• bitcoinBitcoin$19,286.940.00%
  • ethereumEthereum$1,306.13-0.56%
  • elrond-erd-2Elrond$48.101.05%

Hermez Network Addresses the Ethereum Gas Fee Issues

A decentralized zero-knowledge rollup (zp-rollup), Hermez Network, has now officially launched its mainnet. The project is notable for the fact that it aims to lower the gas fees on Ethereum by combining multiple transfers into only one transaction.

As of now, every transaction, regardless of size, has a cost. Several transactions can take place at once, in an uncoordinated way, which leads to a higher cost of processing any individual one. “Instead of sending multiple unique transactions, it compresses and aggregates thousands of them in batches,” reports beincrypto.com.

Developers have high hopes for the product – they expect that the batching will be able to reduce the Ethereum transaction costs by up to 90%. On top of this, Hermez is not expected to contribute significantly to the network’s processing load while doing its thing.

Because Hermez is a zk-rollup, it is basically a layer on top of Ethereum that uses the network for data storage and not for computation. This means that it can handle data availability on-chain, but that the computation takes place off-chain. It also makes use of easily verifiable zero-knowledge proofs that are able to show that the off-chain computations have been carried out as they should have.

Proof-of-Donation Mechanism

If you become a network coordinator, you can contribute to the Hermez Network. This would require you to run hardware that verifies and batches transactions – it is basically where the computations take place. Following this, the batched transactions are recorded on the Ethereum blockchain.

An auction will take place in which coordinators will bid for the right to process the transactions. The bids are placed using the Hermez Network native utility token, known as HEZ. If you win the auction, you have 10 minutes to process as many transactions as you can. Following the completion of the transactions, the coordinator will receive the transaction fees as a reward.

This system relies on a new consensus mechanism, named Proof-of-Donation. This means that 40% of the winning bid of the coordinator will go back to the ETH developer community. The mechanism has the role of aligning the incentives of the ETH community, the coordinators of Hermez, and the network users.

Previous articleNext article

Leave a Reply

Your email address will not be published.