Feb 1, 2021
The “M.” ZK-Rollup Ecosystem — Lowering costs and increasing speed for DeFi & Ethereum Transactions.
NOTE: All references to ‘NIX’ and ‘NBT’ in this article refer to the rebranded ERC-20 tokens after the upcoming token swap.
NIX Pivoting to Ethereum to Provide Solutions
The DeFi explosion in 2020 proved what a versatile and exciting platform Ethereum is, but it came at a price. That price was exploding transaction fees and increasing transaction confirmation times as the overloaded system struggled to cope with the huge demand.
The impact was particularly felt on decentralized exchanges (DEX’s) such as Uniswap, where simple token swaps became unaffordable and time consuming. These issues create an unfortunate paradox for DeFi projects trying to capitalize on sudden ‘hype cycles’ — they want to on-board new users, but new users are averse to competing with whales on transaction costs. The little guy is frozen out of the market while whales pay what it takes to move capital through the Ethereum network, in & out of hot projects.
With NIX moving to the Ethereum blockchain and developments already in progress towards creating a privatized DEX of its own, these issues had to be solved.
The answer is ZK-Rollups, an L2 scaling solution in which all funds and transactional data is held by a smart contract on the main chain. It allows transactions and storage off-chain with users able to transact freely, with everything settling to the main chain at a user-defined point in the future.
ZK-Rollup DEX and an Incentivized Ecosystem
This technology will allow NIX to bring its leading privacy functionality to Ethereum while retaining full control over the cost of transactions.
Slow transaction times and congestion will not be an issue with the new ZK-Rollup DEX, allowing users to quickly respond to changing market conditions. Users will only need to pay for gas on Ethereum when entering or exiting the ZK-Rollup ecosystem. Transactions within the DEX will cost a tiny fraction of their Ethereum equivalent due to the nature of the scaling solution offered by ZK-Rollups, and these cost savings are passed onto end-users.
The ecosystem will be secured by validators — holders of more than 40,000 NIX who maintain specialist nodes (rewarded with a proportional share of trading fees) — and governed by NBT holders (more on tokenomics coming in a future article).
Currently, Uniswap is averaging over $2 million in fees every week, Sushiswap over $1 million. Users of these platforms will appreciate an up-and-coming competitor that saves them time, money and keeps every transaction private. Capturing a small fraction of these markets will lead to higher demand for NIX tokens by those wanting to set up a fee-yielding validator node. Once the token-swap is complete, there is no more scheduled emission for NIX (total supply will = circulating supply) and staking/node rewards will be retired — the only way to acquire it then is on the open market.
A Unique Proposition, Ripe for Adoption
DeFi projects and users will choose to allocate liquidity to desired pairs within this ecosystem because it allows them to offer cryptographic privacy and scaling to their user base. Rather than go through the laborious and costly process of creating their own sidechain or privacy layer, they can just create a pair on our ZK-Rollup DEX. This will provide users access to cheap, fast and private transactions at any time as well as deeper integration with native dApps, should they choose to tap into our infrastructure directly via our interoperable SDK.
One thing is certain — we’ve been working on the idea of privatizing tokens for a long time. NIX was the first project to perform an automated cross-chain private atomic swap, but is moving away from that approach towards the ZK-Rollups scheme because it brings us far closer to the only thing that has been holding NIX back — access to liquidity. Now, after pivoting to a ZK-Rollup DEX operating on Ethereum, access to liquidity won’t be an issue.
There may be other projects out there offering their own take on privacy for tokens, and there are certainly alternative DEX’s gaining traction without offering much in the way of privacy or scaling solutions. However we believe that we’re the only ecosystem out there with a community-led DAO which governs a fully decentralized ZK-Rollup DEX, bringing a balance of both privacy and scalability to the swap market. Imagine if Robinhood was community-governed and permissionless — quite simply, millions of traders would not have been frozen out of protecting their investments and the free market would have been preserved.
More information on the simple-to-use and marketable swap app being created by NIX will be coming in a future article, but it’s clear to see that facilitating fast, low cost transactions in the huge world of Ethereum and DeFi is a game changing strategy for the new NIX.
2021 will be a transformational year for the dual-token ecosystem and its holders.
Thanks for reading.
