An optimistic summary designed to reduce the cost of private token transfer
Layer 2 scaling solution Polygon launched Nightfall to reduce the transaction cost of private transfers of ERC20, ERC721 and ERC1155 tokens. This update to the original Nightfall network uses Optimistic Roll-up technology to reduce costs with privacy achieved by leveraging zero-knowledge proofs.
Due to the growing demand from businesses that need to interact with each other by utilizing smart contracts to manage the exchange of goods or services, Polygon has launched a public, privacy-focused Layer 2 stacking solution called Polygon Nightfall. In collaboration with Ernst & Young (EY), the project will enable accessibility and privacy for companies that want to use Ethereum.
The Polygon team released the Nightfall Beta Mainnet on May 17, which will be tested in collaboration with EY. Who partnered with Polygon to research and build permissioned private industry blockchains for businesses. EY already has two flagship blockchain-related services in EY OpsChain and its Blockchain Analyzer. Both now connect to Polygon Nightfall, and current users can access them by connecting to the Polygon Network.
Slow down, what’s a roll-up?
A digest enables off-chain aggregation of transactions within an Ethereum smart contract, reducing fees and congestion by increasing the throughput of the blockchain from its current 15 transactions per second (tps) to over 1000 tps.
The two rollup approaches are Optimistic Roll-ups and ZK-Roll-ups and they differ in the way they ensure validity. For Optimistic Roll-ups, validity is ensured by a synchronicity and fraud-proof assumption, while for ZK-Roll-ups, validity is ensured by zero-knowledge proofs, which is the system that Nightfall will use.
ZK-Roll-ups are a layer 2 scaling solution where all funds are held by a smart contract on the Ethereum mainchain. Meanwhile, it performs off-chain processing and storage where sidechain validity is ensured by zero-knowledge proofs. Zero-knowledge proof is a method by which one party (the prover) can prove to another party (the verifier) that it knows a value X, without conveying any information other than the fact that it knows the value X.
Think about the way your debit card or credit card works when moving funds. These days, it’s possible to send your money across multiple apps in a few minutes. For example, from your fiat bank account to a top-up card like Revolut or Monzo to an exchange like Coinbase. These transactions seemingly happen in seconds, but there are processes going on in the background that take longer. But as a user, you just need the peace of mind that the money is available and safe.
Private transfer of cryptocurrencies and NFTs
Nightfall enables the transfer of three classes of NFT tokens and essential cryptocurrencies in the blockchain industry. ERC20 is the most common standard used to create and issue smart contracts on the Ethereum blockchain. ERC721 is a standard for representing ownership of non-fungible tokens, where each token is unique, and ERC1155. A reasonably new token standard aims to build on the best of previous standards to create a gas-efficient, fungibility-independent token contract.
Polygon Nightfall is part of Polygon’s suite of scalability solutions, which includes Polygon Hermez, Polygon Miden, and Polygon Zero. The critical difference is that Nightfall is a privacy-focused digest designed for enterprise use cases by combining the concepts of optimistic digest and zero-knowledge cryptography (ZK) to deliver private and scalable transactions.
No value or target tracking in Nightfall
Nightfall provides greater scalability and removes a barrier organizations face when using blockchain for daily activities, namely the lack of transaction privacy on public blockchains. Nightfall adds a layer of confidentiality so that key transaction parameters such as value and destination cannot be traced.
These two features mean that companies see Nightfall as a way to run their business logic and coordinate with their supply chain on a decentralized network at a sustainable price point, all while maintaining the inherent security and privacy of the Layer-1 Ethereum network.
Nightfall is Polygon’s first blockchain solution for businesses, enabling them to perform their complex everyday functions with ease. It uses a Hybrid ZK – Optimistic Summary to provide the following features to businesses:
- Security: Ethereum security as a settlement layer
- Efficiency: fast transactions and low fees
- Privacy: No third party access to transactions and data
Why Polygon and Nightfall are important
The last 2 years have seen Polygon set new standards with the B2C side of its operations to become a leading blockchain with a well-developed and utilized dapp ecosystem. Through DappRadar, users can track thousands of Polygon dapps across all major categories, as well as track Polygon NFTs through our dedicated NFT explorer. DappRadar’s portfolio manager tracks your Polygon assets so users can monitor all their Polygon activity, buy and sell NFTs, and more.
Fast transactions, low fees, and supporting dapps that offer the same services as Ethereum counterparts have helped Polygon stay relevant and build a strong presence as the go-to layer 2 solution.
However, Polygon acknowledges that public blockchains are not suitable for commercial use, as all transactions are visible to third parties. Fundamentally, companies will not want their transactional data to be shown to the public. This has nothing to do with hiding shady deals. It is simply the direct competition of organizations with each other, and revealing critical financial strategies could lead to problems.
The global supply chain industry is worth an estimated $50 trillion and blockchain technology, more importantly immutable ledgers and smart contracts can massively streamline things. EY OpsChain is already helping companies track and manage their supply chains.
Nightfall will allow them to create NFTs that represent real-life assets, traceable on-chain and verifiable within inventory. Additionally, Nightfall will be faster and cheaper for organizations to use than legacy solutions. A fact that will become increasingly important in the harsh economic conditions of the coming years. At the same time, the privacy of sensitive data will be preserved.
Aside from this, there are use cases in industries, such as finance, healthcare, and education. Polygon is important because it has proven to be a strong blockchain for embedded user smart contract applications, while a solution like Nightfall is important because it can empower businesses to transform the way they work.
The foregoing does not constitute investment advice. The information provided here is purely for informational purposes only. Please exercise due diligence and investigate. The writer holds positions in various cryptocurrencies including BTC, ETH, and RADAR.