ZKSwap (ZKS) Layer-2 DEX | Save on Ethereum Gas Fee!

2021 is bringing some crazy technology out of the oven, and I'm super excited to talk about a lot of the stuff that's going on. This video, we're going to focus in particular on ZKSwap. So as you guys kind of know, one of the biggest issues in crypto right now is that transaction costs are getting all the way up there. And this is a solution that directly tackles that. With ZKSwap, it's the direct implementation of layer 2 scaling. This means that you can now transact, like do trades for much cheaper and also much faster than before. Now, this has actually been promised for a long time. What makes ZKSwap worth talking about right now is that it's already operational on the Ethereum testnet. You can already test to see how it uses, and it's going to be released very, very soon. And in terms of what a transaction looks like, I mean, this interface probably should remind you of Uniswap. And it's exactly like that. Now we can do a quick transaction. And all it takes is a signature transaction. You can just see how fast that is. Because it's completed on layer 2, it is instantaneous. And in terms of the gas prices, and this is the key part, in terms of gas prices, it's virtually nothing. It's much, much cheaper than doing a transaction on Ethereum mainnet. So in this video, we're going to explore some of the key aspects. What is ZK? What is the technology that's bringing this around? This is ZK roll-up technology. We're going to talk a little bit about where this is going to go and why you should pay attention to it. And last, we'll take a look at the exchange being built around and all the features that's coming. So it's super exciting because finally, this is something that we've been asking for for a long time. At the end of the day, the way I see it, stuff like this will take decentralized finance to the next level. Recently, we've been talking about all this stuff, cool stuff, like automated market makers and liquidity pools. But unfortunately, right now at its current point, Ethereum is getting so expensive, it's pricing a lot of people out. It's pushing people out. But finally, with the rollout of, well, ZK rollouts and ZK swap, you finally get the ability to use the power of decentralized finance, but at a price that everyone can afford. So I hope you guys can learn a little bit from this. If you guys do, make sure you share this video. And of course, if you guys want to learn a little bit more about decentralized finance, check out the playlist right up there. There's a whole decentralized playlist that you should definitely take a look at. Now, it doesn't take a genius to figure out that Ethereum is heavily congested right now. This is because of the rise of decentralized finance. As more and more people start using decentralized finance, they're going to generate more transactions. There's going to be more traders on there, more farmers. There's going to be more people borrowing, lending, and more people using Tether on Ethereum. It's going to cause more congestion. That's just been a general trend. Now, the problem of Ethereum is that it only handles a certain number of transactions per second. So as a result of that, gas prices or the price to send a transaction is going up because people are willing to pay more and more to make sure that their transaction gets through. I mean, obviously, no one wants to get left out the dirt. So there's a lot of being a lot of discussion and a lot of talk about how to scale Ethereum. Now, this is where the analogy comes in because we've been talking and hearing a lot about that. There's Ethereum 2.0 coming out. Well, it's already launched, but it's going to be built in phases. And the best analogy I would say is that Ethereum 2.0 is like a mega highway. Right now, maybe we'll have some like congested small roads right now in our little city. Lots of people wanting to get on their cars, trying to get out in this congested city. Now, planned coming soon in the next few years are these phases of a giant highway that will try to solve some of the congestion problems. But two things, right? Can this highway even solve all the congestion problems that we might face? As the network grows and grows, there's going to be more and more traders there. And there's going to be even like high frequency traders that wants to trade maybe a thousand trades per second. So even that might not be enough to satisfy the needs of Ethereum and where we're going with decentralized finance. This is where layer two comes in. So as opposed to just keep building more roads on the ground level, why can't we just look up there, look into the skies? And while that might not be feasible right now in the real world, on the tech world, in Ethereum, it's absolutely possible. It's absolutely possible to build a network that's above the roads that can satisfy a lot more traffic with much greater scaling potential. Now, that sounds like a great promise. The promise of infinite scaling, cheaper transactions, much faster. How does this even work? Is it even possible? What is the new technology that allows us to work? Let's take a look at ZKSwap first. And I'll kind of demo for you some of the core features here. First and foremost, ZKSwap looks very similar to Uniswap. It just looks pretty much like the same thing. Say for example, I have $100 of USDT and I want to swap for Ethereum. It immediately gives me a quotation of how much I'm going to get. And I have a swap button there that I can just press sign it and go. Now, this is super easy. It just it's almost like magic. It's almost how the network should work. I think one thing you want to draw your attention to is L2 wallet over here. This is your wallet very much like an exchange wallet. And it shows the assets that I have. Now, I can see I have some testnet Ethereum, some testnet USDT, and some testnet Uni here on this wallet. So if we go back to the analogy above, this would be the assets up in the skies already. This will be our flying cars in the air. We'll have this wallet. This is our flying wallet holding our funds. So it's actually it's almost like magic to say the least. Now, in terms of use case, and because this is built on top of Ethereum to go up into the skies to go, it's relatively easy. All you have to do is click the deposit button. You'll be able to access your usual wallet. You have your assets there. Say, for example, I