Zero-Knowledge Proofs: Powering Web3, Solving the Impossible Trilemma

As the blockchain's "transparent ledger" evolves into a "trusted black box," a digital infrastructure simultaneously satisfying privacy, compliance, and efficiency is being built. Zero-knowledge proofs are transforming from a cutting-edge cryptographic technology into a core engine driving the large-scale deployment of Web3. How will it break the long-standing "decentralization, scalability, and security" triangle in the blockchain field and usher in a new digital era where privacy and trust coexist?

According to on-chain data tracking by Dune Analytics and Artemis, in January 2026, the number of daily active unique addresses on the Ethereum mainnet experienced its first month-on-month decline since 2020, decreasing by approximately 3.2%. Simultaneously, Layer 2 networks employing zero-knowledge proof (ZKP) technology, such as zkSync Era and StarkNet, achieved a staggering 412% year-on-year increase in total monthly active unique addresses. This stark contrast is not accidental; it signifies that industry value and traffic are rapidly migrating to a more efficient and private next-generation infrastructure.

In its "2024 Global Zero-Knowledge Proof Market Outlook" report, market research firm Stratistics MRC predicts that the market for KYC (Know Your Customer) solutions based on zero-knowledge proof technology will reach $83.6 million in 2025 and grow to $903.5 million in 2032, representing a CAGR of 40.5%. This is just the tip of the iceberg of ZKP's vast application prospects. From financial transactions to identity verification, from supply chain management to medical data sharing, this cryptographic concept, born in 1985, is moving from theory to industrial practice at an unprecedented pace, reshaping the cornerstone of trust in the digital world.

01 Performance Leap: From Laboratory Theory to Commercial Infrastructure

Before 2023, zero-knowledge proofs were more like the "crown jewel" of cryptography laboratories. Their theoretical beauty was captivating, but the high computational cost of proof generation (often requiring minutes or even hours) and extremely complex engineering implementation kept them on the fringes of commercial application for a long time. However, over the past three years, the triple effect of algorithm optimization, hardware acceleration, and engineering innovation has propelled ZKP towards practical application at a Moore's Law-like pace.

This shift is evident in the pronouncements of industry leaders. Ethereum co-founder Vitalik Buterin stated at the 2024 Devcon developer conference, "If Layer 1 cannot continue to evolve, it may eventually evolve into a highly secure settlement layer specifically for ZK coprocessors or Rollups." This suggests that the architectural focus of blockchain may shift due to ZKP.

Performance leaps are a prerequisite for commercialization. Currently, next-generation general-purpose zkVM (zero-knowledge virtual machine) provers, represented by RISC Zero and Succinct Labs, have reduced the computational overhead of proof generation by 3-4 orders of magnitude compared to earlier solutions in 2022 when combined with dedicated hardware (such as FPGAs and ASICs) acceleration. For example, some lightweight ZKP solutions for mobile devices can already run locally on smartphones, enabling instant generation and verification of identity credentials, paving the way for large-scale consumer applications.

In the core battleground of blockchain scaling, the contribution of zero-knowledge proofs is even more groundbreaking. Taking Polygon zkEVM as an example, according to its Q4 2024 technical report, through continuous optimization of its proof algorithm and node architecture, its block verification time has been reduced from nearly 16 minutes in the early testnet to a stable 16 seconds. Transaction costs are reduced by approximately 45 times compared to the Ethereum mainnet during the same period, and over 99% of blocks can complete final confirmation within 10 seconds. This near-instant finality experience is bridging the performance gap between Web3 and Web2 applications.

02 Architectural Convergence: A Dual Revolution of Privacy and Scaling

The revolutionary nature of zero-knowledge proof technology lies in its core capability of "killing two birds with one stone": achieving efficient scaling while providing verifiable privacy protection. This contrasts sharply with traditional blockchain technologies, which often require a difficult trade-off between the two.

In the scaling field, ZKP achieves an exponential increase in throughput by "packaging" a large number of off-chain transactions and generating a concise proof for submission to the main chain for verification. According to Ethereum data platform L2Beat, as of early 2026, the total value locked (TVL) of all ZK-Rollup-based Layer 2 networks exceeded $11.7 billion, with a 24-hour transaction volume of $3.5 billion, accounting for half of the entire L2 ecosystem. StarkNet's test data is even more impressive: through deep optimization of the Cairo language and Stark proof system, the cost of a single ordinary transaction has been reduced to $0.002, a staggering 75,000-fold reduction compared to the peak Ethereum mainnet gas fees in 2023 (when a single transaction could cost over $150).

