ZKX
ZKX
06 September 2023
3 min read

ZKX Appchain: Bridging the gap between Performance and Security for Traders

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Introduction

We’re back with our biggest update of the year so far, and this one’s a game-changer.

Presenting: ZKX Appchain

Throughout our building journey, our focus has always been building a trustless, permissionless, and decentralized architecture while delivering the performance of a CEX with the security of a DEX. Our move to ZKX Appchain represents the final piece to achieve that vision. This is a natural evolution of our long-term strategy to provide the user with high TPS, unified liquidity, and minimal slippage. Let's dig into the why in the next section.

Why the move to ZKX Appchain?

With our initial protocol designed around decentralized functions via smart contracts, our journey through the first testnet highlighted scalability challenges in reaching our desired level of performance, particularly with intricate aspects like funding rates, complex trading logic in the world of L2s. We realized that scaling a future-proof DEX that can onboard hundreds of thousands into DeFi required an underlying infrastructure that was free from the L1 and L2s block production time. In other words, scaling the computation of an orderbook at higher frequencies can't happen within the current infrastructure. This realization prompted us to accelerate the development of the ZKX node network, leading us to turn it into a full-fledged appchain for ZKX protocol.

Deep dive into ZKX Appchain

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ZKX Appchain is an omnichain layer that connects users to our exchange across multiple L1s and rollups. As a result, you have a continuous flow of liquidity and interoperability, allowing us to deliver an elevated trading experience to you without chain limitations.

During the conceptualization phase, our mission was clear: to build an app chain framework that operates autonomously. Imagine a scenario where the main chain encounters a slowdown or comes to a halt—our orderbook remains resolutely operational. Our appchain, guided by trusted validators in the beginning, continues to function, with a vision to evolve into open permissionless validation in the future.

Crucially, the order book's transaction processing speed flexibly adapts to market demands, breaking free from the constraints of the main chain. The result is a unified liquidity pool, regardless of its origins. This innovation empowers rollups and L1s, ensuring liquidity and safeguarding user funds. Simultaneously, it ushers in a dynamic and scalable derivatives ecosystem and a new era of user-centric DeFi experience.

What resides on L2 and ZKX Appchain

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You start your trading journey on L2, where your account resides. Each L2 trading account is matched to a sub-trading account on the ZKX Appchain. Your funds are on L1 and L2, ensuring you have control over them. On the Appchain, the Orderbook and Substrate manage trade processing and verification, all recorded on-chain and accessible via the Block Scanner.

Functions like Profit and Loss (P&L), Liquidation, and Funding Rate calculations are executed within Substrate and then batched from the appchain to L2. This process maintains the accuracy of your account balance.

While deposits and withdrawals occur on L2, the integrity of your account data is maintained through instant synchronization between L2 and ZKX Appchain. The division of logic between L2 and the appchain guarantees a precise and dynamic trading experience.

The validators can also provide price feeds through the internal oracle module, guaranteeing rapid and accurate data updates. This simplifies the process to seamlessly create different markets and list assets in the future as soon as the community wishes to do so.

Key features of ZKX Appchain

Performance & Scalability - Elevated by the architecture shift, ZKX Appchain introduces linear scalability beyond the block production time of the underlying blockchain and rollup, delivering instant settlements with exceptional speed.

Robust Risk Management - ZKX adopts a dual-layer strategy for efficient risk management. While L1 and L2 handle withdrawals and the insurance fund, the custom Substrate implementation manages deleveraging, liquidations, and any number of trades.

API Integrations - The novel ZKX architecture brings robust APIs to break barriers for advanced traders and automated strategies, bringing easy access to DeFi trading to institutions.

Unified Liquidity - It liberates users to access the exchange seamlessly across multiple L1s and rollups, creating unified liquidity. Account creation on any chain facilitates an uninterrupted depth of market, ensuring a dynamic trading journey.

Self-Custody & Provable Transactions - Leveraging account abstraction on L2s guarantees self-custody and transparency, putting users in control of their funds on ZKX accounts. While provable transactions on the ZKX appchain enable users to validate trade integrity and gain full visibility into settlements through the ZKX block scanner.

The Path to Decentralization

Our mission has always been anchored in the principles of trustlessness, permissionlessness, and true decentralization. From the very beginning, these core principles have guided our efforts and defined our commitment to providing equal access to all participants, all without forcing our users into a trade-off between performance and security.

The ZKX appchain brings us closer to this reality and the potential of dedicated appchains within the Ethereum ecosystem. Starknet, zkSync and other L2s have begun work to allow future compatibility with Rust-based stacks like Substrate, enabling the ZKX appchain to expand in the future with access to ZK proofing and sequencing as well as further decentralization.

The initial implementation will be on Starknet with plans for future integration with other Ethereum ecosystem infrastructure. The appchain architecture promises compatibility, composable infrastructure, and high throughput, while retaining the ability to abstract away the complexity of the DeFi user experience and offer a low-fee environment that can cater to any user around the world.

In this journey to realize our vision, we see the following stages:

V1 - ZKX core team will provide validators during mainnet launch.

V2 - Progressing to a phase of trusted validators, who can provide scalable resources to the protocol and high-speed price feeds.

V3 - Advancing towards full decentralization and permissionless architecture, with plans to introduce staking mechanisms for ZKX validators as a pivotal step in this transformation.

Each step reinforces our resolute commitment to realizing a truly decentralized future, and following the ethos of open-sourcing ZKX's technology will be realized along the way. And we look forward to seeing you joining us in that journey.


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