The zkLink protocol uses zero-knowledge proofs (ZKPs) to provide privacy and security for cross-chain transactions. ZKPs are a cryptographic technique that allows two parties to prove to each other that a statement is true, without revealing any additional information. In the context of zkLink, ZKPs are used to prove that a transaction has occurred on one blockchain network, without revealing any information about the transaction to the other network.

One of the key benefits of zkLink is that it allows for fast and efficient cross-chain transactions. Traditional cross-chain solutions often require a lengthy verification process, which can result in slow transaction times. zkLink's use of ZKPs allows for near-instant verification, enabling fast and efficient cross-chain transactions.

Another benefit of zkLink is its compatibility with a wide range of blockchain networks. Many existing cross-chain solutions are limited to specific networks or require custom integration. zkLink is designed to work with a variety of networks, making it a flexible solution for cross-chain transactions.

In addition to its security and compatibility benefits, zkLink also offers a user-friendly experience. The protocol is designed to be easy to use, with a simple interface that allows users to initiate cross-chain transactions with just a few clicks.

Overall, zkLink is a promising solution for cross-chain transactions. Its use of zero-knowledge proofs provides strong privacy and security guarantees, while its compatibility with a wide range of networks and user-friendly interface make it a flexible and accessible option for users. As the blockchain ecosystem continues to evolve, zkLink could play an important role in enabling seamless cross-chain transactions.

Which privacy service fits the needs of the crypto market? Coinbase CEO, hedge fund A16Z, and top names in the industry see privacy as a must-have trend in the crypto market. Different from previous years when there were only a few prominent names like Monero, Zcash or Tornado Cash. Currently, breakthrough privacy services have gradually appeared and are able to meet the real needs of the market.

The article will analyze privacy services including: Mixing service, Privacy coin and infrastructure solutions.

Mixing service Imagine you put 100 thousand VND (BTC, ETH, ...) into a piggy bank (mixing service). That 100k is now mixed with many other coins. After a while you take out that 100 thousand secretly, it is very difficult for others to know who took the bill.

Mixing service is like a piggy bank, but users can only take away exactly or less than the amount they deposited.

Advantage:

The working mechanism of the mixing service is quite similar to sending money to CEX exchanges and then sending money from CEX to another wallet and it is difficult to be tracked. However, the big difference is that with CEX, users have to KYC, and with mixing service, users will not need to do any procedures.

Defect:

The nature of a mixing service is a repository of assets, so there is a possibility that they will be attacked and cause property damage to users. The piggy bank can be stolen.

Another disadvantage of mixing service is capital efficiency. A piggy bank has only 1 500k coin and if that bill is taken out, everyone will know who took it. Therefore, if the depositor wants to withdraw, the depositor must wait for the piggy bank to have another 500 thousand bill or have to divide the withdrawal into several times.

Typical projects

The iconic project in the mixing service space is Tornado Cash ($TORN). More than 3.6 million ETH and over $7.8 billion have been deposited into the project to date, showing that the demand for privacy in the market is huge.

However, after strict sanctions from the US in August 2022, the amount of assets loaded into the platform has decreased significantly, from a few tens of millions of USD weekly deposited / withdrawn to several million USD. This shows the US government's not-so-good attitude towards privacy projects. This is a risk factor that users must consider if they want to use or invest in similar projects in the future.

Privacy Coin Privacy coins are coins developed to ensure user privacy. The transaction information of the coin is difficult to track. Typical privacy coins can be mentioned as Monero, Zcash, etc. Each type has a different privacy protection mechanism.

Advantage:

The privacy security of privacy coin projects is at a high level. Zcash and Monero themselves have been around for a long time in the market and have been technologically proven.

Defect:

Similar to Bitcoin, these networks do not support smart contracts and can only be used to send between addresses. Therefore, the problem of increasing the acceptance of privacy coins is being put on top.

Infrastructure solutions More and more infrastructure solutions are being developed to address the disadvantages of the above services. They not only help secure privacy, but also increase flexibility and capital efficiency for users.

The two most popular types of solutions today include:

1/ Create a layer 1 blockchain that supports smart contracts and ensures privacy like Secret Network, Aleph Zero,...

2/ Create a layer 2 that provides privacy services like the Aztec Network does with Ethereum.

Blockchain layer 1 supports smart contracts and ensures privacy Aleph Zero

The mainnet ecosystem has been around since December 2022 and there have been a few development projects, but due to the short launch, the quality of the projects is not too good.

Secret Network

Secret Network has been mainnet since 2020 and developed for themselves many dapps. However, the ecosystem does not do well in attracting users. The value of the locked assets on the network has been steadily decreasing and is now just over $5 million.

Secret Network was also involved in many controversies related to the fact that the founder of the project had secretly sold a significant amount of the network's $SCRT token, which angered the community. Many validators have stopped cooperating with Secret Network after that incident.

The layer 1 blockchain solution makes the project more flexible with the direction of development. However, developing something new requires the project to build a community network from the ground up. This is very difficult and prominent projects like Aleph Zero and Secret Network are still struggling with the problem of attracting developers and users.

