What Are Validiums and How Do They Work?
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What Are Validiums and How Do They Work?

What Are Validiums and How Do They Work?

Intermediate
Published May 24, 2024
6m

Key Takeaways

  • Validiums are scaling solutions for Ethereum that process transactions off-chain while using zero-knowledge proofs to ensure their validity.

  • Validiums allow for efficient transaction processing by leveraging operators to batch and validate transactions, reducing on-chain data storage and gas fees.

  • While offering benefits like enhanced transaction speed and privacy, validiums also face challenges, such as data availability risks and potential centralization concerns. 

Introduction

Over the years, blockchain technology has significantly improved, but scalability remains one of the key problems. In this article, we will explore validiums, how they work, and how they can improve Ethereum’s scalability.

What Are Validiums?

Validiums are scaling solutions for Ethereum that use off-chain data availability and computation to process transactions more efficiently. Unlike zero-knowledge rollups (zk-rollups), which store some data on-chain, validiums keep transactions off-chain while using zero-knowledge proofs (ZKP) to verify their validity.

How Do Validiums Work?

Validiums operate by executing transactions off the Ethereum mainnet, leveraging smart contracts on Ethereum to ensure their validity and integrity. Let’s walk through some of the key aspects of validiums.

Transactions

When a user wants to make a transaction using a validium, they send it to an operator. Operators are nodes responsible for executing transactions on the validium chain. They could be a single entity or a group of entities chosen through a proof-of-stake (PoS) system. 

The operator collects transactions into a batch and processes them off-chain. Once the batch is ready, the operator uses a special system called a proving circuit to create a proof that the transactions were performed correctly.

State commitments

Imagine Validium’s state (the record of all accounts and their balances) as a big tree, known as a Merkle tree. The root of this tree, called the state root, is like a fingerprint that represents the entire state. This state root is stored on Ethereum. 

When the operator processes transactions, they update the state root to reflect the new balances and account states. Then, they send this new state root along with the proof that everything was done correctly to the Ethereum mainnet

Unlike zk-rollups, block producers on a validium don’t need to publish all the transaction details on Ethereum. If Ethereum verifies the proof, the new state is accepted, and the validium is updated.

Deposits and withdrawals

Users can deposit their funds from Ethereum to a validium by sending ETH or other tokens to a special contract on Ethereum. The contract communicates this deposit to the validium off-chain and credits the user’s off-chain account. 

When withdrawing funds back to Ethereum, users submit a withdrawal request to the operator. The operator includes the request in a batch, and once the batch is verified on Ethereum, users can withdraw their funds.

Validiums and EVM Compatibility

Simple applications 

Validiums are efficient for simple applications, such as token swaps and payments, because they can quickly process many transactions without having to store all the data on the Ethereum mainnet. This makes it ideal for applications where transactions are straightforward and don't require complex computations. 

Challenges with smart contracts 

Smart contracts are programs that run on the blockchain and often involve complex operations. Validiums struggle with these because proving that complex operations were done correctly requires more computational power. This makes it harder for validiums to support the wide range of functionalities that smart contracts can offer. 

Potential solutions

Some projects are working on ways to make validiums more compatible with Ethereum's smart contract capabilities. One approach is to create special versions of programming languages like Solidity (used for writing Ethereum smart contracts) that are optimized for validiums. However, this can be limiting because it might not support all the features of the regular Ethereum programming environment.

Benefits of Validiums

Efficiency

Validiums can process up to 9,000 transactions per second (TPS) by offloading data storage and computation from the Ethereum mainnet. This is crucial for applications such as decentralized exchanges (DEXes), where speed and cost-effectiveness are important.

Cost reduction

Validiums can significantly reduce gas fees by not posting transaction data on-chain, letting users benefit from lower transaction costs.

Enhanced security

With off-chain data storage, validiums can offer enhanced privacy for transactions and an added layer of security without compromising scalability.

Challenges of Validiums

Data availability risks

Validium's reliance on off-chain data availability also introduces risks. If operators or data availability managers withhold transaction data, it may be unfeasible to generate the necessary proof for withdrawing user funds.

Centralization risks

The need for specialized hardware to produce validity proofs may potentially lead to centralization. If only a few entities can afford the necessary resources, they could dominate the network, undermining its decentralized nature.

Closing Thoughts

Validiums are scaling solutions designed to enhance the Ethereum network by processing transactions off-chain while ensuring transaction integrity through zero-knowledge proofs. By addressing the limitations of on-chain data storage, validiums can improve transaction throughput, marking an important step towards solving the blockchain scalability problem.

Further Reading

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