Matter Labs, the company behind zkSync, raises $200 million to scale Ethereum

Mater Labs raised a $200 million Series C funding round co-led by Blockchain Capital and Dragonfly. Matter Labs is better known for its work on zkSyncan Ethereum scaling solution that dramatically reduces the cost of Ethereum transactions.

LightSpeed ​​Venture Partners, Variant and Andreessen Horowitz also participated in the Series C round. In total, Matter Labs has raised $458 million, including a $200 million ecosystem fund to drive zkSync adoption. That’s a pretty big amount of money, which means the company will be able to replicate zkSync for a while, even though we don’t know the full ramifications of the FTX crash yet.

Over the past few years, the biggest pain in Ethereum transactions has been gas fees. In Ethereum parlance, gas fees are transaction fees. Every time you want to send some crypto assets to the Ethereum blockchain, you have to pay some gas fees.

And these gas charges are not variable. If you try to send $10 or $10 billion worth of Ethereum, you will pay the same amount as gas fees. These fees vary depending on the web search. But it can be quite discouraging if you are new to cryptocurrencies or want to use your cryptocurrencies for small transactions.

Many teams are working on ways to solve this problem. They believe that some transactions should not take place on the main Ethereum blockchain (Layer 1). These are what we call Layer 2 solutions.

zkSync is one of those L2 solutions that are gaining popularity in the crypto ecosystem. Essentially, transactions are sent to layer 2 nodes so they can be processed and grouped together.

When there are enough transactions, a batch of transactions is sent to the main Ethereum blockchain. Once on the main Ethereum blockchain, these transactions cannot be altered.

zkSync is a zero-knowledge aggregate implementation, meaning proofs of validity are generated based on hundreds of transactions and then published on the main Ethereum blockchain. This is the main security feature because layer 2 transactions cannot be changed because they will not meet the proof of validity.

The upcoming version of zkSync will be compatible with the Ethereum Virtual Machine, which should greatly improve ecosystem support. In this way, decentralized application developers can make their applications compatible with zkSync with minimal work.

And Matter Labs plans to open source zkSync 2.0 through the MIT Open Source License at some point in the fourth quarter of 2022. This will be important to ensure that there is no bug in the zkSync smart contract code. “What I worry about the most is if we have $10 billion in ZK-rollup in 2 years and it gets hacked due to a bug in the chain limit code or the EVM wrapper around it,” Ethereum creator Vitalik Buterin tweeted today.

So far, 150 projects have used zkSync in one way or another. For example, Chainlink, SushiSwap, Uniswap, Aave, Argent, 1inch, Gnosis and Curve implement zkSync in their products.

Ethereum scaling solutions will be extremely important to make the crypto ecosystem truly decentralized. There are many reasons why centralized exchanges like FTX exist. They allow you to convert fiat currencies into cryptocurrencies. But many people also use these exchanges for crypto to crypto transactions. Projects like zkSync will make crypto transactions easy, secure and accessible – even without using a centralized exchange.

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