ZK-Rollups are the Most Promising Way for the Blockchain Industry to Scale Smart Contracts

Ishan Pandey: Hi Jagdeep, welcome to our series “Behind the Startup.” Please tell us about yourself and the story behind Syscoin?

Jagdeep Sidhu: Hi! I’m Jagdeep Sidhu, Syscoin Lead Core Developer, President of the nonprofit Syscoin Foundation, and CTO of Blockchain Foundry Inc, which is a publicly-traded company on the Canadian Securities Exchange. My academic background includes AI, neural networks, and client/server protocols. I saw the world-changing potential of blockchain technology and became involved as a core developer in the industry’s earlier days. We have evolved Syscoin over the years since we began the workaround 2013.

Syscoin’s first mainnet release took place in 2014, even before Ethereum. It has evolved in harmony with the developments required for it to survive and thrive long term. Much of our research has been put into what an ideal blockchain would look like in the new world where money is replaced with value and we remove intermediaries from all of our day-to-day business processes.

Ishan Pandey: What exactly are ‘rollups’ and how have they aided blockchain technology?

Jagdeep Sidhu: We consider Rollups, particularly ZK-Rollups, the most promising way for the blockchain industry to scale smart contracts and move forward with the least amount of trade-offs, from a pure decentralization perspective.

Understanding the mechanics isn’t required in order to appreciate why they are important. Basically, inside a Rollup, everything functions just like on the Ethereum mainnet but much faster and cheaper, and in a way that is basically transparent to the user. Service providers are given great flexibility in how they handle fees or whether to charge fees at all. This, plus other aspects, make Rollups very adaptable to existing business models and make new ones possible. Plus, the user doesn’t have to interact directly with L1 very much, if at all, while using a Rollup-based service. A little more technically speaking, the idea is that execution work is done off-chain, and some nodes or a sequence of nodes provide a succinct state update to the Ethereum mainchain representing the new state of the rollup. That relatively small state update is like a fingerprint representing perhaps many thousands of executions that have occurred within the rollup.

You can almost think of it like Lightning Networks, except involving computation and “state” instead of simple aggregations of value in/out. This might sound like simple hashing to the more technical-minded, but actually accomplishing this properly has required some significant advancements in the field of cryptography. If you want to learn more about Rollups, take a few minutes and read my Medium article titled “The Ultimate Guide to Rollups”. There you will learn the basics and gain some understanding of the main types, optimistic and zero-knowledge (ZK), and how they differ.

Ishan Pandey: Please tell us a little bit about Syscoin and how it is different from Ethereum.

Jagdeep Sidhu: The main point of differentiation between Syscoin and Ethereum is layer 1 security. Ethereum is in the process of shifting to a proof-of-stake model with sharding in order to provide finality and serve on-chain data availability at scale, largely for rollup-based services. In stark contrast, Syscoin’s rollup-centric layer 1 design and network can accomplish finality and provide effective resistance to MEV attacks while keeping Bitcoin’s proof-of-work paradigm and the hard economics of being merge-mined with Bitcoin’s own network.

Also, rapid advancements in the area of zero-knowledge proofs point towards Syscoin likewise fulfilling data availability and light-client security needs at scale within the tried-and-true proof-of-work paradigm. We have a lot of very promising research focused on those two points, and on some other areas surrounding ZKP that I have yet to publicly describe. Syscoin has a very strong focus on providing true scalability without sacrificing proven security and decentralization. It is now possible to achieve that trifecta by way of modular designs and recent cryptographic advancements.

Another point of contrast can be seen in the manner in which Syscoin has evolved as a project. I’ll preface this by mentioning that we consider Ethereum’s EVM as the “gold standard” for decentralized computation. The Ethereum community contributes immense intellectual capital to the evolution of blockchain technology. However, due to Ethereum’s level of adoption and downstream concerns, the project might be seen as a little more rigid and less apt or able to quickly factor the latest cryptographic advancements into its fundamental layer 1 design. On the other hand, the Syscoin project has been much more flexible. This is partly because we recognized very early that the scalability challenges associated with smart contracts still needed solving, and rightly refrained from deploying EVM capabilities back then.

We could have just as easily launched support for smart contracts and driven adoption onto our platform prematurely as many alt-Etherea have. Instead we chose an evolution-focused strategy where we factored the best emerging advancements into our layer 1 design over time, while awaiting the emergence of true scaling solutions for computation from academia’s cryptography research. True scalability is emerging now in the form of advancements in the area of Rollups, and those of the ZK/validity proof variety are of particular focus within the Syscoin project. As such, the time arrived in Q4 last year for our EVM layer 1, called NEVM (Network-Enhanced Virtual Machine), which is reflective of Syscoin’s modular design. This was deployed to mainnet on December 6, 2021. Any smart contract running on Ethereum can be deployed on Syscoin with 100% compatibility.

