1. Introduction
2. What are Rollups?
3. What are ZK Rollups?
4. What is Taiko?
5. Taiko – Features
6. Valuation
7. Accomplishment and Roadmap
8. Team
9. Conclusion

Introduction

The blockchain trilemma between decentralisation, security and scalability is still the main problem to be solved. While there have been many alternative solutions to the problem, rollups seem to be the most promising one. Ethereum has maintained its commitment to decentralisation and security even as it strives to enhance scalability.  The success of Ethereum leads to network congestion, resulting in high transaction fees. Due to this reason certain developers and users prefer to migrate to other ecosystems. To position itself as the global settlement layer for the emerging internet, Ethereum plans to process a growing number of transactions through rollups, which are Layer 2 scaling solutions closely integrated with the Ethereum network.

What are Rollups?

A rollup is a type of scaling solution that works by executing the transactions outside of Layer 1 but posting transaction data on Layer 1. This allows rollups to scale the network and still derive its security from Ethereum Consensus. Moving computation off-chain allows for essentially processing more transactions in total as only some of the data of the rollup transactions has to fit into the Ethereum blocks. 

To achieve this, rollup transactions are executed on a separate chain that can even run the rollup specific version of EVM. After the execution of the transaction on a rollup, the next step is to batch them together and post them on the Ethereum chain. The whole process essentially executes transactions, takes the data, compresses it and rolls it up to the main chain in a single batch, hence the name – a rollup. To verify the validity of the transaction each rollup deploys a set of smart contracts on Layer 1 that are responsible for processing deposits and withdrawals and verifying proofs.

What are ZK Rollups?

ZK rollup uses zero knowledge proofs. Every batch posted on layer 1 includes a cryptographic proof called a ZK-SNARK. The proof can be quickly verified by the layer 1 contract when the transaction batch is submitted, and invalid batches are rejected straight away.  ZK-rollups scale computation by executing, aggregating, and proving transactions off-chain, and relying on Ethereum for data availability and validity proof verification. 

General-purpose ZK-rollups, are the holy grail of Layer 2 scaling solutions in that they do not compromise on security or equivalence while offering faster and cheaper transactions. There are already a few ZK-EVMs such as Scroll or Polygon. Let’s explore why Taiko is unique compared to other networks.

What is Taiko?

Taiko is a fully decentralised, Ethereum – equivalent ZK-rollup (Type 1 ZK-EVM – The different types of ZK-EVMs (vitalik.ca)). The goal of Taiko is to scale Ethereum while upholding the root principles of security, permissionless, and decentralisation. It provides a scalable and effective environment for developers and users of decentralised applications (dApps). This enables them to harness the capabilities of Ethereum’s Layer 1 without necessitating any modifications to their current dApps.

Taiko is actively developing a Type 1 ZK-EVM, which is designed to achieve full Ethereum-equivalence. This involves creating a ZK-EVM that can support all Ethereum Virtual Machine (EVM) opcodes. The primary objective of Taiko, as a Type 1 ZK-EVM, is to prioritise Ethereum-equivalence over the speed at which ZK-proofs are generated. The “Type 1” designation signifies that these ZK-EVMs introduce no modifications to the Ethereum framework itself, including its hash functions, state trees, or gas costs. 

This high degree of Ethereum-equivalence allows for the reuse of execution clients with minimal adjustments. The key advantage of this approach is that developers can deploy their existing Ethereum decentralised applications (dApps) on the Taiko platform without any need for alterations, while still benefiting from Taiko’s performance enhancements. This not only saves developers time but also makes Taiko an attractive option for existing EVM developers.

Taiko’s technical structure comprises three main components: the ZK-EVM circuits (used for proof generation), the Layer 2 rollup node (responsible for managing the rollup chain), and the protocol on Layer 1 (which connects these two components together to facilitate rollup protocol verification). These components collaborate to ensure seamless Ethereum-equivalence with Ethereum Layer 1, delivering a familiar experience to both developers and users.

This Ethereum-equivalence eliminates the requirement for developers to rewrite their dApps, thereby saving time and effort and ensuring a smooth transition, which can enhance Taiko’s adoption among developers. This strong emphasis on Ethereum-equivalence is what distinguishes Taiko from other ZK-EVMs in the market, as not all ZK-EVMs permit EVM code to function without modifications.

Additionally, Taiko’s objective is to scale Ethereum while upholding its technical and foundational principles. This makes Taiko a promising solution for facilitating the future growth of the blockchain ecosystem.

Taiko – Features

High Speed and Scalable

Taiko leverages ZK-Rollup technology as a means to enhance transaction processing speed and lower fees. ZK-Rollups employ cryptographic proofs to validate transactions, which not only boosts efficiency but also enhances security when compared to optimistic rollup methods.

In addition to the improved speed, ZK-Rollups offer Taiko the ability to scale more effectively by preserving the status of all Layer 2 transfers using minimal data. This simplifies the process of validating blocks and transferring data to Layer 1 . Essentially, this means that Taiko can accommodate a growing number of users and transactions without becoming unwieldy, making it an appealing choice for developers and users in search of a blockchain that can scale to meet their needs.

Secured and Decentralized

To demonstrate its commitment to security and decentralization, Taiko is striving to launch with a fully decentralized set of proposers (often referred to as sequencers) and provers, allowing anyone to undertake these roles without any restrictions.

