the revolution of DeFi liquidity on Ethereum

ZKsync Interop is a native interoperability layer that could revolutionize DeFi.

It was launched yesterday by ZKsync thanks to the Atlas upgrade, and it allows all ZK Chains to interact natively with DeFi on Ethereum. 

It has been introduced as a solution that avoids the so-called “cold start” of new chains, allowing direct access to liquidity on Ethereum while maintaining its own private environment.

What is ZKsync Interop

Technically, it is a Layer-2 protocol on Ethereum based on zero-knowledge proofs (ZK).

It was designed to solve fragmentation issues among different blockchains, as it allows ZK networks within the ZK rollup ecosystem “Elastic Network” to communicate and transact directly with each other at the protocol level, eliminating the need for third-party bridges that often introduce security risks and a complicated user experience.

In this way, ZKsync Interop makes ZK blockchains more scalable, secure, and interconnected from the outset, inheriting the security of Ethereum without the need for third-party tools or compromises. 

The Underlying Technology

Currently in DeFi, users, apps, and liquidity are spread across different, separate chains. 

This, in particular, leads to a fragmentation of capital, as well as a poor experience and reliance on third-party bridges vulnerable to hacks. 

ZKsync Interop aims to completely change this scenario, making the entire network “elastic” as if it were a single unified chain.

It is based on a shared bridge, aptly named Shared Bridge, capable of natively connecting all ZK networks to Ethereum’s layer-1 directly within the protocol, thus completely avoiding the need to use external bridges. 

Additionally, it is also equipped with a mechanism that enables direct communication between different ZK chains, called ZK Gateway, which supports seamless cross-chain transactions, such as token swaps between different chains. 

Finally, it supports various levels of complexity, ranging from simple asset transfers to atomic operations, including straightforward cross-chain swaps to data synchronization.

The Revolution

Some of the things that will be possible with ZK Interop have never been achievable until now without relying on third-party tools.

For example, it will be natively possible to synchronize multi-bank banking instructions, atomic post-trade confirmations for securities, or ISO-20022 messages for cross-border payments. 

But initially, it will be decentralized finance that will benefit the most. 

First of all, it could end the liquidity fragmentation across different chains, such as Ethereum, Arbitrum, Base, Solana, Cosmos, etc. 

It would achieve this by transforming all the ZK Chains into a unique and liquid environment where it will be possible to swap different tokens between a chain on ZKsync and another with just one click and in less than a second. 

It will no longer be necessary to use wrapped tokens and bridges, and there will be no need to pay different fees on different chains. 

This way, liquidity could indeed become unique and shared just as it is on centralized exchanges, while still remaining in a decentralized environment with Ethereum as the central hub. 

For now, however, only a public demo is available to test native interoperability, but sooner or later it should also be usable by everyone. 

The Atlas Update: Where the Revolution Began

All this was made possible by the Atlas upgrade of ZKsync. 

This is the main upgrade of the ZKsync ZK Stack, and it was released between late October and early November. It represents a significant leap forward for the scalability and interoperability of ZK blockchains. 

This update introduces a modular architecture that addresses the “cold start” of new ZK chains, specifically allowing immediate access to Ethereum L1 liquidity without bootstrap or bridge.

Ensures a throughput of up to 15,000 transactions per second (TPS), with peaks of 30,000 TPS achieved during testing.

Additionally, it reduces fees to negligible levels, below a thousandth of a dollar per transaction. 

Enabling native interactions between ZK Chains and DeFi on Ethereum, this update has also made the launch of ZKsync Interop possible. 

It allows users to sign transactions solely on its layer-2, while simultaneously accessing the Ethereum layer-1 without any network switch. 

Finally, thanks to Prividium it enables the creation of private chains that can leverage liquidity on Ethereum while maintaining their own isolation.

This update has been directly praised by Ethereum co-founder Vitalik Buterin as a significant advancement towards secure and interoperable ZK scaling.