Web3 loves a solution – and a layer. The first blockchains changed the game for the internet, introducing a new way of developing, building, and transacting. However, it didn’t take long for these base layer blockchains like Ethereum to welcome some evolution, challenged by high demand and increasing gas fees.

Enter Layer 2 (L2) blockchains, a secondary framework to enhance scalability and transaction speed. Linea, launched in 2023, is one of these solutions. As an Ethereum equivalent zkEVM rollup network, Linea offloads computational demands from Ethereum by processing transactions in a separate environment and then verifiably publishing  the results on the mainnet through the use of zero knowledge proofs.

Zero-knowledge rollups face their own challenges. Namely, the speed at which they can generate a proof of execution (as carried out by the prover) and compatibility with the Ethereum Virtual Machine (EVM). Linea resolves these challenges with a fully EVM-equivalent network, meaning developers can use the same tools and infrastructure they would on Ethereum.

But as more L2s have entered the ecosystem, following Vitalik Buterin’s rollup-centric roadmap introduced in October 2020, liquidity and composability fragmentation have also entered the chat, ultimately impacting the user, developer, and application experiences within the ecosystem.

In this article, we explore the marriage of L2s and L3s as a solution to fragmentation and glean insights from zkLink Nova, an aggregated Layer 3 rollup that enables users to aggregate assets cross-chain.

Only As Strong As Your Weakest Proof

ZkEVMs are taking off in 2024. Using zero-knowledge proofs or validity proofs, zkEVMs provide an “Ethereum-like” experience but with unparalleled security and scalability for dapps. Different types of validity proofs exist, but all have a standard function. Fundamentally, these proofs enable one party to demonstrate to another that they possess certain knowledge without disclosing the information as evidence of their understanding.

Compared to other zkEVMs, Linea’s technology differs in terms of its arithmetization scheme and inner-proof systems. These systems simplify constraints into polynomial evaluations using an Interactive Oracle Proof (IOP) model, enhanced by lattice-based cryptography, to ensure fast and efficient verifications. Following several iterations and internal enhancements, the proof undergoes further compression through the external proof system, Plonk. (Read more about the Linea prover here.)

So, unlike other scaling rollup solutions like optimistic rollups, Linea boosts network security through cryptography and mathematics, not validators. Its finality to Ethereum Layer 1 is quicker, providing stronger transaction assurances on L2 and facilitating trustless withdrawals for better efficiency.

Enter The Layer 3 Modular Framework

In the Ethereum world, L2 zk-rollups offer extensive functionality, easing congestion and lowering transaction fees. However, this surge in innovation has also led to liquidity fragmentation, creating a need for further innovation.

Different solutions have arisen to address fragmentation between L2s such as unified bridgers and shared sequencers. For example, OP’s Superchain and Polygon’s AggLayer. However, these solutions, too, have limitations. While they facilitate cross-rollup transactions, they only operate within their own technology stacks. This risks further dividing liquidity within the Ethereum ecosystem.

Aggregated L3 rollup zkLink Nova, however, is stack agnostic, creating a new paradigm to aggregate fragmented assets on different L2s. Built with ZK Stack and zkLink Nexus, it leverages zk-proofs to enhance scalability and security. “We’re trying to solve the potential liquidity fragmentation problem that exists in the current multichain world,” shares Davison Freeman, Product Lead at zkLink.

zkLink Nova, a product line under the overall zkLink infrastructure, is designed with a modular architecture. “By being modular, we can selectively compose different layers of the entire system, dividing into the sequencing layer, execution layer, data availability (DA) layer, and settlement layer,” Freeman explains. This modular approach provides flexibility and scalability by combining specialized blockchains and technologies.

The Importance of Addressing Fragmentation

“The issue of liquidity fragmentation will hinder the development of the entire web3 framework –  It makes the user experience quite isolated,” says Freeman. By securely aggregating liquidity, zkLink Nova aims to reduce users' trading costs while maintaining security, making web3 more accessible to both web3 and web2 users, and promoting mass adoption of blockchain technology.

Each trade on zkLink Nova currently costs a few cents, and as trading volume increases, the cost will be further amortized. This makes trade transactions on zkLink Nova significantly cheaper than those on the Ethereum mainnet and against most L2s.

Compared to other fragmentation solutions, the zkLink Nova model allows for more robust security, currently connected to Ethereum and eight L2 networks. “We can still inherit the security from our base layer. But for other cross-chain protocols, their users must have much stronger security assumptions,” explains Freeman.

Collaboration Between L2s and L3s

As inherent in its name, an L3 solution exists in relation to an L2, and collaboration between the two is crucial.

In zkLink Nova’s architecture, the settlement layer finalizes transactions on the base chain(s). Unlike traditional setups, zkLink Nova aggregates liquidity and assets across Ethereum and its L2s. To optimize on-chain verification costs, a single L2 network is designated as the primary chain.

Currently, Linea serves as the primary chain for zkLink Nova. “zkLink Nova chose Linea as our primary chain because it is an Ethereum roll-up, so it also inherits security from Ethereum and has an unpromised security that will meet our requirements,” shares Freeman on the collaboration between Linea and zkLink Nova. “Linea, as a zk-rollup network, offers faster settlement times compared to optimistic rollups and is currently the first of its kind to support specific functionalities that enable the verification of our zk-proofs,” he adds.

For Linea, this means more transactions and increased total value locked (TVL) on the network. When a user decides to withdraw funds from Nova, the backend processes this request by settling across multiple L2s, with tokens such as ETH being stored within Linea.

Essentially, zkLink Nova aggregates these funds and, needing a secure and efficient storage location, places them on Linea. This system not only streamlines the process of fund withdrawal and settlement across L2s but also enhances the liquidity and capital efficiency on Linea by pooling TVL onto the platform.

ZK on ZK on ZK

The marriage of L2s and L3s presents a starry-eyed vision (e.g., faster, scalable, and cheaper) for Ethereum and its users. Essentially, the improved quality of on-chain life, with applications that can extend to better UX, lower barriers to entry, easier bridging, access to more markets, and enhances capital efficiency.

In the case of zkLink Nova, the benefits boil down to the following:

• Cost Reduction and Speed Enhancement: Cuts costs by a multitude and increases operational speed significantly.

• Unmatched Affordability: zkLink is one of the most cost-effective options, being a leading L3 rollup network.

• Underrecognized Innovation: zkLink represents a significant yet widely undiscovered breakthrough.

• Liquidity Aggregation: Directly facilitates liquidity aggregation for DeFi protocols, enhancing efficiency and enabling the merging of tokens with identical values into a single token (e.g., USDC(l) + USDC(m) becomes just USDC).

• New LP Pair Creation: Allows the establishment of new liquidity provider (LP) pairs on Nova, broadening trading possibilities— for example, Lynex with Arbitrum.

• Multi-Rollup Standardization: Introduces a new level of multi-rollup standardization and unification.

The natural next question is: Where do the layers end? Freeman predicts that Layer 3 is enough: “In addition to Layer 3, I'm not currently seeing a great marginal benefit to add an additional layer.”

-

Head over to zkLink to learn more and explore the ecosystem.