Pioneer zkSync Era for scaling solution of zero-knowledge proof.

Original Title: "Analysis of zkSync Era, the Pioneer of Zero-Knowledge Proof Expansion Plan"

Source: DODO Research

 zkSync Era Introduction

zkSync is an Ethereum layer-2 scaling solution based on the zk-rollup architecture, aimed at achieving high-performance, low-cost smart contracts and blockchain applications. It utilizes zk-rollup technology to achieve high throughput scaling, reducing transaction costs and increasing confirmation speeds. zkSync Era is built on top of the zkSync protocol, with faster transaction speeds, higher scalability, and more cost-effective features. It is applied in multiple fields such as DeFi, cross-chain bridges, and NFTs. Due to its efficiency and low cost, zkSync has received widespread attention from the capital market and is rapidly developing.

zkSync development company Matter Labs has completed a total of four rounds of financing, with a total financing amount of $458 million. Well-known venture capital firms a16z, Dragonfly, 1KX, OKX Ventures, bybit, and Blockchain Capital have all participated in the investment. Looking back, this financing amount is an amount that is difficult to ignore in both the WEB3 and WEB2 fields, and is a leading unicorn project in the blockchain industry.

Strong financing background, cutting-edge technology, and one of the first players in the zk-rollup technology that Ethereum founder Vitalik has praised. It is one of the few zkEVM rollups that has been launched. Whether in terms of narrative, capital, or practical aspects, zkSync Era is outstanding. The blockchain world's desire for new things has made zkSync Era the most anticipated and hottest public chain in 2023.

zkSync Era History

zkSync 1.0 - zkSync Lite was launched on the Ethereum mainnet on June 15, 2020, achieving a transaction throughput of approximately 300 TPS, but it is not compatible with EVM.

zkSync 2.0 - zkSync Era will launch on March 24, 2023, supporting arbitrary smart contract functionality implemented in Solidity (via zkEVM) and Zinc (the internal programming language of rollups); secondly, through zkPorter - a protocol that combines zk-rollup and sharding, throughput will increase exponentially, reaching 20,000+ TPS.

The biggest selling point of zkSync Era compared to zkSync Lite is its compatibility with EVM, which allows it to execute smart contracts written in Solidity or other advanced languages used in Ethereum development, attracting more developers and users to seamlessly connect with the ecosystem. In addition, the transaction cost has been reduced by 50 times compared to before, and the speed of 20,000 TPS also brings long-term progress in terms of user experience compared to Ethereum itself or zk lite.

zkSync's competitor

The competitors of zkSync are undoubtedly various public chains in the L2 track. In addition to the mature and leading Arbitrum One & Optimism, many newcomers using zk-rollup are the opponents that zkSync needs to pay more attention to:

Including the currently launched Polygon zkEVM, the well-known and heavily invested Starkware, Linea developed by Consensys, Scroll also dedicated to developing zkEVM, Aztec focused on privacy, two layer-2 solutions respectively sponsored by exchanges, Taiko invested by OKX and Mantle developed by Bybit. Even the already launched Optimistic Rollup Metis has announced actively developing Hybrid Rollup by combining zk-rollup with the current Optimistic Rollup. Lastly, there is Kakarot which has gained attention due to Vitalik's personal investment in the Pre-Seed round.

zkSync currently has a 100% first-mover advantage. In order to maintain its lead and provide users with a good experience in the future, cultivating the ecosystem is the most important thing besides the technical aspect.

zkSync Era Data Overview

Before we dive into a detailed introduction of the ecosystem project, let's first take a look at some data such as TVL, official bridge in/out, and daily on-chain transaction volume to better understand the current status of the zkSync Era ecosystem.

According to on-chain TVL data, the total TVL of the zkSync Era ecosystem has reached 459 million US dollars, just 2 months after its launch. It has maintained stable growth in TVL since its launch and currently ranks third in Layer2 Rank, only behind Arbitrum One & Optimism, which use Optimistic Rollup.

source: l2beat.com/scaling/tvl

source: dune.com/makaineko/zksync-era-airdrop-criterion

Meanwhile, the official bridge data of zkSync Era also conforms to the trend of its continuously rising ecosystem. The cumulative deposit addresses have reached 800K, and the average number of new deposit addresses per day from June to present is about 10K.

