Validium - a new approach to storing transaction data
However, second-generation blockchains were not designed with scalability in mind. Hence, as cryptocurrencies grew in popularity and the number of active users increased, Ethereum faced the problem of low bandwidth.
Due to the lack of scalability mechanisms, high user activity led to serious transaction delays in the network and high fees, which at the peak reached several tens of dollars. One solution to the problems with Ethereum network throughput was second-layer solutions like Validium.
What is Validium?
Validium is a Layer-2 solution that optimizes the performance of the underlying Ethereum blockchain without compromising security or decentralization.
How does Validium work, and what problems does it solve?
The Validium protocol processes transactions outside the Ethereum network similarly to Arbitrum and Optimism. Transactions made on the Validium network are collected into packets (rollups) and then sent to the underlying Ethereum network, where they are finally validated and deposited into the blockchain. According to observers, Validium's solution can process up to 9000 transactions per second.
Validium uses Zero Knowledge Proof (ZKP) technology, which allows you to confirm data reliability without disclosing it. This approach significantly reduces the time required to process transactions, thus significantly increasing their speed. This technology is trendy among developers of modern second-level solutions.
However, Validium has one essential difference from second-level networks that use another technology based on zero-disclosure proofs (Zk-Rollups) — it is the way the solution approaches data storage organization. Instead of rollups, Validium uses so-called "validities." While networks based on ZK-Rollups place transactions together with data in packets, in Validium's solution, only block headers are placed, and the rest of the information is stored separately and hidden from users.
Strengths and weaknesses of Validium
One of Validium's main advantages is that the underlying technology helps improve Ethereum network performance by reducing the load on the underlying blockchain. By storing some of the data outside the blockchain without disclosing it, Validium provides additional transaction privacy.
In addition, Validium's solution reduces the cost of transaction fees by eliminating the need to send all data to the Ethereum network.
However, the Validium solution also has its own risks, including those related to data access. Network participants responsible for data storage can potentially disclose information about transactions, recipients, and senders. This risk not only threatens users' privacy but can also lead to problems with access to their digital assets.
Another risk of Validium relates to the possibility of centralization: processing technology-based transactions using zero-disclosure proof-of-stake requires special hardware that is, among other things, complex to set up. In other words, it's not available to everyone.
Does Validium have a token?
As of August 2024, Validium does not have its token. This phenomenon is not uncommon for Layer-2 networks: for example, Arbitrum and Optimism also initially lacked their own tokens — they were released much later than the mainnet was launched.
There is no information yet on when and when the Validium team will release its token.
Validium's prospects
Validium cannot be said to be significantly different in any way for the better from the plethora of other similar Ethereum scaling solutions such as:
- Polygon,
- Arbitrum,
- Mantle Network,
- Optimism,
- Base.
Each of these networks provides reliable technology for fast and cheap transactions. In addition, competition between Layer 2 solutions continues to grow, with more new severe players entering the DeFi market, such as:
- Scroll,
- Blast,
- zkSync.
