Tap in Tuesday: ZK-Rollup Layer 2 Hermez AMA

Introducing Hermez Network! Find out how Hermez Network delivers security and speed to your favorite DeFi applications.

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DeFi Slate Fam:

Recent market surges have kicked the DeFi flywheel into action. As prices go up, traders take leverage to get long, more leverage means more borrowing and higher APY for lenders. 

The DeFi flywheel concept was evident on Mainnet in Summer 2020. Now, liquidity is flowing downstream to Layer 2. 

 Polygon & Hermez are Layer 2 networks at the forefront of scaling innovation.

Hermez delivers a ZK-sync style technology which is orders of magnitude more secure than other rollup solutions. 

Last week Polygon and Hermez announced their merger as one of the most lucrative acquisitions in crypto ever. 

David and Goliath have joined forces.

Check it out below:

Enjoy!

-Robbie


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Hermez AMA Qs

  • How does Hermez differ from other Layer 2 networks (ie. Polygon, Optimism, Arbitrum)?

Hermez is a zero-knowledge rollup, leveraging zkSNARKS for validity proofs and with on-chain data availability. The Hermez rollup is being built by the team behind iden3, which is more focused on self-sovereign identities. 

Hermez employs a new circuit compiler language called Circom and the SnarkJS libraries built by the team behind iden3. Although these technologies are relatively new, they're being used by other projects like Semaphore and Tornado Cash.

Hermez is a zkRollup, meaning that it is based on zero-knowledge technology, like other projects like Aztec, Matter Labs or Starkware.

Like other Layer 2s, it’s built on top of Ethereum, hence inheriting its security and network effect. This differs from other scaling solutions like Polygon or xDai, which are sidechains, meaning that they’ve built their own blockchains.

It’s also different to other projects that have opted for the optimistic rollup route, like Optimism or Arbitrum. While these projects have smart contract compatibility right now, they come with big trade offs, like withdrawals taking up to seven days.

As Vitalik himself has established, zkRollups will likely be the winner in the future, and we’re working hard to accelerate that future.

  • How do Ethereum network upgrades like EIP1559 and ETH2.0 affect the Hermez Network?

Great question! Our devs have been very busy preparing for the London hard fork during the last few weeks. We took the opportunity to upgrade our Layer 2, as well as to deploy a few improvements, like atomic transactions, which will enable swaps in the near future. 

We’ve also added new functions, like multi-token withdrawals, and a whole new structure of our StateRoot, which will save lots of gas for both users and coordinators. Another great new feature is that now users can withdraw funds from their Layer 2 wallet to any address they wish. 

  • What types of applications do you anticipate will deploy on Hermez?

We’re pretty much open to anything! Token swaps are the next logical step, and we’re working closely with other teams to develop identity solutions on top of Hermez. Further down the line, we’re working to develop a novel zkEVM able to integrate Ethereum’s Virtual Machine on top of zero knowledge cryptography, this will enable any smart contract to be run on our Layer 2. Of course, any other payments applications are being considered, like business

  • How much faster and cheaper are transactions on Hermez compared to Ethereum Mainnet and other Layer 2’s?

Our cost is roughly a tenth of a Layer 1 transaction, but this will improve as the network scales up. Regarding speed, we’re currently processing batches of transactions every ten minutes, and again, as the network usage increases, this threshold may be reduced, potentially forging batches after a few seconds.

  • Does using a Layer 2 sacrifice any security measures?

No, our Layer 2 inherits Ethereum’s battle-tested security assumptions. However, zero-knowledge is a novel technology and bugs may be discovered. We have a bug bounty program ongoing, so if you know of any white hat hackers, show them this link.

  • What are tokenomics and main functions of HEZ token?

The Hermez token (HEZ) will act as the vehicle for bidding in the auction to award exploitation rights to slots of the Hermez Network to the highest bidders. To do so, we have decided to start offering HEZ to the public. 