have some testnet OKB, and I can just transfer that onto the wallet. So there is a step of depositing onto layer two, which you can sign and it confirms. Now, this step and the kind of the beauty of this and why we'll discuss a little bit about why ZK rollups are powerful in this circumstance is that this step is relatively fast. It takes about three to five minutes for an asset to be deposited onto layer two. And it does actually cost in terms of fees. It does cost fees that are equivalent to current Ethereum gas fees for interacting. So something that's smart that the developers are doing to counteract the cost of the initial deposit onto layer two. What ZK swap is doing is they're doing something called proof of gas. So with proof of gas, what they're doing is they're doing a direct reimbursement of the transaction fee on Ethereum. They're giving you a ZKS token. So that's where 10% of ZKS tokens will be distributed as proof of gas mining rewards. So this is a direct incentive for anyone to get onto layer two, onto ZK swap. And in effect, basically, they just have to pay nothing. I mean, that's the end result of it. So there'll be a direct reimbursement so long as you actually deposit an amount of ETH into the ZK swap payment contract. The other difference that you'll probably know when you do the transaction is that when you click the swap button, instead of requesting a transaction to be sent where you can enter gas prices, etc., you don't do that anymore. You just directly sign a signature. And that signature is enough to submit this transaction and complete the transaction as well. So you can just see that transaction went through. And I did manage to swap that testnet USDT for some testnet ETH. And boom, that was like in seconds. So the end result of doing something on layer two is that you don't need to wait at all for a confirmation. We all know that this confirmation might take 30 seconds, one minute, sometimes 10 minutes if you're cheap on gas to complete. And also, you don't have to pay the gas fees for that transaction too. So sometimes if, you know, when Ethereum is super congested, you might be paying 20, 30 US dollars for the transactions. But when you're on layer two, you're really saving that. The rest of ZK swap works very similar to how Uniswap works. So you can add liquidity. Say, for example, I can supply 100 USD and 0.03 ETH or 0.3 ETH to the network. And this will help with market making. And I can earn a little bit of fees on the side. You can check out the liquidity pools video to understand what's going on here. So this is kind of like bringing the power of Uniswap, but to layer two. All right. Next comes the fun part, which is how is this all possible? Because when I see some video magic like this, I'm always wondering, okay, what is it possible? Is it safe? What are the strengths? What are its limitations, if there are any? First and foremost, the technology that really makes this possible is ZK rollups. So as you guessed from the name, it's based on ZK snark technology, zero knowledge proofs. Now, I love analogies. So the best analogy to really describe ZK rollups is kind of bundling of transactions together, kind of combining tens of hundreds, if not tens of thousands of transactions, all in a tiny neat bundle and submitting it all at once. And this is something that's absolutely possible with cryptocurrencies because in crypto, signatures become very important. If a person can sign a certain transaction, which is something that we saw when we confirmed that transaction, we sign it. And by signing it, you already provide the network with all the credentials and validations necessary to prove that you can do this transaction. And I think that's a great analogy of how this all works. It's really just about bundling those transactions together. So you don't have to report every single transaction, but you just kind of tell the blockchain the results. Now, this makes a lot of sense for decentralized exchanges to be on layer two, because when it comes to trading, there are high frequency traders, algorithmic traders that just trade a huge amount, like maybe hundreds, if not thousands of transactions for a second. And a lot of the times they're trading such small amounts, right? They want to really target small amounts, really min max on everything they have. But a lot of times like that doesn't need to be recorded forever. And that's what really this type of layer two scaling does. By rolling up all these little tiny transactions together, you kind of cut out all the garbage that doesn't need to be put on a blockchain. You really just report the results. And the reason you do that is because you still want that stability and the trust that layer one offers. Now, what about drawbacks? Well, I mean, this sounds fine and dandy. Why don't everyone move to layer two immediately? Well, there is one drawback, which we kind of alluded to earlier, which is the layer two wallet. This is absolutely mandatory. So to kind of jump from layer one, which is Ethereum to layer two, there is a deposit process. It was quite easy. We showed you that it was just deposit, click the asset you want to get. And then boom, you can deposit any amount, click confirm, and you're done. But once you confirm with that, you do need to wait. So roughly here, what we saw here is less than around three to five minutes to wait for that confirmation of the deposit onto layer two. So that's kind of the extra step. You need to jump onto layer two. And more importantly, also, if you ever want to exit out of layer two, this is where the withdrawal comes in. This step does take longer as well. So if you can see here, this is a withdrawal that I've started roughly around an hour ago, and it's still confirming. And this is kind of the biggest weakness of any layer two solution, where it does take time to exit out of layer two. One of the reasons being is to make sure you get the asset. The auto proofs need to be submitted to make sure that you haven't, you know, scammed the system or whatnot. And you can safely exit out of the layer two. It's almost like a safety check, the proof check that you've been a good player and everything's okay. You can safely exit. There's a delay in there if someone wants to kind of report a conflict. So that is the kind of the major drawback with any layer two solution on right now, where there is entry and exit requirements. Now, is this