Regarding privacy protection, zero-knowledge proofs are transitioning from an "optional" feature in a few privacy-focused cryptocurrencies to a "default" configuration for next-generation DApps. Privacy is no longer a luxury that comes at the expense of convenience and performance. For example, the privacy-focused blockchain network Dusk, through its unique confidential smart contracts and protocol layer optimizations, has reduced the verification cost of privacy transactions by more than 60% in public testing while maintaining sub-second verification speeds. This means that whether it's a regular DeFi transaction or a complex commercial contract, users can enjoy financial-grade privacy protection at a negligible additional cost, which will undoubtedly greatly expand the application boundaries of blockchain.

03 Ecosystem Interconnection: Building a Trusted Interoperability Bridge for Web3

As the multichain universe becomes a reality, cross-chain flows of assets and data are becoming commonplace, but this brings with it security risks and trust challenges. Zero-knowledge proof technology has timely become a "trustless bridge" connecting various heterogeneous blockchains.

The 2026 IEEE International Conference on Blockchain and Cryptocurrency (IEEE ICBC) specifically set up a workshop on "ZKDAPPS: Decentralized Applications Driven by Zero-Knowledge Proofs," focusing on the application of ZKP in key infrastructures such as zkBridge (cross-chain bridge), zkOracle (oracle), and decentralized identity (DID). The core idea of ​​these applications is to verify the authenticity of cross-chain events or external data through cryptographic proofs, without relying on the honesty of third-party intermediaries.

A particularly inspiring case comes from the Chinese technology company MicroAlgorithm Technology. The company proposed a cross-chain privacy solution combining Lease-to-Stake (LPoS) and zero-knowledge proofs. In its test environment report with 1000 nodes, the solution maintained a high throughput of 3800 TPS while effectively hiding transaction paths and participant identities through zero-knowledge proofs, reducing the risk of potential data leakage by over 90%. This balance between efficiency and security/privacy provides a viable technical path for large-scale cross-chain applications at the institutional level.

More notably, ZKP is driving the on-chain process of Real Assets (RWAs). GCL Energy Technology, a Chinese new energy company, provides a benchmark case. The company successfully tokenized a 200 million RMB photovoltaic power plant asset using a compliance verification framework based on zero-knowledge proofs and completed cross-border green financing. In the traditional model, similar financing cycles involving multiple countries' laws, audits, and regulatory approvals typically last more than three months. However, through on-chain verifiable compliance proofs (such as asset ownership and environmental benefit data), the entire process was compressed to 15 days, significantly improving capital efficiency. This demonstrates that ZKP can meet the stringent requirements of both privacy and compliance in the real-world financial sector.

04 Service Deployment: Standardization of Zero-Knowledge Proofs as a Service

The widespread adoption of any disruptive technology relies on lowering the barriers to entry and standardizing services. The adoption of zero-knowledge proofs is undergoing a shift from "developer-driven" to "out-of-the-box" service-oriented approaches.

According to market analysis by Stratistics MRC, the global zero-knowledge proof KYC market is projected to surge from $83.6 million in 2025 to $903.5 million in 2032, representing a CAGR of 40.5%. Behind this rapid growth is the rise of ZKP-as-a-Service (ZKP-as-a-Service) platforms. These platforms encapsulate complex cryptographic operations into simple APIs or SDKs, allowing enterprises to integrate privacy-enhancing features without delving into cryptographic principles.

Practical applications are already underway. HashKey Exchange, a leading digital asset exchange in Asia, has integrated a zero-knowledge proof solution into its new KYC process. Users can generate a proof locally to verify that they have passed all compliance checks (such as age and nationality) without sending sensitive data such as their original passports and proof of address to the platform. The platform reports that this solution achieves a user verification success rate of over 98%, while reducing the risk of leakage of sensitive user privacy data stored on centralized servers to near zero.

At the developer experience level, efforts to reduce technical complexity have never ceased. Compact, a high-level language for ZK smart contracts designed by a team of renowned cryptographers, uses TypeScript syntax, allowing developers to write privacy-preserving logic in a familiar way, similar to Web2 development, greatly lowering the barrier to entry for traditional developers outside of cryptography engineers. This trend clearly indicates that zero-knowledge proofs are transforming from a highly specialized cryptographic tool into a standardized service module that can be easily invoked by a wide range of developers.

05 Hardware Breakthrough: Dedicated Acceleration and Paradigm Shift

Despite significant progress in software algorithm optimization, the large amount of parallel computation and complex mathematical operations involved in the zero-knowledge proof generation process places unique demands on computing hardware. In 2025, a benchmark test conducted jointly by AntChain OpenLabs and zero-knowledge hardware acceleration company ZEROBASE revealed a key cognitive turning point in the industry.