In the context of a properly decentralized rollup, where both proposers and provers are decentralized, the aim is to ensure accessibility for users to participate in these essential functions. Currently, none of the existing Layer 2 (L2) solutions fully achieves this decentralized ideal.

Taiko’s approach is distinct in that it does not favor any specific parties through whitelisting; anyone can join the network whenever they wish (it permisionlessly allows anyone to propose blocks). Moreover, Taiko aspires to operate in a leaderless manner, relying on the collective efforts of the community. It plans to launch a structure which is as decentralized as possible and adapt its governance as necessary over time. The intention is to gradually transition governance authority to the Taiko DAO, with more details on this process to be communicated in forthcoming updates.

Open-Sourced

Taiko takes a transparent and inclusive approach to its open-source project by hosting its code on GitHub. It predominantly employs the permissive MIT license for its codebase, and its minimally modified geth fork (https://geth.taiko.xyz), which retains the original GPL license. This open-source project encompasses protocol smart contracts, L2 node software, and ZK-EVM circuits, all of which are freely available for participation without any restrictive barriers.

The MIT license offers greater freedom, mainly requiring the retention of copyright and permission notices. Taiko’s choice of the MIT license reflects its commitment to equivalence and simplicity. This decision makes it easier for others to utilize their codebase and fosters collaborative opportunities. While the GPL license can provide additional protection for users, Taiko prioritizes inclusivity and accessibility, aiming to maintain transparency and safeguard user freedom in the spirit of open-source development.

Valuation

Taiko have raised $22 million across two funding rounds to build a decentralised and Ethereum-equivalent (Type 1) ZK-EVM.  The first was a $10m seed investment that was raised in August 2022 and the second was a $12m pre-Series A that concluded in June 2023. A group of leading investors have shared the same vision as Taiko and have decided to back them. 

The rounds were led by Sequoia China and Generative Ventures respectively, with participation from Mapleblock Capital, BAI Capital, GGV Capital, GSR Markets, IOSG Ventures, Kucoin Ventures, Mirana Ventures, OKX Ventures, Skyland Ventures, Token Bay Capital, Yunqi Partnersl, plus other investors and prominent contributors & community members from across the Ethereum ecosystem. 

Accomplishment & Roadmap

The Taiko project commenced its development endeavors in the first quarter of 2022, with the team diligently engaged in the construction of the ZK-EVM circuits, the L2 rollup node, and the protocol smart contracts on Layer 1 of the Ethereum network.

Demonstrating significant progress, the Alpha-3 testnet was successfully launched in early June 2023, attracting active participation from a substantial cohort of more than 5,000 block proposers and 858 block provers.

Furthermore, Taiko has embarked on its Alpha-4 phase, known as the Eldfell L3 testnet, which represents an innovative experiment featuring an inception layer, effectively a rollup on top of a rollup. This phase has also garnered substantial attention, with the participation of over 5,000 block proposers and more than 500 block provers.

In addition to its technical achievements, Taiko boasts a robust and vibrant community that has grown to include 472,000 members on Discord and an impressive following of 352,000 enthusiasts on Twitter. This thriving community underscores Taiko’s significance and appeal within the blockchain ecosystem.

As can be seen in the roadmap, there are several more testnets planned, each focusing on testing a different part of the tech stack. The mainnet is set to launch in Q1 2024. 

Team

Taiko’s team has a total strength of3 5 people and the co-founders have extensive experience in launching and scaling ZK projects, as demonstrated by the creation of Loopring – the world’s first application specific ZK rollup in 2017.

Daniel Wang, co-founder & CEO:
Daniel was previously the founder and CEO of Loopring foundation. Loopring is an EVM DEX protocol powered and scaled by zero-knowledge proof technology. He did his MBA from the University of Minnesota and has previously worked as a senior engineering director at ZhongAn Insurance.

Brecht Devos, Co-founder & CTO:
Brecht already knew Daniel and had worked with him at Loopring. He was the chief architect at Loopring. His crypto journey thus started in 2017. Brecht has a background in gaming technology and has a knack for solving optimization problems.

Terence Lam, Co-founder & CSO:
Terence was educated from The Chinese University of Hong Kong, Macquarie University in Australia, and Harvard Business School. With extensive experience in web2 companies, he previously served as the VP of Operations at Loopring, where he played a pivotal role in shaping the company’s growth and success. Terence is also an Adjunct Associate Professor at The University of Hong Kong.

Matthew Finestone, Co-founder & COO:
Matthew did his studies at the University of Warwick and McGill University. He has previously worked as a head of business in Loopring and head of blockchain at Gamestop before being an advisor at Wize. He then co-founded Taiko labs.

Conclusion

The renowned blockchain trilemma asserts that achieving all three properties – decentralization, security, and scalability – simultaneously is challenging. However, Ethereum-equivalent ZK rollups break this tradition by allowing for the inclusion of all three elements without compromising scalability.

Taiko is dedicated to resolving Ethereum’s scaling challenges while ensuring a user-friendly experience for both developers and users. It stands as a promising decentralized Layer 2 blockchain protocol that harnesses the power of Ethereum’s Zero Knowledge Virtual Machine (ZK-EVM) and ZK rollup technology. As a fully Ethereum-equivalent ZK-Rollup, Taiko places a strong emphasis on maintaining decentralization, security, equivalence, and simplicity in order to attract a wider community of developers and users. With its alpha test network already in progress, Taiko is well on its way to becoming an accessible and user-friendly platform for Ethereum’s developer and user community.