“A smart account (or Account Abstraction) has long been the dream of the Ethereum developer community.” - Vitalik Buterin, founder of Ethereum said. Recently, Account Abstraction (AA) seems to be becoming the main topic for the crypto market in 2023. On Twitter, crypto projects and investors like Chanlink, John Rising (founder of Stackup), Gnosis Safe , zkSync… all simultaneously mentioned AA in their tweets. In particular, ERC-4337 is the new token standard of AA.

Why pay attention to ERC-4337? After DeFi developed, NFTs were noticed, the crypto market began to resonate in the financial community. However, getting into crypto is still a matter of millions of potential users.

The user interface in the crypto market with complicated technical processes or the risk of losing assets is still a barrier for many people who are not blockchain and technology savvy.

Joining CEX exchanges also raises safety and security concerns as these exchanges have full control over user assets. Especially after the collapse of the FTX exchange, many investors lost money.

Besides, not remembering the private key and seed phrase also causes many investors to lose millions of dollars. There have been many cases where investors forgot their private keys or revealed their private keys and lost all their assets in their wallets.

In particular, there are many cases where users cannot buy, sell or receive tokens because the account does not have enough required assets to pay gas fees. For example, an investor who owns 2 million USD in the account but does not have enough tokens of several USD equivalent on the blockchain to pay gas fees, he will not be able to transfer this amount out.

All of the above issues will be resolved through ERC-4337. This is the AA standard that was officially developed and implemented through the EntryPoint smart contract in March 2023.

No seed phrase needed ERC-4337 was developed to allow users to experience crypto almost like the traditional financial system. Users don't need to go through a complicated process to create their first e-wallet, don't have to remember 12 seed phrases and worry about losing their assets if they forget their password.

Instead, ERC-4337 allows users to use a smart contract wallet with arbitrary verification logic. The ERC-4337 provides the following features.

For developers, ERC-4337 allows:

Create wallets for users as soon as they sign up for the app. Allows users to make any X transactions in Y time period without needing a signature on each transaction. No need to learn how each blockchain works. As long as the wallet supports ERC-4337, it can be deployed and used on any EVM blockchain. On behalf of the user pay the gas fee for the transaction. For users, ERC-4337 allows:

Create e-wallets using social account information on EVM blockchains without remembering 12 seed phrases. Pay gas fees with ERC20 tokens or non-ETH assets. Make multiple transactions at the same time: If a user has USDC but wants to transact on Ethereum, they can exchange USDC for ETH, make the transaction and pay fees in ETH in a single transaction. Automatic, recurring payments for services like Netflix, New York Times… Options to retrieve your key such as adding, removing devices, restoring with friends, securing wallets with 2FA (two-factor authentication) or biometrics Limit the amount of assets traded to control the flow of assets. This is especially important when paying gas fees. In 2020, a user accidentally paid $2.6 million in gas fees for a $134 transaction. With ERC-4337, these transactions will not be executed as only a certain amount of user-defined assets are used for each transaction.

In the past, there have been many crypto projects that provide similar services to ERC-4337 such as multisig, recurring payments, etc. But no project has provided comprehensive features like ERC-4337.

How the ERC-4337 . works ERC-4337 introduces a new mempool for user activity, changing the way they interact with e-wallet services. Specifically, ERC-4337 does not require changes on the consensus layer, but relies on the infrastructure at a higher layer.

EIP-4337 introduces a pseudo-transaction ("fake transaction" object) called User Operation. This is a structure that describes a transaction sent on behalf of the user.

The operation of ERC-4337 occurs specifically as follows:

The user performs an action (such as a click) and the actions to perform the desired user transaction are repackaged into a User Operation and sent to the mempool. Mempool is basically a waiting room to store information about unconfirmed transactions. Mempool sends information to Bundles (packers). Bundles work similarly to validators and miners, but at the level of account functionality. Bundles feed information into blocks on Ethereum or any other blockchain EVM to the Entry Point smart contract. Next, the Entry Point processes the User Operation submitted by Bundler through 2 stages:

Verification loop: Verify valid User Operation by testing it with Account and Paymaster. Make sure Account or Paymaster can pay the maximum gas cost for each User Operation. Execution loop: Send callData (data transferred to AA address for execution) during each User Operation to Account. Refund unused gas to Account or ask Paymaster to pay required logic fees. Finally, the Account checks if it accepts the User Operation in the Verification round. Additional features to support other account functions such as social media recovery and multi-tasking can also be added here.

Two other factors that also play an important role in ERC-4337 are:

Aggregator: Smart contract specialized in verifying signatures for Accounts. Paymaster: A smart contract account that specializes in funding Account transactions. Paymaster may allow withdrawal of a certain amount of ERC-20 tokens from the Account after the User Operation is executed. This allows users to pay gas fees in any currency they want. In addition, Paymaster also allows developers to pay gas fees on behalf of users to encourage users to use its service.

Summary

ERC-4337 provides users with bank-like features without having to trust the bank. Simplifying the crypto participation process, the ERC-4337 makes the crypto market ready for millions of new potential users.

Now the technology has caused a big buzz when it was mentioned at the ETH Denver conference in early March 2023. Prior to that, ERC-4337 was integrated into StarkWare's zk-Rollup layer 2 and zk Sync. Visa also designed an automated payment system using this technology.