Espresso Systems CEO Ben Fisch and COO Charles Lu. Image Credits:<\/strong> Espresso Systems<\/em><\/p>\n<\/div>\n

To achieve greater throughput, Espresso uses ZK-Rollups, a solution based on zero-knowledge proofs that allow transactions to be processed off-chain. ZK-Rollups consolidate <\/span>multiple transactions into a single, easily verifiable proof, thus reducing the bandwidth and computational load on the consensus protocol. The method has already gained popularity on the Ethereum blockchain through scaling solution providers like StarkWare and zkSync, according to Fisch. <\/span><\/p>\n

At the core of Espresso\u2019s strategy, though, is a focus on privacy and decentralization. The team originally set out a year ago to build a flexible privacy-focused blockchain solution, and has since shifted its priorities to prioritize both privacy and scalability after realizing the \u201cmost immediate pain point\u201d for users has actually been the latter, Fisch said.\u00a0<\/span><\/p>\n

He added that the broad, industry-wide race to scale blockchain technology has been ongoing since 2018, which is when Solana and other layer-ones first started designing solutions focused on cost-effectiveness and throughput. New projects today face an even more complex challenge, according to Fisch.<\/span><\/p>\n

\u201cOne thing that\u2019s become evident of late is that it\u2019s now not just a race to scale, but a race to scale and make the fewest tradeoffs possible with regards to decentralization,\u201d Fisch said.<\/span><\/p>\n

While several different blockchain ecosystems use zero-knowledge proofs to improve efficiency today, that efficiency has come at the cost of decentralization, Fisch said.\u00a0<\/span><\/p>\n

\u201cIf you use a zero-knowledge proof to prove the validity of a large number of transactions that never get sent to the consensus protocol, then while the consensus protocol can verify their validity, they\u2019re not able to provide data to users that is needed for constructing future transactions,\u201d Fisch said. Users, then, rely on the ZK-Rollup server for access to that critical data \u2014 meaning the data is centralized on that server.\u00a0<\/span><\/p>\n

\u201cWe\u2019re working on a way of integrating the roll-up carefully with consensus so that we still achieve higher throughput and thus lower fees, but without compromising so much on decentralization,\u201d Fisch said.\u00a0<\/span><\/p>\n

Like decentralization, privacy is another fundamental consideration for many crypto users. Public blockchains such as Ethereum record all transactions anonymously in an electronic ledger open for anyone to view. Although users\u2019 identities are encrypted on the blockchain itself, if a particular wallet is linked to an individual, their transactions could be exposed <\/span>\u201cin real-time to anyone who might care to look, including business competitors and threatening actors looking for targets,\u201d according to Espresso Systems.<\/span><\/p>\n

The company\u2019s core privacy solution is a smart contract application called Configurable Asset Privacy for Ethereum (CAPE), which allows asset creators on the blockchain to customize who can see what information regarding the ownership and movement of those assets.<\/span><\/p>\n

Fisch said that CAPE is particularly well-suited for financial institutions or money service businesses that create blockchain-based assets because it allows them to balance the customer\u2019s need for privacy with the institutions\u2019 need for risk management and compliance. He shared the example use case of a stablecoin issuer that could create a private version of their coin that allows users to transact privately, while the issuer can still view transaction data.<\/span><\/p>\n