ZkSync Sharpens Role in Future of Ethereum With $200M Funding

Good software development takes money and time. Despite the present crypto winter — generally regarded as having started in late May but turned blizzard by FTX going bust — venture capital has continued to flow into blockchain startups.

That may change now, as the full extent of the FTX contagion is just starting to emerge. But if it does, then Matter Labs, developers of Ethereum layer-2 zkSync, may have gotten in under the wire.

The company announced a $200 million Series C, Wednesday, co-led by Blockchain Capital and Dragonfly, with participation from LightSpeed Venture Partners, Variant, plus Andreessen Horowitz and other prior venture partners.

Throw in Matter Labs’ $58 million in venture funding from its Series B and earlier rounds, and a previously announced — though not yet delivered — $200 million ecosystem fund from BitDAO, and the company claims $458 million in total funding lined up.

That should see the project through even the darkest winter days, according to chief product officer Steve Newcomb. 

“No matter how bad this bear market gets, we are well positioned to grow our team, ship our protocol, and ship our mission,” he said.

The stated mission is “to accelerate the mass adoption of crypto for personal sovereignty,” according to a statement, one which Newcomb said is simpatico with Ethereum itself.

In an interview with Blockworks, Newcomb embraced the concept of the “network state” featured in Balaji Srinivasan’s book of the same name. Ethereum co-founder Vitalik Buterin has called it “an ideological successor to libertarianism,” and “an attempt to sketch out a possible broader political narrative for the crypto space.”

Newcomb describes Matter Labs’ approach as the “Mission to Citizen model,” which prioritizes the overall development of Ethereum above “any normal competitive advantage that you could go after.”

The battle to out-open-source the competition

In blockchain software stacks, security through obscurity is a losing strategy. Open source software went from “a cancer” derided by Microsoft’s CEO in 2001 to becoming the norm in little more than a decade. It’s been a key part of the crypto ethos since the beginning.

The “ZK” in zkSync refers to zero knowledge proofs. Rollups using the technique bundle transactions, drastically reducing the amount of data needed to be passed to mainnet Ethereum while preserving a high level of security, proponents say.

The intended end result is an ecosystem that can reliably handle more transactions, faster.

Matter Labs is one of several teams vying to build ZK-rollup-based scaling solutions compatible with the Ethereum Virtual Machine (EVM). ZkSync 2.0 went live on mainnet on Oct. 28. Others include Polygon with its zkEVM, unveiled in July, Scroll and new entrant Taiko which are still early in their development.

StarkWare doesn’t support dapps written for the EVM and instead has pursued its own approach to an execution layer which is theoretically more scalable. Loopring, which launched a ZK-rollup exchange way back in February 2020 also falls into this category.

A key component of all ZK-rollups is the “prover,” which essentially guarantees correctness in the system as transactions are processed. Part of today’s announcement from zkSync is that it will apply an MIT Open Source license to the whole technology stack — including the prover — sometime before the end of 2022.

“It will be the first time that a general-purpose ZK-rollup’s technology is released that offers developers the freedom to 1) view the code 2) modify the code and 3) fork the code,” Matter Labs said in a statement.

StarkWare is only partly open source and uses a more restrictive license.

Building a prover is “a Herculean task in terms of math, engineering and software,” StarkWare president Eli Ben-Sasson, previously told Blockworks. “We have a team of 100 and have been at it for four years.”

Polygon told Blockworks by email that its prover “does not currently have an open source license as it undergoes audits,” but added, “it will be freely licensed in the future.”

The Polygon team also said “the best way to verify that a team has a working prover is to examine source code,” noting that it has already published its zkEVM in full.

Having a fully open source prover increases the chances that an Ethereum rollup ecosystem will form around one shared prover, Newcomb said, which would bring benefits such as obviating the need for bridges.

What if Polygon or StarkWare opt to adopt MIT open source standards too?

“It would be huge!” Newcomb said. Such a development “guarantees that a mission driven prover is the prover that wins.”

Dapps and decentralization

Both Polygon and zkSync have major DeFi projects planning to deploy on their respective zkEVMs, such as Uniswap, Aave, Curve and Chainlink.

In fact, Matter Labs says it has received commitments from more than 150 projects for its “Full Alpha Launch,” planned to coincide with the February 2023 ETH Denver conference, making it the “largest in history” for any layer-2 blockchain.

The company is incorporated in the Cayman Islands, per Crunchbase, with co-founders Alex Gluchowski and Alexandr Vlasov located in Dubai, UAE, and Montreal, Canada, respectively.

While some rollup projects have issued a token as part of their rollout — such as Optimism (OP) — zkSync does not, and Newcomb said that among all Ethereum L-2s they will likely be the last to have a token.

“Decentralization” is on the team’s roadmap for 2023, but they have no plans to follow others’ approach by launching a DAO or foundation, he said.

EVM-compatibility in a ZK-rollup is seen as a breakthrough technology thanks to the network effects of Ethereum — things like dapps, wallets, developer tooling, infrastructure — and one that was expected to take years to develop. Optimistic rollups, led by Arbitrum and Optimism have been viewed by developers as a stepping stone. But competing teams and years of research have accelerated the timeline to the point that we now have two ZK-based EVM implementations just months away from being live and ready for ordinary users.


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  • Macauley was an editor and content creator in the professional chess world for 14 years, prior to joining Blockworks. At Bucerius Law School (Master in Law and Business, 2020) he researched stablecoins, decentralized finance and central bank digital currencies. He also holds an MA in Film Studies; film credits include Associate Producer of the 2016 Netflix feature documentary, “Magnus” about World Chess Champion Magnus Carlsen. He is based in Germany.

    Contact Macauley via email at [email protected] or on Twitter @yeluacaM