The Ultimate Guide to Zero-Knowledge Proofs: zk-SNARKs vs zk-STARKs

Paulina Lewandowska

14 Apr 2023
The Ultimate Guide to Zero-Knowledge Proofs: zk-SNARKs vs zk-STARKs

Introduction

As blockchain and cryptocurrency have risen in popularity, zero-knowledge proofs have become increasingly important in cryptography. These types of proofs allow for one party to prove they know certain information without actually revealing the information, making them useful for confidential transactions. In this blog post, we will compare the differences between the two most commonly used kinds of zero-knowledge proofs: zk-SNARKs vs zk-STARKs.

What are Zero Knowledge Proofs?

In cryptography, zero-knowledge proofs are a type of protocol that enables one party to prove to another party that a statement is true without revealing any additional information beyond the statement's truthfulness. In other words, zero-knowledge proofs allow one party to demonstrate knowledge of a particular fact without disclosing any other information that could be used to derive the same knowledge. This makes them useful for applications that require secure and private transactions, such as in blockchain and cryptocurrency, where they can be used to verify transactions without revealing any sensitive information. Zero-knowledge proofs are becoming increasingly important in cryptography due to their potential applications in privacy-preserving systems and secure transactions.

In the Mina Protocol video below, you will learn more details:

https://www.youtube.com/watch?v=GvwYJDzzI-g&pp=ygUVWmVyby1Lbm93bGVkZ2UgUHJvb2Zz

Zk-SNARKs vs zk-STARKs: what’s the difference?

In the realm of zero-knowledge proofs, there are two types: k-SNARKs and zk-STARKs. The distinguishing factor between the two lies in their approach to generating proofs. While zk-SNARKs utilize a trusted setup in which a group of trusted individuals generate a set of public parameters to generate proofs that can be reused indefinitely, zk-STARKs employ a more computationally intensive method that negates the need for a trusted setup.

Zk-SNARKs vs zk-STARKs

When comparing Zk-SNARKs and zk-STARKs, one key difference is their level of transparency. Zk-SNARKs are considered less transparent than zk-STARKs due to their reliance on a secret key that is only known to trusted setup participants, which could compromise the system's security if leaked or compromised. However, zk-STARKs are completely transparent and don't rely on assumptions or secret keys, making them more appealing to those who prioritize both transparency and security.

In terms of proof generation time and size, Zk-SNARKs are generally less efficient than zk-STARKs. However, zk-STARKs have the advantage of scalability and can handle more complex computations. Additionally, zk-STARKs are post-quantum secure, while Zk-SNARKs are not, making them resistant to attacks from quantum computers. Another important consideration is that zk-STARKs are more scalable and can handle larger computations compared to zk-SNARKs.

Zk-SNARKs explained

Zk-SNARKs have become increasingly popular due to their efficiency and privacy-preserving features, making them applicable in various real-life scenarios such as in blockchain, where they can be deployed to prove ownership of digital assets without revealing sensitive information. Additionally, Zk-SNARKs have played a crucial role in voting systems by ensuring the accurate counting of votes while maintaining voter anonymity. One of the most notable applications of Zk-SNARKs can be observed in Zcash, a private cryptocurrency, which allows users to transact anonymously while concealing transaction data. However, concerns about potential security risks have been raised regarding the use of trusted setups in Zk-SNARKs, as a compromised trusted setup can put the entire system's privacy at risk.

Zk-STARKs explained

Rather than requiring a trusted setup like zk-SNARKs do, zk-STARKs were developed as a better alternative, which is more resistant to attacks. This is because the trusted setup of zk-SNARKs is vulnerable to malicious use should it be compromised. Despite this, zk-STARKs require more calculations to generate a proof, making them less efficient overall. Still, recent developments have paved the way for more efficient zk-STARKs, making it a promising replacement to zk-SNARKs.

According to their use cases, zk-SNARKs and zk-STARKs differ not only in efficiency and trusted setups. Applications that require fast and efficient proof verification, such as privacy-preserving transactions in cryptocurrencies, typically use zk-SNARKs. In contrast, zk-STARKs are more appropriate for applications that require transparency and no trusted setup, such as voting systems and decentralized autonomous organizations (DAOs). Additionally, it's worth noting that although zk-SNARKs and zk-STARKs are the most prominent types of zero-knowledge proofs, there are other variants such as Bulletproofs and Aurora that offer different trade-offs in efficiency and security, depending on the specific use case.