There are two specific ways that HEZ will flow through the network: the auction and rewards. In the auction, prospective coordinators use HEZ to bid for the right to validate blocks on the L2 network as part of the Proof-of-Donation process. As the HEZ come into the system through the bids, they will be distributed in the following way:

30% of the tokens will be burnt.

40% of the tokens will be donated to Gitcoin grants (for further information on why we selected this particular method, check out this article)

30% will be distributed among the network participants to reward users for onboarding specific tokens onto the network and transacting with them.

  • What is proof of donation?

Proof-of-donation is our novel consensus mechanism. It basically means that every time there's a transaction on the Hermez network, 40% of it goes back to Layer 1 as a donation, and 30% gets burnt, 30% goes to the participants of the network. This way we align incentives across all the actors of the network, as well as with the Ethereum community, which will receive a constant stream of revenue to fund public goods. 

  • How does the Hermez node upgrade, which will be compatible with the ETH London upgrade, enable atomic transactions?

Answered on the second question, maybe our devs can develop further.

  • Please explain the zK

The Hermez Network leverages the power of zero-knowledge proofs in order to create a secure Layer 2 scalability solution for the Ethereum Network.

Hermez uses zk-SNARKs, a proven technology already underpinning the ZCash blockchain and JPMorgan Chase’s blockchain-based payment system, as well as other Ethereum projects like Tornado Cash or Semaphore.

Zk-SNARK stands for Zero Knowledge-Succinct Non-interactive ARgument of Knowledge, and it is a form of cryptography that allows us to create very small and quickly verifiable proofs that all transactions in the Hermez rollup are valid. Succinctly put, zk-SNARKs allow for:

Creating a validity proof for all transactions within the Hermez Network so only valid transactions can be included. This makes it mathematically impossible to include a non-valid transaction. Anyone to validate this proof with minimal effort

Because of the two properties above, we can “roll-up” a lot of Ethereum transactions into one validity proof.  Instead of including signatures on-chain, we send a zk-SNARK which proves that 1000’s of signature verifications and other transaction validation checks have been correctly done off-chain.

Since signatures make up a large percentage of transaction costs (gas), in practice zk-rollup has the effect of significantly reducing the average cost per transaction. This allows us to fit more transactions per block, which results in a greater overall throughput.

  • Do you have any upcoming updates or partnerships?

We’re working with several exchanges to integrate with Hermez, as we’ve done already with Bitfinex and its stablecoin USDt. Our goal is to become the network of choice for inter-exchange token transfers, as well as Metamask, WalletConnect and many others. We’re currently integrating with a few wallets, and incorporating support for some hardware wallets.

  • What kind of hardware is needed to run a node?

    • For prover: 86 CPUs and 192 GB RAM

    • For node: 2 CPUs and 4GB RAM


🙌 Together with: 

  • Polygonthe leading layer two ecosystem in DeFi pushing forward scaling Ethereum and DeFi! Join their Official Telegram channel to keep track of newly launched projects on Polygon.

  • Degate,a Decentralized Layer 2 Exchange based on optimistic rollups. DeGate will offer secure order-book trading that is faster and cheaper than mainnet. Degate also offers a fast and efficient L1 - L2 Bridge, testnet is operating now. Try it HERE!


👀 WHAT’S HAPPENING IN LAYER 2👀


🔥 Partner Project Updates

Babylon Finance is an ecosystem of community-built DeFi strategies. Non-custodial, completely trustless and transparent asset management with traceable performance history.

Ruler Protocol is a market driven lending platform that provides non-liquidatable loans. As an undiscovered protocol, most APYs are quite high (so is risk!!). Check it out here!

Hermez Network is an open-source ZK-Rollup optimised for secure, low-cost and usable token transfers on the wings of Ethereum. Check it out here!


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⚠️ DISCLAIMER: Investing into cryptocurrency and DeFi platforms comes with inherent risk including technical risk, human error, platform failure and more. At certain points throughout this post, we might get commission for promoting certain projects, if this is the case we will always make sure it is clear. We are strictly an educational content platform, nothing we offer is financial advice. We are not professionals or licensed advisors.


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