Espresso Raises $32M in Its Bid to Advance Blockchain Tech

Cryptography experts from Stanford University are brewing up Espresso, a new Layer-1 system that aims to crack the so-called ‘blockchain trilemma’ of balancing decentralization, security and scalability. Described as a privacy-focused blockchain geared to those who find the public-facing aspect of most platforms unsuitable for their sensitive data, Espresso Systems is building “solutions that will unlock new possibilities for Web3 applications and usher in the next generation of users.” The company stepped out of the lab this week to introduce itself with $32 million in funding, led by Electric Capital and Greylock Partners.

High costs and limited privacy “represent major barriers for the next waves” of would-be consumers, Espresso Systems suggests in an introductory blog post. Espresso is a Layer-1 blockchain system that combines proof-of-stake consensus and a Zero Knowledge (ZK) rollup mechanism designed to deliver fast transactions for low fees.

Layer-1 blockchain “is a set of solutions that improve the base protocol itself to make the overall system a lot more scalable,” per Coinbase. Consensus is one of the two most common Layer-1 solutions, and proof-of-stake is the newer, faster, more energy-efficient protocol.

Espresso also offers Configurable Asset Privacy for Ethereum (CAPE), an application that can run on any Ethereum Virtual Machine. The company says CAPE will eventually run on Espresso natively. CAPE is a way for asset creators to provide users with “customized privacy guarantees.”

The initial iteration of Espresso lives on GitHub, but will soon debut as a live demo on Ethereum’s Rinkeby testnet. The company has open-sourced its Jellyfish library of Zero Knowledge proofs and other cryptographic tools.

“At the outset, CAPE will support the creation and wrapping of ERC-20 [smart contract] tokens with support for non-fungible tokens to follow,” according to Yahoo, which quotes Seth Rosenberg — who led the investment for Greylock — as saying, “Espresso systems will allow developers and asset issuers to build stablecoins that are fast, private and compliant; NFTs that are accessible; and DeFi applications that are more efficient.”

Espresso CEO Ben Fisch tells TechCrunch that while the race to scale blockchain tech has been percolating since 2018, today’s developers face additional hurdles: “It’s now not just a race to scale, but a race to scale and make the fewest tradeoffs possible with regards to decentralization.” While various blockchain ecosystems use ZK proofs to improve efficiency, “that efficiency has come at the cost of decentralization,” TechCrunch notes.

“Zero Knowledge proofs are a mathematical technique that enables one to verify that something is true without revealing the underlying data,” Rosenberg wrote yesterday in a blog post. “The classic example is that I can prove that I solved a Sudoku puzzle without revealing any information about the solution. ZK proofs solve two problems for a public blockchain: they enable less data to be recorded on chain, therefore increasing scalability and decreasing transaction costs, and they keep transaction data private.”