Hello/ Bonjour/ Namaste readers!

Its finally the last day of the Web3 Glossary series. Over the past 2 weeks we’ve explored the ABC’s of web3. I am sure each one of you had something to take away and some feedback. I’d love to know your experience with the daily dose of the web3 gyaan. 🙌

Also, we’re a family of 100+ web3 enthusiasts and growing, Let me know in the comments what encouraged you to sign up to this newsletter?

To conclude the web3 glossary series, we have the letter **Z: Zero Knowledge Proofs and Rollups**

Having to spend $20 or more in gas fees for a single transaction is not ideal if you want to complete a DeFi transaction. Right?

Well, if you've been hearing the catchphrase ZK or Zero Knowledge, **you're not alone.** It's the next big thing in **web3**. With an increase in the number of Dapps, there’s a **need for faster processing speeds** & **cheaper txns.**

#### That’s when layer 2 solutions came in!

ZK rollups are also a **layer 2 scaling solution** that increases throughput on **Ethereum Mainnet** by moving computation & state-storage off-chain 👇👇

Zero Knowledge Proof (ZKP) is a sort of cryptographic proof in which a prover tries to demonstrate to a verifier that a particular statement is true without ever communicating it.

For e.g., let’s say your friend is **red-green colour-blind** (while you are not) and you have two balls: **1 red & 1 green, but otherwise identical**

You want to **prove** to him/her they are **differently-coloured**, without revealing which one's red and green ball.

That’s what ZKP help you achieve -

a way to prove that you know something without revealing what you know

Essentially, it implies that **I can convince you that something is true (with high probability), without showing you how I know it is true, hence you cannot reconstruct my proof.**

If you’ve played Wordle you’ve probably come across these screenshots and WhatsApp status at least once.

It’s a way to prove that you have the solution to today’s puzzle, without revealing what the solution is by sending a screenshot of the final board.

With zero knowledge of the actual answer everyone can confidently agree that you have the correct result!

**This is the essence of a ZK Proofs!**

ZK Proofs find application in a lot of domains. Some of them are maintaining

**data privacy in industries like Healthcare, financial services and ZK based identity solutions.**

ZKPs allow such companies to retrieve & use information from the data without actually looking at it

Ask yourself these questions:

👉 What is the minimum information required to share with a hospital receptionist (*verifier*) to demonstrate a patient’s (*prover*) proof of valid health insurance?

👉 Is it possible to share no personal patient information (think of name, DOB, Identification number, etc), and still have a hospital (*verifier*) run your diagnostic tests that you as a patient want (*prover*)?

That’s the decentralised future we’re talking about!

How do they work? 🤔

Let’s get to the technical details of how ZK works

ZK rollups use Zero Knowledge Proofs to consolidate & validate a large no. of transactions off the chain. Then, they submit the transactions as one onto Layer 1 mainnet of Ethereum 👇👇

Instead of mining 1000s of transactions individually, they are rolled up into a single transaction. This single transaction takes form as a validity proof, also known as a

Succinct, non-interactive argument of knowledge (SNARK)

OR

Succinct, transparent argument of knowledge (STARK) 👇👇

SNARKs and STARKs are the same concept as a cryptographic transaction hash. **Both are acronyms for the method by which the two parties prove their knowledge**

📌 SNARKs are estimated to require only 24% of that gas that STARKs would require.

Implies transacting with SNARKs would be far cheaper for the end-user.

📌 The proof size for SNARKs is much smaller than STARKs, implies it would take less on-chain storage.

**Starknet**,a ZK-rollup is used in dYdX and ImmutableX for perpetual contracts[**held or traded for an indefinite amount of time**] on Ethereum.

Protocols like loopringorg , zksync , iearnfinance and @zerion_io also use zero-knowledge Rollups

When we talk about blockchain and decentralisation, we talk about data privacy and identity management on the internet. As of today, everything and anything that we do on the web I tracked and most interactions needs a digital identity verification.

This is where the concept of self-sovereign identity come in, where organizations will no longer own or even keep our data. We as the individuals establish all the important components of our identity, own and manage it.

Zero Knowledge Proofs enable a way to share validated data with a third party for authentication and identification without actually sharing the data itself

ZK proofs not only help achieve data privacy but also make the processes faster by removing the multiple steps involved in identification in something as simple as transferring assets through your bank.

That's a wrap for today and Web3 Glossary series as well🥳🥳

It all started from finding it difficult to understand the bazillion different jargons and concepts in web 3.0

I hope these fun yet knowledgeable letters help you understand web3 better🚀🚀

Also, the knowledge share doesn't stop here. A lot of new ideas and content is brewing at Bits n Bytes

As ever, thank you for subscribing and reading. It matters. It’s a big deal to me.

And, remember, half-true compliments and feedbacks are always welcome at:

laisha.wadh [at] gmail [dot] com

WAGMI 🚀🚀