ZKM is building the Quantum Network using Entangled Rollups to enable Universal Settlement.

There is a lot to untangle 😉 within this statement; let’s start by exploring what the Quantum Network is ultimately aiming to achieve.

Universal Settlement

In order to describe what Universal Settlement is, we first have to look at what “settlement” refers to. Settlement is the process of finalizing a transaction, where the transaction is not able to be reverted.

A good example of settlement time is the values that exchanges use in order to process withdrawals from a blockchain. If they have given you fiat before a transaction becomes finalized, this can lead to a scenario where you get money from the exchange and still keep your crypto assets. It is important to achieve settlement of a transaction before any actions are done with that transaction.

Universal Settlement is achieved when any computation can be executed by one blockchain and the results of the execution can be used in any other blockchain. This type of settlement has traditionally been difficult to achieve in a completely decentralized way. Most solutions today create a blockchain in between the source and destination chain in order to guarantee Universal Settlement, typically for token transfers.

When a blockchain is added between a source and destination chain, the security is significantly reduced, as there is no way to prove that a system is sufficiently decentralized to the degree that you are guaranteed to receive your assets.

We will explore a use case that enables trustless, liquidity-optimized, native asset transfer between blockchains, but first, let’s start with how Universal Settlement is achieved through Entangled Rollups.

Entangled Rollup

The Entangled Rollup is an architectural design where connections between two independent blockchains can be made through interactions between their corresponding Layer 2s. These interactions synchronize state changes across networks, allowing for a seamless exchange of information and value.

Transaction Flow

1. The transaction is posted to the Source Layer 2 Rollup Contract.
2. The transaction is sent to the Source Layer 1 Rollup Contract.
3. The transaction is executed on the Source Layer 1 Shadow Contract.
4. The transaction execution is proved and relayed to the Destination Layer 1 Shadow Contract.
5. The data for the transaction execution is sent to the Destination Layer 1 Rollup Contract.
6. The transaction is sent to the Destination Layer 2 Rollup Contract.
7. A result occurs for a specific Destination Layer 2 Account (e.g. Tokens are minted).

A key point to note is that even though this flow starts from the Source Layer 2, a transaction can also be initiated on the Source Layer 1.

Architectural Design Benefits

• Trustless - does not depend on external, 3rd-party validation.
• Interoperable - can work with EVM and non-EVM blockchains.
• Generalizable - allows for generic messages to be sent to/from any blockchain.
• Scalable - users are depositing to a Layer 2, which would provide scalability benefits and liquidity retention in the ecosystem.

We can expand this architecture to solve a specific problem that is shared by all blockchains: fragmentation of liquidity.

Use Case: Universal L2 for Unified Liquidity

We will explore a use case that focuses on optimizing liquidity and leveraging the mint function of the L2 to facilitate efficient liquidity management, through a Universal L2.

Transaction Flow

1. The User submits a deposit transaction worth 100 USDT into the bridging contract on Ethereum and receives 100 USDT on Ethereum Universal L2 from the native bridge contract.
2. The User submits a burn transaction for 100 USDT to the burn address.
3. The ZKM Nodes generate a Proof of Burn for the User.
4. The User submits a redemption transaction and redeems the Proof of Burn on the Avalanche Universal L2, which mints 100 USDT from the native mint function of the Universal L2.
5. The User submits a withdrawal transaction worth 100 USDT from Avalanche Universal L2 and receives 100 USDT on Avalanche through the native bridge contract.

Universal L2 Benefits

• Users are providing liquidity by depositing to a Layer 1.
• Any funds that enter the Layer 1 can be used across all Layer 2s.
• Users can withdraw to any other Layer 1 blockchain that has deposits from other users.

We have examined a Universal L2 framework, where the main factor of increased liquidity is the number of L2s that become Universal L2s by enabling native minting through proof of burn. The effectiveness of Entangled Rollup structures primarily depends on the participation of other Entangled Rollups, with the network's utility increasing as more are integrated into the system.

Quantum Network

Merriam Webster defines “Quantum Entanglement” as “a property of a set of subatomic particles whereby a quantum characteristic (such as spin or momentum) of one particle is directly and immediately correlated with the equivalent characteristic of the others regardless of separation in space”.

Analogical to this definition, the Quantum Network’s “particle” is a message, its "characteristics" are properties, and its "space" is blockchains. What the Quantum Network represents is “...one [message] is directly and immediately correlated with the equivalent [properties] of the others regardless of separation in [blockchains]”.

The process of using Zero Knowledge Proofs (ZKP) to prove computation, i.e. retrieving data from a source chain and posting a generated ZKP to the destination chain, ensures that any transaction is correctly executed and settled. Using ZKPs for message passing, we can generate messages that immediately correlate properties across different blockchains in the Quantum Network that were previously incompatible.

Pavel Sinelnikov is Developer Relations Lead at ZKM

‍