source: dune.com/makaineko/zksync-era-airdrop-criterion

On the other hand, looking at the daily transaction TX volume of zkSync Era, it has dropped from a high point of nearly 100K transactions since its launch to a daily low of only 1300 transactions in early May, and is currently steadily rising and maintaining at around 20K transactions per day. The reason may be that there is currently no killer DAPP on zkSync Era, and the surge in transaction volume was only caused by novelty in the early stages of its launch.

source: dune.com/sixdegree/zksync-airdrop-simulation-ranking

Generally speaking, the ecological overview of the industry is still in its early stages, and it is not easy to achieve such results in less than three months since its launch. Currently, it has passed the early FOMO stage and is steadily rising. We look forward to breakthroughs in the future with more project deployments on the chain.

zkSync Era Ecological Project Introduction

Old Project

zkSync Era has received promises from many projects to deploy it even before it was launched, including Balancer, Uniswap, Frax, OHM, LayerZero and other well-known protocols on the mainnet, but few have completed deployment so far. Among the well-established protocols that have been officially launched, 1inch and iZUMi Finance are the most significant.

1inch Network

1inch aggregator is one of the cornerstones of the Defi project. It officially landed on the zkSync Era on 4/20 as the 11th deployed public chain. With 1inch, the on-chain liquidity fragmentation has a good entry point, and users no longer need to think about which DEX to go to when exchanging tokens, effectively promoting ecological development.

iZUMi Finance

iZUMi is also a multi-chain deployment Defi project. It was deployed at the beginning of the zkSync Era and is one of the first protocols to actively deploy on zkSync Era. iZUMi has an impressive TVL on zkSync Era and is currently the second project on the chain, becoming a strong competitor in the zkSync Era DEX track.

From TVL perspective, zkSync Era is a top project

source : https://defillama.com/chain/zkSync Era?tvl=true

From Defillama's statistics, it can be seen that the development of the chain is very early. The top five locked positions are all decentralized exchanges (DEX), and eight out of the top ten are DEX projects. The remaining two are lending projects. More complex tracks such as derivatives and GameFi still do not have strong competitors. The following will introduce the projects in different categories.

DEX Decentralized Exchange

SyncSwap

SyncSwap is a decentralized exchange built on the zkSync Era. It has the characteristic of low transaction fees and inherits the complete security of zkSync.

SyncSwap's features include support for gauges, custom fee structures, advanced routers, delegated token voting models, and governance.

Recently, SyncSwap launched a cross-chain bridge called Move based on the official bridge of zkSync Era, allowing transfers between Ethereum and zkSync Era, supporting multiple assets such as USDC, ETH, USDT, WBTC, LUSD, LSD, MUTE, etc. In fact, Move can be understood as a third-party front-end of the zkSync Era official bridge, with the same gas cost as the zkSync official bridge, and the bridged tokens are 100% zkSync native assets, without third-party risks. When users approve or transfer using Move, they directly interact with the official zkSync smart contract.

iZUMi Finance

iZiSwap is an on-chain order book DEX launched on zkSync Era by iZUMi Finance, a one-stop liquidity-as-a-service DeFi protocol. It adopts iZUMi's Discrete Liquidity AMM (DL-AMM), similar to Uniswap V3 concentrated liquidity. DL-AMM can allocate liquidity at any fixed price to improve capital efficiency.

iZiSwap is a continuation of the automatic market maker (AMM) DEX represented by Uniswap. Its innovative design not only improves the efficiency of liquidity supply, but also greatly enriches the user's trading experience, making iZiSwap stand out in the competition of decentralized trading platforms.

Finally, users need to claim the assets that have been traded on their own. This is a necessary restriction because it ensures that users have full control over their assets and avoids potential security issues that may arise from automatic asset transfers.

This design brings a series of good features. Firstly, since the limit orders on a single point are treated as a whole, the transaction can be completed in O(1) time, which greatly improves the efficiency of the transaction. Secondly, when the price crosses the target price (time point A) and then falls back (or crosses) the target price (time point B), the limit orders after time point B will not be recorded as a transaction, which ensures the correctness of the transaction. Finally, when the price is on the target price, the part of the transaction is obtained by the user who initiated the claim operation first, which ensures fairness in the sense of first come, first served.

Overall, iZiSwap's innovative limit order management method has brought significant improvements in security, efficiency, and fairness, providing users with a higher quality trading environment.