going to be a game breaker? This is where the market will decide. My personal take on this is that this is very much like almost like depositing into any exchange. You deposit and you withdraw. And the process is actually quite fast without any KYC, et cetera, validation. So I don't see this going to be a big problem. And I feel like once this technology matures, wallets will support this natively. So that's kind of the vision of the future for all of this, where a lot of these assets can live on layer two rather than layer one. So wrapping up, I want to just talk a little bit about where ZK swap is right now in terms of development and also about the ZKS token as well. So first and foremost, in terms of development right now, we can see the testnet. So if you can just like go on ZKS.app, you can connect your wallet and do make sure you're on the Robston testnet. So testnet means that this is not with real Ethereum, like nothing is finalized at this current point, but it gives the opportunity for people to just kind of test out what is working and the transactions. In fact, a few community members and including me have actually tested testnet. The feedback was that early on in terms of the trades, there were a few bugs that came along the way. But the good news is that it seems like for me right now, the tests have been going on quite smoothly and I was able to do the test transactions and to do them in relatively fast speed and with a lot of ease as well when it really comes down to it. They are expecting to deploy on Ethereum mainnet in January. So that's coming up very, very soon with full support. So this is where right now, if you can actually see what's happening right now, they're very close to the final stages of completing the tests and deploying that on Ethereum mainnet. Once Ethereum mainnet deploys, you can actually start using it to do token transfers. And this is when it can get very exciting. If you want to test it out at this point, there is a link here for the faucet. So what the faucet gives you is it gives you 1000 of all these coins here. It's all, I mean, testnet coins. We can test out the swapping on Robson testnet for yourself to see it working. Also, if you test this out, there is an incentive program. So you get rewarded for just testing out the testnet. So we can go on the ZK swap main website, check out incentive programs. And you have the ability. Well, if you manage to do 50 withdrawals from layer two, and also you do 100 swaps, which is quite a lot, by the way. But if you do that, then you get to participate in the distribution of 50,000. So not 50,000, 500,000 ZK swap for free, which is not bad at all. Lastly, ZK swap does have a token. So that token is called ZKS. It's currently listed right now. So it's already live. It's an ERC 20 token. And the largest trading market of that right now is on Uniswap. In terms of the use case for the token, the token will be used for governance, token listing, transaction verification, and buyback. So a little bit similar to Uni token. If you guys know the Uniswap, Uniswap has a token Uni, and ZKSwap has a token ZKS. Being on layer two, they do have transaction verification. So the token use case has added use cases for the layer two aspect. So that also brings more economic value for the token. In terms of the token distribution as well, something that's quite interesting is that 60% of the token will be given out for community mining. So that's a major portion of the tokens that have not been distributed. They're going for community mining. And right now on the market, so in terms of what it has right now, the circulating supply is 40 million. So out of the 1 billion, there's only 40 billion of it circulating with a market cap at this current point of 12 million. So this is going to expect it to expand as the protocol grows. And as the kind of community ones do come out, the community coins come out. So this will be a major source of opportunity. I would definitely say because as more and more people come to use it, they'll get the community mining tokens as a reward. In terms of the distribution time, it will take around four years for all the tokens to be distributed. And that's kind of how the token is designed at this current point. So what are the final thoughts on this? First and foremost, it is super exciting. I mean, we've been waiting for scaling solutions for such a long time. And this one operates directly on top of Ethereum. This means you have native support for all the assets on Ethereum. You also have the trust of the Ethereum blockchain. So you don't have to move to another blockchain. You're really kind of elevating yourself up to the sky to layer two and enjoying the benefits of faster transactions and also much cheaper transactions. Believe me, I really need that because at this current point, I'm more or less spending around 15 to $25 per trade on Uniswap at this current point. So by saving myself that amount, that will really matter. Now it does come with one drawback, of course, which is that you have to deposit onto layer two. So you both have to make a deposit. And when you exit, there is a delay that you do have to wait for. Now, there are also other scaling layer two technologies out there. And I've spent a lot of time kind of looking at the differences between optimistic rollouts, ZK rollouts, and also Plasma as well. We'll cover them a lot more in the future. I feel like there's kind of benefits, advantages and disadvantages of both. ZK rollups are very strong in one sense, in the sense that withdrawing from ZK rollups doesn't seem to take a long time, which gives it the power of being very good for exchanges. I think this is something that's very, very intriguing and very interesting going forward. And I hope to cover more videos in the future. If you guys are interested, of course, it's very, very tech heavy. So that will leave up to you guys to decide if it's worth doing a very in-depth guide on that as well. And with that guys, I thank you guys so much for watching this video. Tell me what you think in the comments down below about all this. Are you excited for the rollout of layer two scaling and ZK swap? And also what other projects you wanted me to cover in this space as well. There's definitely so much happening in the decentralized finance space. I've definitely encouraged you to watch that DeFi playlist and I'll see you guys in the next video.