An introduction to the concept of Validium and how it works

Blockchain technology has advanced significantly over the years, but scalability remains one of the key issues. This article will introduce Validium, explore how it works, and how it can optimize Ethereum scalability.

What is Validium?

Validium is a scaling solution for Ethereum that employs off-chain data availability and computation for efficient processing of transactions. Unlike zero-knowledge rollup (zk-rollup), which stores some data on-chain, Validium stores transaction data off-chain and uses zero-knowledge proofs (ZKP) to verify transaction validity.

How does Validium work?

Validium executes transactions outside of the Ethereum mainnet, utilizing smart contracts on Ethereum to ensure their validity and integrity. Next, we’ll cover some of Validium’s key features.

Trading

To execute a transaction through Validium, the user needs to send the transaction to the operator. Operators are nodes responsible for executing transactions on the Validium chain and can be a single entity or a group of entities elected through a proof-of-stake (PoS) system.

The operator collects a large number of transactions, processes them in batches off-chain, and once the processing is complete, uses a special system called a Proof Circuit to create proof that the transaction was correctly executed.

State Commitment

Imagine the state of Validium (the record of all accounts and their balances) as a big tree, which is the Merkle tree. The root of the tree is the state root, which is like a fingerprint and reflects the overall state. This state root is stored on Ethereum.

When the operator processes a transaction, it updates the state root to reflect the new balance and account status; it then sends the updated state root to the Ethereum mainnet along with proof that all operations were performed correctly.

Unlike zero-knowledge aggregation, block producers on Validium do not need to publish all transaction details on Ethereum. If Ethereum successfully validates the proof, the new state will be accepted and Validium will be updated.

Deposits and Withdrawals

Users can transfer funds from Ethereum to Validium simply by sending ETH or other tokens to a special contract on Ethereum. The contract will pass this deposit to Validium off-chain and be credited to the user’s off-chain account.

To withdraw funds back to Ethereum, users need to submit a withdrawal request to the operator. The operator will place the request into a batch and once the batch is verified on Ethereum, the user can withdraw the funds.

Validium and EVM Compatibility

Simple Use Cases

For simple use cases such as token exchange and payment, Validium can quickly process many transactions without storing all data to the Ethereum mainnet, which is extremely efficient. It can be seen that it is more suitable for use cases where the transaction process is simple and does not require complex calculations.

Challenges in smart contracts

Smart contracts are programs that run on the blockchain and usually involve complex operations. Validium faces considerable challenges in this regard, because proving that complex operations have been executed correctly requires more powerful computing power, which makes it difficult for Validium to support the various functions provided by smart contracts.

Potential solutions

Some projects are studying how to improve the compatibility of Validium with Ethereum smart contract functions. One option is to create special versions of programming languages, such as Solidity (the programming language used to write Ethereum smart contracts) optimized for Validiums. However, this solution may have its limitations and may not support all functions in the regular Ethereum programming environment.

Advantages of Validium

Efficiency

By reducing the data storage and computing burden of the Ethereum mainnet, Validium can achieve up to 9,000 transactions per second (TPS). This is critical for applications such as decentralized exchanges (DEX) where speed and cost-efficiency are paramount.

Reduce costs

Validium does not publish transaction data on the chain, which can greatly reduce gas fees, help users reduce transaction costs and increase profits.

Enhanced Security

By storing data off-chain, Validium can improve transaction privacy and add additional security protection without affecting scalability.

Challenges facing Validium

Data availability risk

Validium mainly relies on off-chain data availability, and risks arise from this. If the operator or data availability manager withholds transaction data, the proof required to withdraw user funds may not be generated.

Centralization Risk

Generating validity proofs requires specialized hardware, which may lead to centralization. If only a few entities can afford the necessary resources, they may dominate the network and weaken its decentralized nature.

Conclusion

Validium is a scaling solution that optimizes the Ethereum network by processing transactions off-chain while ensuring transaction integrity through zero-knowledge proofs. By solving the limitations of on-chain data storage, Validium can increase transaction throughput and make an important contribution to solving blockchain scalability issues.

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