Vitalik Buterin's Progress in Zero-Knowledge Technology and the Investment Opportunities within Ethereum's Layer-2 Ecosystem

Following the Merge, has transitioned into a fresh stage, largely influenced by Vitalik Buterin’s emphasis on zero-knowledge (ZK) technology. Recent initiatives, such as the proposal to swap out the modexp precompile and the endorsement of ZK-powered layer-2 (L2) solutions like ZKsync’s Atlas update, highlight a significant move toward more scalable and streamlined blockchain systems. For those investing in Ethereum, these changes represent more than just technical progress—they offer a reason to reassess the financial prospects of ZK-driven L2 platforms within the Ethereum network.

Technical Foundations: Vitalik’s ZK-Centric Vision

Vitalik Buterin has pointed out that the modexp precompile, an older feature used for modular exponentiation, is a major obstacle for scaling ZK-EVMs. Transitioning this function to standard EVM bytecode could cut ZK-proof creation times by as much as half, while also streamlining the

landscape, according to a . Although this adjustment might raise gas fees by 15–25%, the compromise is considered reasonable due to the limited use of modexp (mainly for RSA verification or bridge security), which can be replaced by more advanced solutions like SNARKs, as mentioned in a . This upgrade supports Ethereum’s broader mission to enable ZK-rollups to handle transactions at speeds suitable for enterprise use, a crucial step for widespread adoption.

At the same time, Buterin has spotlighted ZKsync’s Atlas upgrade as a model for L2 scalability. This update achieves over 15,000 transactions per second (TPS), one-second finality, and minimal fees by transforming the liquidity dynamics between L1 and L2, as outlined in a

. By removing the need for separate liquidity pools, Atlas simplifies the process for both users and institutions, including those dealing with Real-World Assets (RWAs), positioning ZK-based L2s as a cornerstone of Ethereum’s next chapter.

Market Dynamics: ZK L2s as Growth Drivers After the Merge

The Dencun upgrade to Ethereum in March 2024 further boosted the economic case for ZK L2s by introducing “blob” data, which cut L2 data posting expenses by 90–98%, as reported in a

. This has led to a rapid increase in L2 usage, with platforms like Base and now handling more transactions than Ethereum’s main chain. For example, Coinbase’s Base L2 processed 109 million transactions in a single month in 2024, highlighting the migration of user activity to L2s, as detailed in the same .

From a financial perspective, ZK L2s are evolving into independent ecosystems. ZKsync’s revamped tokenomics, for instance, links the value of its ZK token to network earnings through mechanisms like buybacks and burns, creating a deflationary effect, as explained in a

. Expected staking returns of 5–10% per year further encourage long-term involvement, and the token’s shift from governance to utility ties its worth to actual platform activity. Meanwhile, Zama’s acquisition of KKRT Labs (Kakarot) aims to process over 10,000 confidential transactions per second, paving the way for privacy-focused DeFi and stablecoin payments, as noted in a .

Project Comparisons: ZKsync, StarkNet, and Scroll

During the third quarter of 2025, ZKsync’s Atlas upgrade showcased performance at an enterprise level, with its sequencer reaching 43,000 TPS and Airbender enabling transfers at just $0.0001 each, according to a

. Its modular design, which is compatible with EVM and will support WASM/RISC-V in the future, makes it a central point for interoperability among L2s. , on the other hand, has focused on decentralization through its Grinta upgrade, introducing a multi-sequencer system and achieving four-second block times, as described in a . The network’s total value locked (TVL) tripled in Q3 2025, with BTCFi activity contributing $150 million in stablecoins and 650 BTC staked, as mentioned in the same . Although less detailed here, Scroll remains a significant contender in the EVM-compatible ZK-rollup space.

Investment Implications

The combination of technical breakthroughs and economic models in ZK L2s points to strong long-term prospects. For Ethereum, expanding L2 adoption could increase overall fees and boost ETH’s value, as L2 activity enhances the network’s usefulness. Still, issues like modexp inefficiencies and rivalry among L2s require careful consideration. Investors should focus on projects with transparent tokenomics, solid enterprise collaborations, and clear technical advantages—ZKsync’s Atlas and StarkNet’s Grinta are prime examples.

Conclusion

Vitalik Buterin’s advancements in ZK technology, along with the progress of L2 solutions like

and StarkNet, are reshaping the conversation around Ethereum’s scalability. For investors, the post-Merge landscape presents a rare chance to benefit from the intersection of cryptographic innovation, economic incentives, and real-world usage. As ZK-based L2s continue to surpass Ethereum’s base layer in both throughput and cost-effectiveness, their financial promise—supported by innovative tokenomics and growing institutional interest—will likely define the next era of blockchain advancement.