RISC Zero: Eliminating Tradeoffs and Unleashing the Power of Blockchain Technology
Risc Zero: Eliminating Tradeoffs and Unleashing the Power of Blockchain Technology
How Blockchain investing impacts solutions for consensus mechanisms
This week we talk about some of the issues associated with consensus mechanisms, and how innovators are addressing them including at RISC Zero - a recent Blockchain Coinvestors investment.
Blockchain platforms like Bitcoin require massive duplication of work to reach consensus and make critical tradeoffs in scalability and ecological feasibility.
Newer chains have more efficient consensus mechanisms and divide the work to increase scalability, but they compromise security and decentralization while increasing complexity and overhead for developers. As such, building privacy focused infrastructure which is scalable and secure is cost intensive and requires great engineering resources.
Risc Zero Secures $40M in Series A Funding to Build Hyper-Efficient Blockchain Platform
We are excited to announce our investment into RISC Zero, an exciting blockchain business that emerged from Seattle in 2022. The founders, Frank Laub, Brian Retford and Jeremy Bruestle, have successfully secured a Series A funding round of $40,000,000, led by Blockchain Capital.
RISC Zero is building a hyper-efficient, developer-friendly, general purpose blockchain platform. This is designed to eliminate the tradeoffs mentioned above, and accelerate the development of privacy focused decentralized infrastructure and applications through Zero-Knowledge (“ZK” or “zk”) technology.
RISC Zero’s founding team brings decades of experience spanning AI, cryptography, engineering and network design, and is uniquely positioned to capitalize on the potential of ZK technology. The team met two years ago in a bank vault in Seattle, when they built the first automated CTF (an attack-defense style capture-the-flag cybersecurity competition) at Defcon, and they’ve been building together ever since.
ZK Technology: What Is It? Why Does it Matter?
ZK technology refers to cryptographic methods that allow one party to prove a statement or certain data to another party, without revealing any of the data itself to the other party. For example, proving you have the money in your wallet to fund a specific investment, without divulging sensitive information like your actual wallet holdings or portfolio details to the counterparty. This is a key issue in the predominantly open, transparent architecture of Web3.
The RISC-V zkVM (Virtual Machine), powered by their Bonsai network, lets any code run as a smart contract, creating an open access execution layer that allows any network, chain or application to take advantage of ZK technology. In essence, creating a widely compatible, general purpose zkVM and rollup designed to be the de facto scaling solution in the industry.
3 Risks and Concerns in ZK Technology Scalability
Despite our excitement about RISC Zero, ZK cryptography is a nascent space. While we see great potential, as do others in the market, we recognize that risks remain with such complex and novel technology. Potential risks to RISC Zero include;
There are a handful of talented teams attempting to effectively scale ZK technology.
ZK architecture is technically complex and success depends on the reliability of RISC Zero’s tech stack.
New, unforeseen solutions may emerge that cannibalize ZK technology.
As always in areas of new innovation, there are sure to be other surprises along the way, but we are excited by this new approach.
Unlocking Privacy Applications with Risc Zero's General Purpose ZK Platform
RISC Zero has built a solution which allows anyone to access a general purpose ZK platform for building privacy applications and infrastructure. In essence, their Bonsai network allows for anyone to easily integrate ZK Proofs into their protocol for scaling, off-chain compute and privacy without any custom ZK circuit development, by acting as a shared execution layer.
Smart contract execution is offloaded to Bonsai's ZK proofs which are then posted back on chain, resulting in a solution that is magnitudes more cost and data efficient. Furthermore, their solution is widely compatible with all of the most popular programming languages and can integrate with any Layer 1, Layer 2, app-specific blockchain or decentralized application.
As a central proving ground, Bonsai enables composable interoperability between different smart contracts regardless of their origin chain. Bonsai is also a universal rollup such that ZK Proofs originating from Solana, Ethereum, and other chains are all rolled up into a single proof that is posted across any chain.
Perspective: RISC Zero is creating a general purpose blockchain platform that allows any developer to easily write smart contract code and utilize ZK technology in their applications, without having to learn complex new coding languages or build ZK expertise in-house at great cost. And the Bonsai network, which acts as a shared execution layer, allows developers to seamlessly connect their products to almost any blockchain or application across Web3.
Bonsai's Impact on Web3 Applications
Moving data onto Bonsai requires less code and thereby can greatly reduce gas fees across decentralized exchanges, lending and DeFi protocols, NFT marketplaces and more. The interoperability of the network means developers are also unbounded by the limitations of older consensus mechanisms, creating better and even novel privacy use cases like allowing developers to shield wallet assets and protect sensitive transaction information.
Web3 games also suffer from high gas fees and blockchain bottlenecks, competing for block space on networks with large DeFi and NFT players.
Bonsai and its general purpose zkVM enable developers to plug ZK Proofs into any sort of Web3 product built on any blockchain, improving performance, lowering gas fees, and adding functionality by moving smart contract code off chain. ZK proofs also offer an elegant solution to realizing the potential of proof of attendance, physical location and behavior, without exposing your actual location or behavior publicly. This creates a host of exciting new use cases and possibilities.
Perspective: Writing secure, privacy-focused Web3 applications isn’t easy. RISC Zero’s next generation zkVM makes ZK technology widely accessible, allows developers to code Web3 apps in languages they already know (like Rust, Go, C++...), and moves smart contract execution to the Bonsai network which requires significantly less code. As such, the Bonsai network also represents a data storage and scaling solution which can greatly reduce fees and improve performance across Web3.
Driving Innovation: Risc Zero's Path to Mainnet Launch and Revenue Model
The team launched their operational support system (OSS) in early 2022 and built out features throughout the year, releasing Bonsai in Q3. Shortly after, the team announced their testnet and the current Series A round as they gear up for a potential mainnet launch later this year.
3 Main Components of their Revenue Model:
They will take a small proving fee for the substantial savings Bonsai’s off-chain execution enables, as a line of Solidity executed on Bonsai vs Ethereum is 10x cheaper.
Over time, the team will decentralize the proving network and issue a token.
They will also offer premium services for unique, custom applications of ZK tech.
Competing ZK technologies like Starkware, Matter Labs, and Polygon Zero have seen large, competitive funding rounds and Web3 gaming companies like Forte who have raised billions are set to be early adopters of ZK technology. But RISC Zero offers broader compatibility, interoperability, cost reduction and all the privacy benefits of ZK proofs in an easily composable package. And for developers, RISC Zero offers a seamless solution to quickly plug in ZK technology without building in-house.
Interested in learning more about RISC Zero and the Bonsai network? Check out this recording from the team’s keynote presentation at ETH Waterloo just last month: YouTube.
Our View
In summary, Blockchain Coinvestors has invested in RISC Zero for the following reasons;
RISC Zero represents an exciting evolution in ZK technology and provides the tools for developers globally to build the next generation of secure, privacy focused applications.
By supporting legacy coding languages, RISC Zero is also paving the way for a more inclusive adoption of Web3 technology by developers worldwide.
And with the broad compatibility, significant savings and performance improvements created by the Bonsai network, RISC Zero could well become the de facto scaling solution in Web3.
We have high expectations for the team and are fully behind their ambitious vision and plan for the future.
Author
Christopher Nelson
Head of Digital Asset Research