Today, we are going to address what validiums are. While blockchain technology has made substantial improvements over time, one key issue remains — scalability. While offering many advantages like improved privacy and transaction speed, validiums face challenges like potential centralization issues.

Let’s explore how validiums help in efficient transaction processing.

What Are Validiums in Blockchain?

Validiums are Ethereum’s scaling solutions. They use off-chain data availability and computation to process transactions more effectively. They keep transactions off-chain and use zero-knowledge proofs for validity verification, preventing invalid state transitions and improving the validity chain’s security guarantees.

The validity proofs come in two forms: Zero-Knowledge Scalable Transparent Argument of Knowledge (ZK-STARKs) or Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (ZK-SNARKs). A smart contract on Ethereum controls funds belonging to validium users.

Validiums provide near-instant withdrawals since users can provide Merkle proofs and withdraw funds after the validity proof for a withdrawal request has been verified on the mainnet. Yet, users of validium may experience frozen funds and limited withdrawals if the data availability managers on the validium chain withhold off-chain state data. When users cannot access transaction data, they cannot generate the necessary Merkle proof to demonstrate ownership of funds and process withdrawals.

There’s also validium Polygon, which uses validity proofs to strengthen the state transition integrity, but it doesn’t store transaction data on the ETH network. The Polygon CDK validium is a zero-knowledge validium, using the PolygonzkEVM’s off-chain prover to generate ZK-proofs, published as validity proofs.

How Validiums Work: Step-by-Step

After learning: ‘What are validiums?’ let’s find out how they work. They operate through many steps, developed to enhance scalability and optimize transaction processing:

  • Step 1: Users start a transaction by submitting it to the validium operator responsible for handling the off-chain transaction processing.
  • Step 2: After collecting a few transactions, the operator organizes them into batches that are subsequently processed off-chain. This substantially boosts transaction speeds. Operators are responsible for developing zero-knowledge proofs to validate these transaction batches.
  • Step 3: The operator develops ZK-proofs after transaction processing. The proofs show the accuracy of the off-chain calculation and that the resulting transactions comply with Ethereum network regulations. ZK-proofs don’t disclose any specifics about the transactions, protecting privacy.
  • Step 4: The developed ZK-proofs and a state commitment are uploaded to the ETH mainnet. The latter is a cryptographic representation of the most recent off-chain system state. The smart contract ensures the proofs’ validity. The verification process validates the transaction security and finality by ensuring the accuracy of the off-chain calculations and the compliance of the revised state with the blockchain’s regulations.

Advantages of Validiums

Some of the benefits a validium Ethereum solution offers are:

  • Cost reduction: Validiums greatly reduce gas fees, as they don’t post transaction data on-chain, enabling users to benefit from low transaction costs.
  • Efficiency: Validiums offload data storage and computation from the ETH mainnet, resulting in their ability to process up to 9,000 TPS. This particularly benefits top DEXs, as they prioritize cost-effectiveness and speed.
  • Enhanced security: Off-chain data storage enables enhanced privacy and extra transaction protection without compromising scalability.
  • Fast withdrawals: Users can enjoy near-instant withdrawals due to the ability to quickly verify validity proofs on Ethereum, enhancing user experience.

Disadvantages of Validiums

Some of the challenges validiums face are:

  • Dependence on trustworthiness and economic incentives: Validiums’ security model partially relies on the data custodians’ trust and financial incentives instead of solely on cryptographic proofs.
  • Data availability risks: The reliance on off-chain data availability is risky because if data availability managers or operators withhold transaction data, it may impede the generation of necessary proof for withdrawing user funds.
  • Centralization risks: Since specialized hardware is required for producing validity proofs, a need for centralization may arise. If only several entities can afford the required resources, they could take control of the network, overlooking its decentralized nature.

Possible Validium Use Cases

There are two notable use cases of validiums:

  1. Enterprise solutions: They are well-suited for enterprise applications that need a balance between privacy and auditability. Organizations can manage data availability, complying with internal regulations and audits. They can protect sensitive data from unauthorized access by controlling who has transaction data access.
  2. Privacy applications: Validiums provide an efficient solution for platforms prioritizing user privacy. Users can execute transactions with no sensitive data exposure on a public blockchain. Individuals and organizations can maintain higher control and security over their transaction details.

What Is the Difference Between Validium and ZK-Rollup?

There are two types of rollups: Zero-Knowledge and optimistic rollups. ZK-rollups categorize transactions and process them off-chain. Thus, they lower mainnet congestion and decrease the cost per transaction. After the transaction is processed, a small proof is transferred back to the main chain to validate the transaction, ensuring the system’s security.

Then again, when talking about validium vs. ZK-rollup solutions, we can say they are very similar, with one primary difference: data availability. Similar to ZK-rollups, a malicious node(s) can disrupt a validium solution, but they cannot steal funds because a validium serves as proof of validity. If the funds are stolen, the proof would become invalid, significantly reducing the risk of attack. However, the primary drawback of validiums is that the underlying data may go offline or be unavailable for extended periods.

Conclusion

So, what are validiums? They are Ethereum’s scaling solutions, using off-chain data availability and computation to process transactions more effectively. They keep transactions off-chain and use zero-knowledge proofs for validity verification, preventing invalid state transitions and improving the validium chain’s security guarantees.

They operate through many steps, offering benefits as well as some challenges. Possible use cases of validiums are enterprise solutions and privacy applications. Validiums are very similar to ZK-rollups, with one primary difference: data availability.

FAQs

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