The test report pointed out that in widely used proof systems such as Groth16, although GPUs (Graphics Processing Units) can achieve speedups of over 100 times compared to CPUs in highly parallelized stages such as "multi-scalar multiplication" and "number-theoretic transformations," their parallel advantages are almost negligible in the crucial stage of "circuit constraint solving," and their efficiency may even be lower than that of high-end CPUs. This completely shattered the traditional hardware thinking that "stacking more GPU cores can linearly increase proof speed."

This discovery has driven the development of zero-knowledge proof hardware acceleration towards specialization and paradigmatic approaches. For example, HalO Labs, which focuses on hardware acceleration, claims that its custom zk chip based on FPGA (Field-Programmable Gate Array) can increase the proof generation speed of specific ZK-SNARK algorithms by 40 times while significantly reducing energy consumption. Meanwhile, startups like Ingonyama are dedicated to designing lower-level ASIC (Application-Specific Integrated Circuit) prototypes optimized for domain operations in zero-knowledge proofs.

In its 2025 technology outlook report, top venture capital firm a16z predicted that by the end of 2026, combined with the synergistic optimization of algorithms and dedicated hardware, high-end computing devices will be able to achieve "real-time generation" (typically in milliseconds to seconds) of complex ZK circuit proofs. This will spawn new business models such as "verifiable cloud computing," where any cloud service can provide customers with cryptographic proofs of the correctness of its computation process.

06 Programmable Privacy: A New Paradigm of Dynamic Adaptation

The next frontier in the evolution of zero-knowledge proof technology is towards programmable privacy. This is no longer a simple binary choice of "hiding everything" or "revealing everything," but rather allows developers to dynamically and granularly define which data needs to be proven and which needs to be hidden based on specific application scenarios.

The Midnight network being developed by IOG (Input Output Global) is a prime example. It employs a unique "public-private bi-state ledger" architecture. All transactions occur in a private sub-ledger, protected by zero-knowledge proofs; only the transaction's commitment (hash value) and necessary proofs of legitimacy (such as preventing double-spending) are anchored to the public main ledger. This design allows users to demonstrate to regulators or auditors their compliance with specific rules (such as anti-money laundering limits) without revealing any sensitive information (such as transaction amounts or counterparties).

Another leading privacy network, Aztec, supports diverse scenarios ranging from private DeFi and decentralized anonymous voting to enterprise confidential supply chain management through its programmable privacy architecture. Users or businesses can autonomously decide the visibility of their assets and selectively disclose proven financial health or transaction history fragments to specific parties, achieving a truly "trustless" business collaboration environment. This dynamically adaptive privacy framework completely returns data control to users, laying the foundation for widespread social acceptance of Web3's large-scale commercial applications.

07 Compliance Collaboration: Balancing Privacy and Regulatory Needs

Traditionally, privacy-enhancing technologies and regulatory compliance are often seen as opposing forces. Zero-knowledge proofs, with their core concept of "selective disclosure," have become an excellent bridge to bridge this contradiction. They make it possible to meet specific regulatory reporting requirements while protecting the vast majority of user privacy.

A shift in regulatory attitudes is a bellwether for the acceptance of technology. The U.S. Securities and Exchange Commission (SEC) has explicitly stated in its investigations of individual projects that certain tokens that only use zero-knowledge proof technology for transaction privacy protection and do not involve the transfer of asset control may not constitute securities in the sense of "investment contracts." The EU's landmark Crypto-Asset Market Regulation Act (MiCA) also classifies service providers offering zero-knowledge proof technology infrastructure as "crypto-asset service providers," providing them with a clear legal operating framework.

This increasingly clear regulatory environment is attracting traditional financial institutions to boldly enter the market. JPMorgan Chase is actively exploring ZKP for compliance reporting and cross-institutional privacy settlements on its Onyx blockchain network; Deutsche Bank has participated in several research collaborations on the application of zero-knowledge proofs in KYC and Anti-Money Laundering (AML). For these heavily regulated institutions, zero-knowledge proofs offer an unprecedented possibility: protecting trade secrets and customer privacy to maintain a competitive advantage while simultaneously gaining the trust of regulators by generating auditable compliance proofs—a balance almost impossible to achieve in traditional fintech solutions.

08 Future Outlook: Defining the Next Generation of Internet Infrastructure

Looking back at the history of technological development, zero-knowledge proofs are completing a leap from "a useful tool" to "defining the core infrastructure of the next generation of the internet." Its impact will extend far beyond the realm of blockchain, permeating broad areas such as digital identity, data markets, the Internet of Things, and artificial intelligence model verification.

The development direction of the Ethereum ecosystem also confirms this trend. Vitalik Buterin…