How to implement zk proof in the project?

When implementing zero-knowledge proof in a project, there are various technical steps involved, and depending on the type of zero-knowledge proof used, different methods and tools are available, such as zk-SNARKs vs zk-STARKs. For instance, when using zk-SNARKs, developers must utilize a trusted setup to produce the public parameters that will be used to generate and authenticate the proofs. The process requires the selection of the appropriate trusted setup ceremony, the setup of necessary infrastructure and assigning the participants who will generate the parameters. After the trusted setup, developers must include the appropriate libraries such as libsnark in their code and develop the functions required to generate and authenticate the proofs.

When it comes to zk-STARKs, a different approach is necessary for developers since trusted setup isn't required. To prove the computations, they need to utilize tools like circom and snarkjs to generate the circuits and tools such as groth16 and marlin to verify and generate the proofs. This includes choosing the appropriate tools and libraries, creating circuits, and ensuring full implementation of verification functions and proof generation.

A deep understanding of the cryptographic protocols involved, as well as having access to the necessary tools and libraries, are crucial requirements for developers when implementing zero-knowledge proof in a project. Additionally, developers must ensure that the proofs generated by the system are correct, secure, and efficient without compromising the users' privacy or security. Testing and debugging play a critical role during the process, and developers must ensure the system undergoes thorough testing before deploying it to production.

Conclusion

Zero-knowledge proofs have become increasingly crucial in cryptography, particularly in blockchain and cryptocurrency. The most commonly used types of zero-knowledge proofs are zk-SNARKs and zk-STARKs, which vary in their approach to generating proofs, level of transparency, proof generation time and size, scalability, and post-quantum security. To implement zero-knowledge proof in a project, developers must possess a thorough understanding of the cryptographic protocols employed, access to the necessary tools and libraries, and ensure the system undergoes comprehensive testing before deployment. Different technical steps and methods are required depending on the zero-knowledge proof used. As the use of zero-knowledge proofs continues to expand, comprehending the trade-offs between different types and effectively implementing them in various applications while safeguarding privacy and security is of utmost importance.

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Aethir Tokenomics – Case Study

Kajetan Olas

22 Nov 2024
Aethir Tokenomics – Case Study

Authors of the contents are not affiliated to the reviewed project in any way and none of the information presented should be taken as financial advice.

In this article we analyze tokenomics of Aethir - a project providing on-demand cloud compute resources for the AI, Gaming, and virtualized compute sectors.
Aethir aims to aggregate enterprise-grade GPUs from multiple providers into a DePIN (Decentralized Physical Infrastructure Network). Its competitive edge comes from utlizing the GPUs for very specific use-cases, such as low-latency rendering for online games.
Due to decentralized nature of its infrastructure Aethir can meet the demands of online-gaming in any region. This is especially important for some gamer-abundant regions in Asia with underdeveloped cloud infrastructure that causes high latency ("lags").
We will analyze Aethir's tokenomics, give our opinion on what was done well, and provide specific recommendations on how to improve it.

Evaluation Summary

Aethir Tokenomics Structure

The total supply of ATH tokens is capped at 42 billion ATH. This fixed cap provides a predictable supply environment, and the complete emissions schedule is listed here. As of November 2024 there are approximately 5.2 Billion ATH in circulation. In a year from now (November 2025), the circulating supply will almost triple, and will amount to approximately 15 Billion ATH. By November 2028, today's circulating supply will be diluted by around 86%.

From an investor standpoint the rational decision would be to stake their tokens and hope for rewards that will balance the inflation. Currently the estimated APR for 3-year staking is 195% and for 4-year staking APR is 261%. The rewards are paid out weekly. Furthermore, stakers can expect to get additional rewards from partnered AI projects.

