[Long English Thread] Lighter ZK Architecture Explained: How to Build Efficient and Flexible On-Chain Financial Solutions

Chainfeeds Guide:

As Ethereum executes its roadmap, potentially integrates ZK technology, and strives for significant scaling, the primary motivation for building independent alt-L1s—pursuing raw throughput—may diminish. In this emerging paradigm, the most successful platforms may not be those that build the highest silos, but rather those with robust security guarantees, deep integration with Ethereum’s rich liquidity, and execution power provided by custom ZK circuits.

Source:

jaehaerys

Opinion:

jaehaerys: In the landscape of on-chain finance, there currently exists a fundamental architectural divergence, particularly pronounced in the design of CLOB (Central Limit Order Book) exchanges. This divergence is not merely a functional difference, but a conflict of foundational strategies. On one hand, monolithic, application-specific L1 (Layer 1) exchanges like Hyperliquid and dYdX v4 pursue high performance by controlling their entire technology stack. While this approach can achieve low latency, it comes at a significant cost: fragmented liquidity, isolated ecosystems, and reliance on their own emerging consensus mechanisms rather than the battle-tested security model of a foundational layer. On the other hand, there is the modular L2 (Layer 2) strategy, advocated by Lighter. This model leverages Ethereum’s unparalleled security, decentralization, and network effects as a global settlement and data availability layer, treating these as features to be utilized rather than constraints to be escaped. This architectural choice is deliberate and deeply rooted in an engineering pragmatism. Lighter’s strategy is further validated by two powerful macro trends: first, the ZK (zero-knowledge) renaissance—ZK proofs, once a niche and occasionally misunderstood technology, have matured into an indispensable mainstream tool for scaling blockchains without compromising security. An increasing number of perpetual DEXs (decentralized exchanges) are adopting ZK technology, highlighting its key role in building the next generation of DeFi. Second, Ethereum’s proactive strategy to scale via ZK technology. The Ethereum Foundation’s roadmap includes progress aimed at significantly increasing base layer throughput and may incorporate ZK proofs as part of its scaling strategy. This ultimate vision positions Ethereum itself to become a global, potentially ZK-enhanced settlement layer. This strategic positioning makes Lighter not just a temporary scaling solution, but a native member of Ethereum’s future architecture. In this context, ZK-based L2s built from scratch are poised to inherit and compound the benefits of improvements at the base layer. In contrast, independent L1s like Hyperliquid, despite architectural features such as its integrated HyperEVM, are always in competition with the entire Ethereum ecosystem’s R&D progress. Therefore, Lighter’s success is essentially tied to Ethereum’s success, creating a powerful long-term strategic tailwind for Lighter. It is this foundational alignment that enables Lighter not only to achieve high performance and verifiable security, but also to deeply integrate with Ethereum’s vast capital base, starting with innovations in capital efficiency such as universal cross-margining. Lighter’s core architecture is designed from first principles to deliver superior performance without sacrificing verifiability. The protocol operates as a ZK-rollup, cleverly separating execution and verification functions. A centralized Sequencer is responsible for low-latency, FIFO transaction ordering, delivering the high-frequency performance traders expect. However, its power is strictly limited; it only determines transaction order, while the validity of execution is guaranteed by other components. Every state transition—every order submission, cancellation, trade, and liquidation—is handled by a Prover, which uses custom ZK circuits to generate cryptographic proofs ensuring the correctness of operations. At the heart of this proof system is the “Order Book Tree,” a novel data structure detailed in the Lighter whitepaper. Unlike traditional Merkle trees, the Order Book Tree is a hybrid structure that can encode price-time priority directly in its leaf nodes. This allows the matching engine to find and execute the highest-priority orders with optimal efficiency, requiring only a single leaf node access, making it possible to prove the fairness of the entire matching process at scale. The entire system is tightly connected to Ethereum through a critical security mechanism: the Escape Hatch. Lighter regularly publishes compressed state data to Ethereum, which users can use to reconstruct their individual account states. If the Sequencer goes offline or fails to process priority requests on L1 within the deadline, the system enters emergency mode. In this mode, users can use on-chain data to generate ZK proofs of their account value and withdraw assets directly from the L1 smart contract, completely bypassing the L2 operator. This provides unconditional self-custody guarantees, which independent L1s cannot offer. [Original text in English]