Zero-knowledge proofs will play a major role in the future of Web3, DeFi and metaverse: Survey
In its "State of Zero-Knowledge Report 2022" survey, the Mina Foundation gauges the sentiment of crypto traders and developers about zero-knowledge proofs. Among its key findings: More than 40% of respondents see Finance as the industry most in need of zero-knowledge proofs.
The Mina Foundation, the corporation responsible for serving the Mina Protocol -- the so-called "world's lightest blockchain" -- released today the results of its new survey titled "State of Zero-Knowledge Report 2022" that shows a greater awareness and adoption of Zero-Knowledge Proofs (or ZKPs) among crypto traders and developers, and the importance ZKPs will have in the future development of the metaverse, Web3 and cryptocurrencies.
What are Zero-Knowledge Proofs?
Zero-knowledge proofs – the mathematical methods used in cryptography to verify the truth of data without giving up the data itself – have gained popularity in the Web3 community over the past few years for their ability to provide scalability and privacy in Web3 applications.
For scalability, ZKPs make it possible for numerous data points to be contained in a single, "lightweight" proof, which enhances efficiency and scalability. And because blockchain technology is notorious for requiring vast amounts of computing power -- limiting its ability to scale -- ZKPs can help developers create lightweight decentralized applications (dApps) that can run on more common hardware devices such as mobile phones, making it possible for Web3 to be more accessible, and scalable, according to the survey.
As for privacy, ZKPs can enable users in Web3 – be it in DeFi, DAOs, and in the metaverse -- to share information securely that's necessary to gain access to goods and services without disclosing personal data that could make a user susceptible to hacking, exploitation and identity theft.
Key survey takeaways
Of the 1,978 crypto traders and developers surveyed in Mina Foundation's "State of Zero-Knowledge Report 2022" survey earlier this year, 46% said the primary advantage of ZKPs in applications are scalability and privacy.
Among the key findings in the survey:
90% said they see cryptocurrencies that incorporate ZKPs are more attractive than those that don't.
78% see ZKPs as important to the future of the metaverse and Web3.
More than 40% see Finance as the industry most in need of ZKP solutions, followed by healthcare (12%), social media (5%), e-commerce (3%), gaming and entertainment (2%), and collectibles such as NFTs (2%).
More than 48% of respondents expressed the greatest concern for government access to data, more so than third-party companies (44%), social media platforms (41%), Banks (40%) and crypto-wallets (36%).
The survey was created, distributed, and analyzed by the Mina Foundation, which created questions designed to gauge the crypto industry's sentiment toward zero-knowledge proofs. The survey was open for three weeks during the first quarter of this year, of which close to 2,000 crypto traders, crypto community members and developers answered questions based on their understanding of zero-knowledge technology.
About 76% of respondents said they've at least heard about ZKPs and understand what they are and that 42% believe that ZKPs will be "of the highest importance in the metaverse and Web3," according to the survey. "What's most interesting to me about the findings… is how the crypto community now strongly understands ZKPs, and that they can be used to protect their privacy," said Evan Shapiro, CEO of the Mina Foundation, in an exclusive interview with ZDNet.
Shapiro notes that this is a significant shift from years past, where ZKPs were merely a theoretical object accessible only to cryptographers and PhDs. "Achieving this industry-wide understanding that ZKPs can be leveraged to bring privacy to Web3 is a major milestone for the technology and for the future of its application to crypto and beyond," he added.
The Mina Foundation has been busy this year touting the praises of zero-knowledge technology in Web3 and the metaverse. In March, Mina received $92 million from tech financiers and billionaires to recruit new talent through grants to help achieve its goal of making Web3 infrastructure more secure and democratic using ZKPs.
ZKP's role in shaping DeFi
One area of focus for ZKPs is the financial community. In the survey, nearly 41% said the industry that could be best served by incorporating ZKPs is Finance, far surpassing health care, social media, e-commerce, gaming and entertainment, and NFTs combined. With the amount of DeFi usage rising, zero-knowledge applications with scalability and privacy benefits have an increased opportunity to help improve the industry's wider adoption," the report concluded.
Since its introduction, DeFi has been regarded by many tech-savvy traders and investors as a solution to the inefficiencies of the "traditional" global financial system. Using public blockchains such as Bitcoin and Ethereum for peer-to-peer transactions – DeFi cuts out the middleman regulator (and associated fees), providing better financing options. DeFi is becoming an alternative to many weary traders as the US economy enters bear market territory. "In my opinion, the bear market conditions will actually help to bring the projects that are enabling a user-controlled Web3 to the forefront," Mina Foundation COO Kurt Hemecker told ZDNet.
Hemecker notes that privacy is a key component of making the decentralized web a reality, and without it, true user empowerment won't exist. "Finance is the industry that stands to benefit the most from ZKP solutions… given how vulnerable such sensitive financial information data can be to hacks and thefts. ZKPs can help ensure financial data is secured to make Web3 safer for everyone," he says.
Despite the turbulent economy caused by record inflation, continuing supply-chain dilemmas, and now a bear market that threatens a recession, Mina is keeping its head down, developing and refining its Mina protocol and its ZKP smart contracts known zkApps. "The big priority for us is getting out to market, being able to launch the zkApps program so that we can deliver on our promise of programmability," Hemecker says. "We want to build an environment where people can come and build and play around and test out new ideas and we'll see what comes out of it."