Coinbase’s Chosen Blockchain Brand Sees Zero Threat from Zero Knowledge

In recent months, there’s been a clear trend among big crypto companies – including Coinbase, Binance, and a16z – looking to start their own “layer-2” blockchain solutions atop Ethereum: They’ve chosen OP Stack, from the team that created Optimism, to provide the open-source software building blocks for their new networks.

On the surface, it might seem like a surprising pattern, since many top Ethereum aficionados have predicted that the most promising layer-2 blockchains would be built not using the OP Stack’s “optimistic rollup” technology but with a fundamentally different setup known as “ZK rollups,” powered by zero-knowledge cryptography. A key difference is the speed of finalizing transactions: With ZK rollups, it’s almost instantaneous, whereas with optimistic rollups, the process can take minutes or even days.

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This dissonance – between the recent commercial track record and the widely held vision for the future – raises the question of whether OP Stack is merely an interim solution for companies that want to start their own layer-2 blockchains now, hinging on the assumption that eventually the industry will pivot toward ZK technology. Or maybe there’s a flaw in the common wisdom that ZK tech will dominate in the long run?

The short answer might be that ZK rollups are still seen as the best solution for scaling Ethereum, in the long run.

“I’d say they choose the OP stack because it is easy to spin it up and there is no need to arrange a hardcore ZK team for this,” said Mikhail Komarov, CEO of Nil Foundation, a research and development firm designed to expand the reach of ZK technology and adoption. “Once there is an easy way to spin-up ZK-rollup stack, they will migrate to that.”

What’s less understood, perhaps, at least according to the Optimism team, is that the OP Stack will eventually allow builders the flexibility to pick and choose between various attributes. Those include whether to adopt proofs used with ZK rollup technology instead of implementing optimistic fraud proofs.

Optimism’s flagship network, OP Mainnet, is the second-biggest layer 2 blockchain, according to the website L2Beat. And though it’s an optimistic rollup, builders using OP Stack could go in a different direction.

The OP Stack or Zero-Knowledge?

Ethereum layer 2s, blockchains that are built on top of a base blockchain and enable faster and cheaper transactions, have quickly released new scaling products to the market over the last six months.

Vitalik Buterin, co-founder of the Ethereum blockchain, has said previously that while optimistic rollups have been around longer, rollups that are powered by ZK technology will eventually overtake them.

The recent launch of crypto exchange Coinbase’s ‘Base’ layer 2 is built using Optimism’s OP Stack, a type of customizable blockchain framework that lets developers build their own chains using the optimistic rollup technology. Crypto venture capital firm Andreessen Horowitz (a16z) is also working with OP Stack to come out with their own rollup client solution, and Binance’s BNB chain came out with an Ethereum-compatible testnet blockchain using the stack’s technology.

To observers who read the glowing predictions for zero-knowledge technology, the choice of OP Stack might seem like choosing a canal over a railroad.

Several ZK-based networks, which employ a type of scaling technique that uses zero-knowledge proofs, were hailed as possible game-changers as they’ve come to market this year. Contenders include Polygon’s zkEVM or Matter Labs’ zkSync era, while Matter Labs, Polygon, and Starkware have their own zk-proof-based packages – again, for developers to build their own blockchains on the blueprint – hitting the market.

One trade-off is that ZK rollups tend to be more technically complex, and many of the projects that use them are considered to be in a more immature state of development, when compared with optimistic rollups. Another downside of ZK-based systems is that they tend to be computationally intense – requiring specialized hardware, and consuming more energy.

Jesse Pollak, head of protocols at Coinbase and the creator of Base, told CoinDesk that picking the OP Stack was “a very considered decision,” but that Base’s goal is to eventually be secured by ZK validity proofs (which the OP Stack will enable.)

The team at Base argued that the latest upgrades to the OP mainnet, in addition to the OP Stack being an MIT open-source license (which is seen as one of the most “liberal” open-source licenses, meaning that developers can reuse the code in almost any way possible), allowed the company to start building right away, without having to consult anyone or even alert OP Labs ahead of time.

“We basically think about OP Stack as the ball platform, which will start with fault proofs, but will be upgraded over time and have multiple fault proofs, and then ZK proofs (validity proofs) that run alongside the fault proofs until we kind of have the best configuration of provers for the network to optimize for security and kind of faster finality,” he said.

It’s worthy to note though that currently the Optimism mainnet does not use fraud proofs, which are used to verify the state of transactions and key to the security of a blockchain.

Indeed, with OP stack, the blockchains will be compatible with multiple proofs, meaning that those looking to build will be able to implement fraud proofs (for optimistic rollups) or validity proofs (for ZK rollups.)

OP Labs, the company behind Optimism, has gotten some heat in the past about not having fraud proofs securing its mainnet, including from the CEO of Offchain Labs, Optimism’s competitor and the company behind the Arbitrum blockchain, who tweeted: “Without fraud proofs, Ethereum provides zero security.”

Karl Floersch, CEO of OP Labs, told CoinDesk in an interview that “we 100% support multiple proof systems. We’re talking about a modular proof system. That modular proof system supports fraud proofs of various types and supports validity proofs of various types.”

Floersch believes that given how easy it is to build with Optimism, those looking to build their chains will opt for the OP Stack over their competitors.

Time will tell as ZK-based blockchain frameworks mature and come to market.