A Leap in Blockchain Tech – Solana’s ZK Compression Solves Cost And Scalability Issues

Solana has introduced zero-knowledge (ZK) Compression, a cutting-edge technology that minimizes transaction costs by up to 5,000x and enhances scalability while preserving the interoperability of Solana’s Layer 1 (L1) network. 

Let’s explore why it’s considered the next significant development in the blockchain ecosystem. 

ZK Compression Curbs Costs

Light Protocol and Helius Labs have created a feature called ZK Compression on the Solana network. Millions of users and developers can build large-scale applications without the usual burdensome costs and scaling constraints by compressing their on-chain state. 

The ZT technology achieves this through ‘state compression,’ which allows users to store various data types in a cost-friendly Solana-based ledger instead of an expensive account to lower costs associated with creating tokens and accounts. 

It stores a hash of off-chain data for verification to significantly minimize storage costs and ensure data integrity. 

Light Protocol claims that through ZK Compression, the price of creating a 100-byte Program Derived Address (PDA) has decreased 160x – from 0.00001 $SOL to 0.0016 $SOL.

Solana token accounts also benefit. For example, the expenses associated with managing 100 token accounts drop from 0.2 $SOL to just 0.0004 $SOL, a 5,000x cost reduction. 

Helius Labs’ Founder, Mert Mumtaz, also highlighted on X that prices for large-scale operations like airdrops to millions could plummet from $260K to $50. 

These drastic cost reductions apply to all aspects of Solana’s ecosystem because each Solana-based entity is treated as an account for international scalability. This way, much less data is added to the chain state, saving on storage expenses. 

Cost-Efficient Scaling Without L2 Hurdles

Implementing ZK Compression on L1 has advantages beyond minimizing costs. Developers and users can now scale and build any application on Solana without needing additional layers. 

Unlike Layer 2 (L2) solutions, ZK Compression doesn’t require a governance token, chain ID switches, or a security council. Instead, it maintains high performance in one existing system while eliminating the need for central authorities. 

While some users on X claim Solana’s compression tool is essentially an L2, Solana Labs’ Co-Founder, Anatoly Yakovenko jumped in to defend the product: ‘Solana validators still get all the transaction fees. It’s like an L2 without all the things that people complain about L2s.’ 

> But they lied. Their new product is actually an L2. L2s are a winning model.

Sure. It’s an L2 that doesn’t need a security council multisig, users don’t need to switch chain ids, doesn’t need a governance token, doesn’t need an external sequencer, solana validators still get…

— toly 🇺🇸 | compressed (@aeyakovenko) June 23, 2024

Wrap Up 

Since the beginning of 2023, Solana’s TVL has spiked by 20,805.71% from $210M to $44B, showing significant growth in the network’s DeFi activity. 

ZK Compression brings Solana’s vision of being ‘The Financial Computer’ one step closer to reality because it enables developers to create dApps and DeFi projects without high costs and capacity restrictions. 

Notably, these architectural differences won’t affect Solana’s APIs because they won’t change how developers work with the network. Rather, it will save them transaction and deployment costs. 

Solana is poised to attract more enterprises and developers wanting to create large-scale blockchain projects through ZK, which could lead to broader adoption and innovation on the network – especially if Solana ETFs are on the horizon.