EY Releases Zero-Knowledge Layer to Tackle Increasing Ethereum Costs

Published on: 05.07.2021

Multinational accounting firm EY, commonly known as Ernst & Young, has released a layer 2 protocol focused on scaling the Ethereum blockchain to bring down costs and increase efficiency.

EY has announced the release of the third-generation zero-knowledge proof (ZKP) blockchain technology to the public domain on the Ethereum public blockchain. The enhancements of the ZKP blockchain technology will help make private transactions on public blockchains more scalable by significantly reducing transaction costs through batching multiple private transfers together in a single transaction.

The “Nightfall 3” project combines zero-knowledge proofs (ZKP), aggregates transactions into groups, known as rollups, designed to lighten the transaction load on the blockchain by transferring them to layer 2.

EY’s work utilizes what’s known as “optimistic rollups,” named as such because the system assumes transactions to be valid unless proven otherwise, removing the need for validation from all participants.

“Based on EY experience, ZK-Optimistic roll-ups are currently among the most effective in balancing security incentives and mathematical efficiency for running private transactions on the public Ethereum network,” Paul Brody, EY Global Blockchain Leader, said. “As we have in the past, we are again contributing this code into the public domain to speed up enterprise adoption of this technology.”

Nightfall 3 could achieve costs of around one-eighth of those needed for a conventional token transfer on Ethereum, according to EY’s announcement.

The new tool was built to address network congestion and rising transaction costs brought about by the growth of decentralized finance (DeFi).