions on the data. ZK proofs are considered one of the greatest achievements of cryptography in the last 50 years.”

Elan Neiger (opens new window), head of marketing, Ingonyama

# Conclusion

This report will delve into the familiar terrain of zk proofs, elucidating the distinctions between zk-STARKs and zk-SNARKs, charting the timeline of innovations in this domain, addressing challenges, and offering future projections.

Thank you to the following PLN teams and people who shared their expertise:

Zama (opens new window) – Founder & CEO Rand Hindi (opens new window)

Zama is building an open source framework that enables developers to use homomorphic encryption to secure their web2 and web3 apps, without having to know cryptography.

Ingonyama (opens new window) – Head of Marketing Elan Neiger (opens new window)

Ingonyama builds semiconductors to accelerate a wide range of ZK protocols with an emphasis on zkSNARKs.

Gensyn (opens new window) – Co-Founder Harry Grieve (opens new window)

The Gensyn network is the Machine Learning Compute Protocol that unites all of the world’s compute into a global supercluster, accessible by anyone at any time, sharply lowering the cost of compute.

Polybase (opens new window) – Co-Founder & CEO Sid Gandhi (opens new window)

Polybase is a public L2 blockchain with private transactions and MEV-resistance powered by zero knowledge proofs.

CryptoNet (opens new window) – Data Scientist Nicola Greco (opens new window) & Former Research Scientist Rosario Gennaro (opens new window)

CryptoNet is a community of researchers and engineers working on designing, proving and improving the building blocks for crypto-networks to engender new capabilities across the Web 3.0 stack.

Lurk Lab (opens new window) – Co-Founder John Burnham (opens new window)

Lurk is a Turing-complete programming language for recursive zk-SNARKs that will enable new possibilities for SNARK proofs, blockchain consensus, the Filecoin Virtual Machine (FVM), decentralized apps, data integration with IPFS and IPLD, and more.

Rarify Labs (opens new window) – Director Kitty Horlick (opens new window)

Rarify Labs is a service provider and community member dedicated to advancing the next-generation interoperability protocol Rarimo.

StarkWare (opens new window)

A zk-SNARK pioneer, StarkWare solves the inherent problems of blockchains – scalability and privacy.