USV Leads Round in Matter Labs as Ethereum Scaling Wars Intensify
The team behind Ethereum speed booster zkSync has closed a Series A funding round led by Fred Wilson’s Union Square Ventures (USV) as the race between Ethereum scaling solutions tightens.
Matter Labs, which first released its zero-knowledge rollup (ZK-rollup) product in December 2019, raised an undisclosed sum with limited partners “to preserve the dominance of the community share in the future zkSync network,” Matter Labs CEO Alex Gluchowski told CoinDesk in a Telegram message.
“The crypto community will strongly prefer solutions with the least compromises on security, decentralization and [user experience],” the startup said in a blog post shared in advance with CoinDesk. “This is what makes ZK-rollup tech so important. It relies on pure cryptography rather than game-theoretic mechanisms, and is thus the only scaling approach with no upper bound on the value it can securely handle in L2.”
The round was joined by a host of cryptocurrency projects that are considering adding zkSync, including Coinbase, Aave, Curve Finance, CoinGecko and Balancer, among others. The round also included venture capital firms Placeholder, 1kx and Dragonfly Capital.
Gluchowski said numerous cryptocurrency wallets are in various stages of integrating zkSync, including Argent. Crypto exchange partners are likely to integrate the tech directly as well, he said.
War for L2?
The funding round comes at a time when historic gas fees have plagued the leading blockchain for decentralized applications. For example, a simple transfer on Ethereum cost up to $40 last week. Rollups are considered the prime method addressing this issue – at least in the short term until Ethereum 2.0 is fully developed.
Rollups are off-chain batches of transactions that settle as one transaction on a base layer. They come in two forms: zero-knowledge (ZKR) and Optimistic (ORU). The former rely on a mathematical proof to settle the lump payment without committing fraud. Optimistic rollups rely on a slashable bond and validators who watch for fraud.
A chief distinction between ORU and ZKR has been the latter’s limited interoperability with virtual machines. Yet, Matter Labs has “found a way to make ZK-rollups EVM-compatible in a very efficient way” using another privacy tech called “recursive PLONK,” Gluchowski said. A solution to this issue could make ZK-rollups a more favorable solution for decentralized applications (dapps).
Optimism is the most well known proponent of ORU. The firm also recently closed a round, booking $25 million in a Series B led by Andreessen Horowitz (a16z).
Gluchowski said Matter Labs is singularly focused on zkSync, and not other “L2 bridges” like Matic’s new Polygon Network. “We’re focused on zkSync as the single [layer 2] network, because you can only get seamless composability within the same L2,” he said.
The round was joined by a host of cryptocurrency projects that are considering adding zkSync, including Coinbase, Aave and Curve Finance.