Ethereum development firm Matter Labs has raised a monster $200 million to support the launch of its zkSync V2 rollup network, one of the major platforms vying for dominance in a crowded competition to reduce Ethereum’s fees and increase its transaction speeds.
Matter Labs’ Series C funding round, which closed before the market was roiled by the collapse of crypto exchange FTX, was co-led by Blockchain Capital and Dragonfly, and was joined by venture capital heavyweights including Variant, Lightspeed Venture Partners and Andreessen Horowitz.
Alongside its funding announcement, Matter Labs pledged to file its core software under an MIT Open Source license by the end of 2022, meaning third parties will be allowed to view, use and augment zkSync’s code.
Additionally, Matter Labs Chief Product Officer Steve Newcomb told CoinDesk that his team had begun “talking about the research that we’re putting into understanding how to generate a ‘Fair’ token standard,” though he stopped short of announcing an official token.
Matter Labs did not disclose a valuation to CoinDesk, but the new funding brings the total amount raised by the firm to $458 million – a large sum, even in the wild world of crypto, that Matter hopes will put it on solid footing in the deeply competitive Ethereum scaling race.
“When Google raised money just before the .com crash, it made them a king,” Newcomb wrote in a message to CoinDesk following an interview last week. “[N]o matter how bad this bear market gets, we are well positioned well to grow our team, ship our protocol and ship our mission.”
Read more: Ethereum Scaling Platform zkSync v2 Goes Live Amid Controversy
Zero Knowledge rollups
Rollups exist as a way to ease Ethereum’s high fees and slow speeds, which have iced out users and bred a number of competing networks and copycats.
zkSync is a kind of zero-knowledge (ZK) rollup platform – a so-called “layer 2” network that processes transactions separately from Ethereum, bundles them up, and passes them back down to the main Ethereum network so they can be written to its ledger for a fraction of the cost of normal transactions.
Read more: What Are Rollups? ZK Rollups and Optimistic Rollups Explained
ZK rollups use complex cryptographic seals called zero-knowledge proofs to ensure that the transactions they pass down to Ethereum reflect real user activity. This fancy computer code, which is supposed to prevent a central party (like Matter Labs) from spoofing transactions, is considered a breakthrough in the Ethereum scaling race since it will eventually make transacting on zkSync similar – security-wise – to transacting on Ethereum itself.
Other companies in addition to Matter Labs, like the research-oriented Scroll platform and the Ethereum juggernaut Polygon, are progressing on their own ZK-rollup platforms. Together, these firms represent the first cohort of a new class of so-called zkEVMS – ZK rollups which, unlike past applications of the technology (including an older version of the zkSync network), will be able to support virtually any program that runs on Ethereum.
zkSync V2
The version of zkSync that launched on Ethereum in October, the “baby alpha” version of zkSync V2, is only open for internal testing by the Matter Labs team. According to a public roadmap put out by the firm, any whitelisted project will be able to launch on zkSync to run their own tests in a soon-to-arrive update to the platform, with users eventually gaining access to the platform in a subsequent update slated for late 2022 or early 2023.
“One of the things we want to educate people on with ZK technology is by the fact that we have not concentrated on performance yet,” said Newcomb, warning that initial transaction speeds and fees may not initially be as impressive as hoped. “We’re just getting everything working right now,” he continued.
So far, Newcomb says that over 150 projects – including major decentralized finance platforms like Uniswap and Aave – have committed to launching on zkSync, which he hopes will bolster the platform’s chance of becoming a dominant player in a crowded field of competing rollups.
Securing trust
When zkSync V2 launched on Ethereum’s mainnet last month, it did so amid questions about whether its core technology – the complicated zero-knowledge proofs that are supposed to secure user funds – is ready for prime time.
In response to a widely shared tweet from one of zkSync’s competitors questioning the existence of zkSync’s driving technology, Newcomb shared evidence with CoinDesk of its zero-knowledge prover working to verify transactions end-to-end.
Read more: The Sudden Rise of EVM-Compatible ZK Rollups
“We have publicly verifiable links all over the place for people doing proofs on test net. We have it launched on mainnet,” said Newcomb. “That’s why we celebrated [the baby alpha launch] so much, because getting an end-to-end prover for general purpose contracts is a very, very big deal.”
To prevent similar controversy in the future, Newcomb said that Matter Labs would open-source its code under the relatively permissive MIT License – a step that some competing platforms have yet to take. Newcomb also said that Matter Labs would support wider Ethereum community efforts to standardize best practices around how rollups should launch and communicate limitations to users.
Wen token?
zkSync, unlike several other scaling platforms, has no token associated with its platform. The much-hyped launch of the V2 of its platform has led to speculation that a token might be coming.
Newcomb says that Matter Labs will likely be “the last project” to launch a token, but he did hint at how a zkSync token could eventually be distributed.
According to Newcomb, a third of tokens would go to “shareholders” in zkSync, which could include Matter Labs employees and investors. The other two-thirds would apparently go to the zkSync “ecosystem,” though it’s unclear exactly how or to whom those funds would be disbursed.
“We have no comment whatsoever on anyone trying to have strategies for token drops,” said Newcomb.
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