Ishan Pandey: NFTs are becoming increasingly common, despite the fact that many people are still unsure about how to delve into them. What are your views on NFTs and their ever-rising popularity?

Jagdeep Sidhu: There are many potential use cases for digitally representing your unique assets. The fundamental concept of NFTs can extend far beyond quirky digital artwork. Examples include music rights, land deeds, a specific bullion bar that has been assayed and serialized, or an automobile with a VIN.

While the concept of NFTs has arguably been around since the early days of Bitcoin as a “colored coin” implementation, Ethereum has made NFTs much more interesting and opened the way to the more recent popularity you see. You will see NFTs become more commonplace in tandem with the evolution of layer 2 scalability. The masses will soon be able to delve into NFTs without necessarily knowing the term “NFT” or even that they are participating in a blockchain transaction. This will come thanks to things like ZK-Rollups and economies of scale enabling ideal user-experiences for GameFi, rollup-integrated metaverses, IoT and eventually smart cities.

Ishan Pandey: Web 3.0 is one of the most talked-about and debated technology concepts in recent times. Please explain the decentralization factor that Web 3.0 brings with it.

Jagdeep Sidhu: Web 2.0 brought a much-enhanced user-experience over v1, but revealed the problems inherent to centralized control such as censorship, manipulation of records, and exploitation of user data. Web 3.0 is a term that generally refers to the burgeoning field of decentralized digital protocols and services. We are still in the early days of this new stage, but it has already shown itself to be very promising. Our vision of a well-evolved Web 3.0 goes beyond just disintermediation of financial value. It includes you having ownership of your own decentralized digital ID with the ability to control exactly what level of details are divulged on a case-by-case basis. This will be key to things like proof of legal ownership, physical access rights among an IoT within a smart city, the ability to participate in the decentralized voting systems of an honest future, and much more. It’s very important that the appropriate underlying protocols and infrastructures are available to support this vision at scale while providing appropriate security guarantees. What motivates Syscoin most as a project is engineering the solutions necessary to fulfil those needs.

Ishan Pandey: The development of multi-chain platforms is gaining popularity lately since they help new companies and provide the finest opportunity to enter the crypto sector. Can you give us a detailed rundown of this cross-chain router protocol?

Jagdeep Sidhu: The Syscoin project was an early trail-blazer of trustless cross-chain bridging, and we continue to push the boundaries there with new research. A little background… About two years ago we introduced “Syscoin Bridge” to mainnet. Initially, this was a first-class (mutual-chain-aware) integration between Syscoin and Ethereum that used fraud-proof gamification between agents to secure a 2-way peg mechanism between Bitcoin-based tokens and ERC-20s on Ethereum. This effectively brought Dogecoin’s previously unfinished “Dogethereum” concept to reality while also extending its functionality to a Bitcoin-based asset layer.

Since then we have repurposed this tech to serve as the ideal bridge between base-chain and our new EVM called NEVM, both of which use SYS as their native/gas coin. In this environment our bridge design operates much more affordably compared to bridging directly with Ethereum itself where fees are still quite high. We are now edging into some very interesting cross-chain research that we are not going to elaborate on right now beyond saying it can be potentially game-changing, and that it involves leading-edge cryptography. Look for us to maybe talk more about that in the near future.

For the time being, to facilitate liquidity between separate ecosystems, we are utilizing MPC-based bridging solutions through partners like Multichain (formerly known as AnySwap), which has been working quite well to fulfill those needs.

Ishan Pandey: What does the roadmap ahead for the crypto ecosystem as a whole?

Jagdeep Sidhu: Speaking of the crypto ecosystem as a whole, we are heading into some really exciting and positive times. These times ahead will also be turbulent for a lot of projects because we are just beginning to see ZK-Rollups as an emerging macro-trend in the blockchain industry. Ethereum’s woeful scaling challenges will be largely solved by ZK-Rollups, resulting in a lot of capital returning to Ethereum that had previously moved to other cheaper/faster smart-chains. Some of those alt-Ethereum chains can perhaps become Rollups on Ethereum and/or Syscoin. Syscoin is importantly positioned for this emerging future by providing the same scalability, low fees, and functionality expected of tomorrow’s Ethereum, yet coupled with some very important fundamental security and decentralization characteristics that are absent from Ethereum. In sum, Syscoin is set to be a valuable option for you as a smart contract platform in tomorrow’s world.

Disclaimer: The purpose of this article is to remove informational asymmetry existing today in our digital markets by performing due diligence, asking the right questions, and equipping readers with better opinions to make informed decisions.