Polygon acquires ZK-rollups startup Mir Protocol for $400 million

Polygon (formerly Matic Network) has made yet another acquisition in the ZK-rollups space, buying Mir Protocol for $400 million.

Mir is an Ethereum scaling startup that utilizes zero-knowledge proof (ZK-proof) technology. A ZK-proof is a cryptographic tool that can be used to create ZK-rollups. ZK-rollups enable transactions to be processed but don’t require all transaction data to be posted on Ethereum. This helps to reduce the block space used on Ethereum — enabling it to scale — and reduces gas fees.

The deal follows Polygon’s acquiring of Hermez Network for $250 million in August.

Polygon says Mir Protocol possesses the fastest ZK-proof technology, meaning it can generate proofs faster and verify more transactions in a single proof. The Mir team has invested a lot of time designing and optimizing their ZK-proof technology called Plonky2, Polygon co-founder Mihailo Bjelic told The Block.

“It is a great piece of engineering,” he said. “Plonky2 can generate recursive proofs in an incredible 170 milliseconds on a laptop. Most importantly, plonky2 is practical to use on Ethereum, with 45kb proofs in size-optimized mode.”

Mir was founded by Brendan Farmer and Daniel Lubarov two years ago. Along with eight other colleagues, they are both joining the Polygon team as part of the deal, said Bjelic.

Polygon and Mir reached the deal on November 26. It involves 190 million MATIC tokens and $100 million worth of USDC stablecoins, totaling around $400 million as of MATIC’s price on November 26, said Bjelic.

The deal carries a vesting period of three years, meaning the Mir team will be able to withdraw the funds over a period of three years based on deliverables, Polygon co-founder Sandeep Nailwal told The Block.

Mir rebranding to Polygon Zero

As part of the deal, Mir is rebranding to Polygon Zero, and the project will build a ZK-rollup based on its ZK-proof technology.

Bjelic said the Polygon Zero ZK-rollup should be ready sometime next year. As for the expected zkEVM launch by the Polygon Hermez team, Bjelic said that should happen by mid-next year.

There are currently several ZK-rollup-based Ethereum scaling technologies live in the market with limited functionalities, including StarkWare’s StarkEx, Loopring, and Matter Labs’ zkSync. StarkWare also recently launched StarkNet Alpha, which allows whitelisted developers to write and deploy their smart contracts permissionlessly on the Layer 2 network like on Ethereum.

StarkEx currently has the highest total value locked (TVL) at nearly $1.3 billion, followed by Loopring (about $630 million) and zkSync (about $60 million), according to The Block Research.

When asked whether all Polygon-based projects will move to its ZK-rollup technologies when launched, Nailwal said once these technologies are “battle-tested, we’ll press throttle on them in terms of growing adoption.”

Polygon committed to investing $1 billion in ZK-rollup-related efforts in August and since then has announced two acquisitions worth $650 million: Hermez and Mir. It also recently announced Polygon Miden, a STARK-based Ethereum-compatible rollup, and Polygon Nightfall, a privacy-focused rollup built in collaboration with EY.

Nailwal said Polygon aims to become “a Layer-2 aggregator,” providing a suite of Ethereum scaling solutions in the long run.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.