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1. Collaboration with Common Prefix: We've successfully established a collaboration with the team at Common Prefix to delve deeper into a research direction that employs Zero-Knowledge Proofs for the optimization of Optimistic Rollups. 2. Rationale: Optimistic Rollups, while efficient, necessitate the replication of an L2 interpreter on the L1. Given the specifics of Cardano's architecture, implementing something like a MIPS interpreter in Plutus would be unrealistic. Leveraging ZK within the Optimistic Rollups allows for a more pragmatic approach. Instead of duplicating the interpreter, any dispute resolutions would happen in a ZK setting. This would only demand Cardano to support ZK primitives, which aligns more closely with its current capabilities and future trajectory. 3. Key Developments: Research Progress: Significant headway was made in assessing how ZK can be applied within Optimistic rollups, with the aim of bridging the technological gap between Ethereum and Cardano. 4. Technical Challenges: There were inherent challenges related to adapting zk-rollup technology for Cardano, especially when considering the differences in smart contract development and execution environments. Nevertheless, the team has been devising strategies to address these hurdles. 5. Blueprint Development: Preliminary outlines have been crafted for the proposed blueprint, with insights from the ongoing research and collaboration. Detailed drafting is set to commence shortly. We are planning to finalize the grant proposal within next 3 months.

We worked with a different implementation of zk-rollup so we could validate a different set of tradeoffs between their implementation (Mina) and the one from zkSync - The research was done around Mina’s kimchi elliptic curve and its programming language. One of the most important use cases is that Mina will enable the creation of trustless Oracles using any website that has a TLS (https). This will open up a lot of new use cases currently not possible in other virtual machines. - Another of the main advantages of Mina is that its entire blockchain can fit in 22 kb using zk-snarks. This could eventually be a Cardano smart contract. Cardano would need a small increase in tx limit and also the implementation of a new elliptic curve which it may not be as big deal as you could expect — recently secp256k1 was implemented. The information to recreate the state of the chain would be stored on C1 as a data availability solution. The current plan would be do an analysis on how to deploy Mina on top of C1 but with a plan to eventually port it to be directly on top of Cardano mainnet. Evidence: We are working on three smart contracts that will be created for Mina in order to test capabilities. A signing webserver using Mina crypto primitives, a smart contract Oracle, and a game. We successfully deployed a game sc and in next report we will be able to make all contracts public and show as a next evidence of proposal progress.

Review of multiple zk-rollup solutions and decided on doing deeper implementation research on zk-sync. Reviewed infrastructure, devops and smart contracts.

Deployment of zkrollups smart contracts to Milkomeda C1

The project is being implemented as planned. We are currently starting the research phase in SNARKs and STARKs