Binance Labs invests in Ethereum Layer 2 network developer Zircuit

Binance Labs, the $10 billion venture capital and incubation arm of the crypto exchange Binance, has invested an undisclosed sum in Zircuit, an Ethereum Layer 2 network developer.

Zircuit is a zero-knowledge rollup with "AI-enabled sequencer-level security," Binance Labs said Tuesday. The firm added that its investment will help Zircuit grow and develop its network further.

Binance Labs' investment in Zircuit comes ahead of the network's mainnet launch this summer. Both firms declined to disclose the size of the investment and other terms of the deal. Zircuit is also backed by Pantera Capital and Dragonfly, according to its bio on X.

What is Zircuit?

Zircuit is an Ethereum Virtual Machine-compatible ZK rollup that can be compared to similar projects such as ZKsync, Scroll and Linea.

Zircuit's main differentiating factor is its sequencer-level security, Martin Derka, co-founder of Zircuit and a former Quantstamp executive, told The Block. Derka said when other blockchains receive transactions, the block proposers look for the first block that is available to include the transactions in.

"In Zircuit, similarly to other rollups, organizing transactions into blocks is the responsibility of the so-called 'sequencer.' However, before Zircuit's sequencer includes transactions in blocks, it scrutinizes their effects," he said. "It uses artificial intelligence to check whether each transaction is a hack, or not. Transactions that are hacks are not included in blocks. Instead, they are quarantined."

The main aim with sequencer-level security is to discover exploits and hacks and stop them before they actually happen, Derka explained. "This way, Zircuit fosters a safer environment for all the participants — developers, as well as the transacting users," he added.

Zircuit mainnet launch

Founded in mid-2022, Zircuit is currently in the testnet phase. Derka said the testnet was launched at the DevConnect 2023 event in Istanbul last November, and the mainnet will be released in the coming months.

Zircuit claims to have already gathered over $3.5 billion in staked assets and says its "Build to Earn" program has drawn more than 1,100 applications. Ethena, Renzo, Ether.fi, KelpDAO, Elixir, Ambient, Pendle, LayerZero and others are among its launch partners, the project said.

"The Zircuit staking program collects liquidity pre-committed to enter the Zircuit ecosystem and DeFi when the mainnet goes live," Derka said. These deposits are managed by a smart contract on Layer 1, allowing users to deposit and withdraw their assets anytime. When the mainnet launches, users can either withdraw their funds or transfer them to the Zircuit network using its bridge, he added.

There are currently about 30 people working for Zircuit, and Derka is looking to hire more people in the engineering department, primarily applied cryptographers with programming skills in Rust.

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