Starkware: Redefining Ethereum Scalability

Scaling solutions addressing Ethereum’s high gas costs have been in the works since they were first conceived by co-founder Vitalik Buterin in 2014. After many false starts, rollups, both optimistic and zero knowledge (ZK), have emerged to provide greater throughput and significantly lower transaction fees than Ethereum’s base layer (L1). Starkware is a leading innovator in the ZK rollup space.

A recent funding round valued Starkware Industries at over $8 billion, higher than the circulating market caps of many established L1s, including Avalanche and Near. Starkware’s value proposition is its proven ability to scale major projects that require fast finality and low fees such as dYdX, Sorare and Immutable-X through its permissioned StarkEx Dapp-specific rollups.

Zero Knowledge Rollups

Rollups batch transactions together through off-chain computation, with some data then stored on-chain. There are two major types of rollups: optimistic and zero knowledge (ZK). How optimistic and ZK rollups differ is in the process of validating transactions: Optimistic rollups, put very simply, assume that all transactions are valid by default. “Fraud” proofs are only required if an invalid batch of transactions, or “fraud”, is flagged. ZK rollups provide validity proofs for every single batch, which are quickly verified on-chain.

Starkware argues that fraud proofs are inherently less secure, because an attacker could attempt to create “silence” by not signaling an instance of fraud through DDoS or similar attacks. ZK rollups on the other hand will always reflect a correct L2 state that can be immediately relied upon and used. This security concern also results in optimistic rollups requiring long withdrawal periods, usually around one week, whereas ZK rollups can withdraw to the L1 along with any batch. In addition, while ZK rollups are much more computationally intensive, they have the ability to scale much larger than optimistic rollups. This is because optimistic rollups require a witness per transaction, whereas ZK rollups batch transactions into a fixed size proof, meaning optimistic rollups scale linearly, whereas ZK rollups scale poly-logarithmically with the number of transactions.

While Starkware is primarily focused around the implementation of ZK rollups, they also implement another scaling solution that is very similar: validiums. These are exactly like ZK rollups in that they use validity proofs to validate transactions, except that rather than using a Layer-1 like Ethereum as the data availability layer, the data is instead kept off chain. By keeping the data off chain this allows for even greater throughput and reduced cost, but users are at the mercy of data operators who could act maliciously by freezing or confiscating funds.

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