Staking Incentives

Rewards are calculated based on the staking duration and staked amount. These factors are equally important and they linearly influence weekly rewards. This means that someone who stakes 100 ATH for 2 weeks will have the same weekly rewards as someone who stakes 200 ATH for 1 week. This mechanism greatly emphasizes long-term holding. That's because holding a token makes sense only if you go for long-term staking. E.g. a whale staking $200k with 1 week lockup. will have the same weekly rewards as person staking $1k with 4 year lockup. Furthermore the ATH staking rewards are fixed and divided among stakers. Therefore Increase of user base is likely to come with decrease in rewards.
We believe the main weak-point of Aethirs staking is the lack of equivalency between rewards paid out to the users and value generated for the protocol as a result of staking.

Token Distribution

The token distribution of $ATH is well designed and comes with long vesting time-frames. 18-month cliff and 36-moths subsequent linear vesting is applied to team's allocation. This is higher than industry standard and is a sign of long-term commitment.

  • Checkers and Compute Providers: 50%
  • Ecosystem: 15%
  • Team: 12.5%
  • Investors: 11.5%
  • Airdrop: 6%
  • Advisors: 5%

Aethir's airdrop is divided into 3 phases to ensure that only loyal users get rewarded. This mechanism is very-well thought and we rate it highly. It fosters high community engagement within the first months of the project and sets the ground for potentially giving more-control to the DAO.

Governance and Community-Led Development

Aethir’s governance model promotes community-led decision-making in a very practical way. Instead of rushing with creation of a DAO for PR and marketing purposes Aethir is trying to make it the right way. They support projects building on their infrastructure and regularly share updates with their community in the most professional manner.

We believe Aethir would benefit from implementing reputation boosted voting. An example of such system is described here. The core assumption is to abandon the simplistic: 1 token = 1 vote and go towards: Votes = tokens * reputation_based_multiplication_factor.

In the attached example, reputation_based_multiplication_factor rises exponentially with the number of standard deviations above norm, with regard to user's rating. For compute compute providers at Aethir, user's rating could be replaced by provider's uptime.

Perspectives for the future

While it's important to analyze aspects such as supply-side tokenomics, or governance, we must keep in mind that 95% of project's success depends on demand-side. In this regard the outlook for Aethir may be very bright. The project declares $36M annual reccuring revenue. Revenue like this is very rare in the web3 space. Many projects are not able to generate any revenue after succesfull ICO event, due to lack fo product-market-fit.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to contact@nextrope.com. Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.

Nextrope Partners with Hacken to Enhance Blockchain Security

Miłosz

21 Nov 2024
Nextrope Partners with Hacken to Enhance Blockchain Security

Nextrope announces a strategic partnership with Hacken, a renowned blockchain security auditor. It marks a significant step in delivering reliable decentralized solutions. After several successful collaborations resulting in flawless smart contract audits, the alliance solidifies the synergy between Nextrope's innovative blockchain development and Hacken's top-tier security auditing services. Together, we aim to set new benchmarks, ensuring that security is an integral part of blockchain technology.

Strengthening Blockchain Security

The partnership aims to fortify the security protocols within blockchain ecosystems. By integrating Hacken's comprehensive security audits with Nextrope's cutting-edge blockchain solutions, we are poised to offer unparalleled security features in our projects.

"Blockchain security should never be an afterthought"

"Our partnership with Hacken underscores our dedication to embedding security at the core of our blockchain solutions. Together, we're building a safer future for the industry."

said Mateusz Mach, CEO of Nextrope

About Nextrope

Nextrope is a forward-thinking blockchain development house specializing in creating innovative solutions for businesses worldwide. With a team of experienced developers and blockchain experts, Nextrope delivers high-quality, scalable, and secure blockchain applications tailored to meet the unique needs of each client.

About Hacken

Hacken is a leading blockchain security auditor known for its rigorous smart contract audits and security assessments. With a mission to make the industry safer, Hacken provides complex security services that help companies identify and mitigate vulnerabilities in their applications.

Looking Ahead

As a joint mission, both Nextrope and Hacken are committed to continuous innovation. We look forward to the exciting opportunities this partnership will bring and are eager to implement a more secure blockchain environment for all.

For more information, please contact:

Nextrope

Hacken

Join us on our journey to deliver top-notch blockchain tech and a safer future for the industry!