When it comes to investing in cryptocurrency, narratives often play an important role in identifying promising investment opportunities.
In 2017 we had Initial Coin Offerings (ICO's), Ethereum Killers (NEO, for example), Interoperability (Wanchain & Icon), and zero transaction fees (IOTA & Nano/Raiblocks).
From 2020 - 2021 Decentralized Finance (DeFi) was the new narrative, bringing interest to cryptocurrencies such as MakerDao, Uniswap, Avalanche, etc.
Additional cryptocurrency narratives in 2021 included:
Savvy investors caught on to these narratives early and made some spectacular gains on their investments.
However, this doesn't mean you should always chase the next big narrative. In fact, I believe it's best to focus on the fundamentals behind a cryptocurrency instead and build a long-term position.
But at the same time, it's important to understand which narratives are attracting the most attention since the money usually follows soon after.
Once you know what the next narrative is, you can research cryptocurrencies within that narrative and build a position with the projects that have a good team and fundamentals behind them.
One narrative that is attracting a lot of attention right now is ZK-Rollups, and we'll be looking at this technology in this post.
We'll also look at three cryptocurrencies which use ZK-Rollup technology, with a secret, bonus cryptocurrency that is related to one of the platforms mentioned. Keep reading until the end and see if you can find it.
If you decide to invest in ZK-Rollup related cryptocurrencies , I recommend using Kucoin to easily buy and sell cryptocurrency, including the ones mentioned in this post. Kucoin is available worldwide, including the USA.
Explained simply, a ZK-Rollup is a smart contract that takes hundreds of transactions off the main blockchain and bundles them into a single transaction. It then sends a validity proof back to the main blockchain.
This reduces the amount of data being sent through Ethereum's main blockchain (Layer 1), enabling faster and cheaper transactions.
For a more detailed explanation on ZK-Rollups, read the next section or skip ahead if you already understand how they work.
Zero-Knowledge Rollups (ZK-Rollups) are smart contracts that scale the Ethereum network by processing multiple transfers off the main blockchain.
ZK-Rollups work by taking hundreds of transfers off-chain and combining or "rolling" them up into a single transaction. It then submits a SNARK (succinct non-interactive argument of knowledge) back to the main chain as proof of validity.
Validating a block with a ZK-Rollup is faster and cheaper since less data is included.
If you want to see a more detailed explanation on ZK-Rollups and Rollup technology in general, I recommend the following resources:
At the time of me writing this, there aren't many ZK-Rollup-based platforms with their own native token, hence why only three are included in this article.
Loopring (LRC) is a ZK-Rollup Layer 2 solution that allows for high-throughput, low-cost trading and payments on Ethereum.
It aims to allow anyone to build non-custodial, order book-based exchanges on Ethereum by leveraging zero-knowledge proofs.
With ZK-Rollups, Loopring claims its exchanges can offer faster settlements for traders.
Instead of settling trades on the Ethereum blockchain directly (like other DEX's do), ZK-Rollups enable Loopring exchanges to complete computations off-chain.
This reduces the number of transactions being submitted to the Ethereum network, increasing speed and reducing costs for traders.
zkSync is a Layer 2 scaling solution that offers cheaper and faster transactions than the main Ethereum blockchain (Layer 1).
It uses ZK-Rollup technology to process transactions off the Ethereum blockchain while still maintaining its security and finality.
zkSync was developed by Matter Labs which received $50 million in funding from investors including Andreessen Horowitz (a16z), Crypto.com, Blockchain.com, Aave, and more.
zkSync's benefits include:
zkSync does not currently have a native token, but they're planning on releasing one. I recommend following their social channels if you don't want to miss out.
Immutable X is a Layer 2 scaling solution for trading Ethereum NFTs. It uses ZK-Rollups to enable instant trade confirmation, over 9,000 transactions per second and zero gas fees.
Since Immutable X is a Layer 2 for Ethereum, ownership of NFTs isn't affected since it inherits the security and finality of the Ethereum blockchain.
Immutable X was developed by the company behind God's Unchained, a Free-to-Play NFT trading card game similar to the popular Hearthstone.
The Immutable X marketplace will be used to trade God's Unchained cards initially, but as time goes on, they intend to open up the marketplace to assets from other games.
Benefit's of Immutable X include:
One of Immutable X's huge benefits is the zero gas fees for trading NFTs. This simplifies the process of trading NFTs between users, making it easier for mass adoption.
Immutable X looks very promising, especially since it covers three major narratives in the cryptocurrency space: ZK-Rollups, NFTs, and Gaming. It's also backed by an NFT trading card game that has the potential for mass adoption.
As the Immutable X exchange matures and attracts assets from additional game developers, I can see this project becoming huge.
Immutable X has its own token (IMX), which you can find on Kucoin. As a bonus recommendation, you can find God's Unchained cryptocurrency (GODS) on Kucoin too.
You can find Loopring (LRC) on Binance. If you live in the USA, you can find it on Kucoin.
Immutable X (IMX) is available on Kucoin along with God's Unchained (GODS).
zkSync has not yet released a token for their platform yet, but you can follow their social channels to stay updated on a release date.
I hope you enjoyed this story; feel free to check out the useful resources below:
BitPanda — If you live in Europe, one of the best exchanges to buy cryptocurrencies with cash, including Bitcoin (BTC), Ethereum (ETH), Polygon (MATIC), and many more. Only available in Europe, Canada, and Mexico