Maverick Protocol

Maverick Protocol is a DeFi liquidity infrastructure designed to provide liquidity markets for traders, liquidity providers, DAO funds, and developers, supported by Maverick AMM.

Users can trade and provide liquidity on Maverick AMM. There are four different types of liquidity modes: Mode Right, Mode Left, Mode Both, and Mode Static. After selecting a mode, the AMM will automatically move its liquidity to follow the price based on a specific set of rules. Maverick Protocol allows LPs to open Boosted positions, using incentive rewards to attract liquidity precisely, and other users can add liquidity to Boosted positions to purchase shares. LPs can earn revenue from transaction fees and LP incentives.

Mute

Mute.io is a DEX based on zkRollup on the zkSync Era, including modules such as limit orders, staking platform, and bond platform. It supports wallet, trading, LP pool, Amplifier, bond, and DAO governance functions, allowing trading and liquidity provision of assets such as ETH, USDC, MUTE, WISP, ZKINA, MVX, IDO, WETH, USD+, ZKDOGE, DOF, BOLT, and ZKFLOKI. Users can earn LP tokens by providing liquidity in the LP pool and stake them in Amplifier to earn profits.

Bonds are an innovation of Mute, allowing users to purchase MUTE from Mute DAO at a lower price (bond) using their LP tokens. After purchasing a bond, MUTE will be released 7 days later. If the ROI is positive, users can earn more MUTE than LP tokens. Through bonds, Mute DAO can increase the liquidity of the protocol, increase treasury revenue, and ensure long-term liquidity of the protocol. dMUTE is the DAO token of the Mute.io ecosystem, and users need to lock MUTE for 7 to 364 days to receive dMUTE as a reward. After the lock-up period, users can redeem MUTE.

SpaceFi

SpaceFi is a Web3 platform that connects the Cosmos ecosystem and Ethereum Layer 2. Its products include DEX, NFT, Starter, and Spacebase, with new products such as Game and Social Network to be added in the future.

SpaceFi supports trading of ETH, USDC, SPACE, and WETH tokens and adding liquidity. Users can stake single tokens such as xSPACE and LP tokens such as SPACE-USDC in the Space Farm to participate in mining and receive xSPACE rewards. Starter is Space's incubation and fundraising platform, where users can stake USDT, ETH, or LP tokens such as SPACE-USDC to obtain shares of project tokens at the initial issuance price. Spacebase is Space's on-chain community, where users can earn more mining rewards by creating or joining Spacebase. Planet NFT is minted by SPACE tokens, and NFT holders can submit on-chain proposals. Both Planet NFT holders and xSPACE holders can participate in governance voting.

Velocore

Velocore is the first ve(3,3) DEX built on top of Velodrome Finance and Solidly codebase in the zkSync Era.

Velocore's core function is to allow users to trade digital assets at low cost and low slippage. Users can add liquidity to LP pools (divided into Stable Pool and Volatile Pool) and use LP tokens to obtain VC token incentives. VC is the native token of Velocore, and VC holders can vote to delegate tokens and exchange governance tokens veVC (veNFT), which can be transferred, merged, and split. The VC lock-up period can be up to 4 years, and the longer the release time, the higher the voting weight and rewards for veVC holders. VeVC holders can also receive protocol fees, bribes, and kickbacks. Bribes can be used to encourage other users to vote for LP pool rewards. Velocore also has a Launchpad and has launched the memecoin WAIFU.

veSync

veSync is also a ve(3,3) DEX on zkSync Era, and it is a fork of Velodrome Finance. The TVL of veSync on zkSync Era is about $4.85 million, ranking seventh, with an increase of nearly 20% in the past 7 days.

veSync's native token is VS, and its governance token is veVS (veNFT). veVS can be transferred, merged, and split. veSync uses the ve(3,3) incentive model, and token holders can vote to delegate their tokens to receive veNFT. Longer vesting periods will bring greater voting power and rewards. veSync's liquidity pool is currently divided into Stable Pools and Volatile Pools, with transaction fees ranging from 0.02% to 0.05%. In the future, veSync will launch Concentrated Pools, allowing users to customize the liquidity range they provide. Users can choose to participate in specific pools to vote and receive bribes.

eZKalibur

eZKalibur is a new DEX that just launched this week. During the token fundraising stage, a total of 653 ETH was raised. Based on the Camelot fork project of the top Arbitrum DEX, it adopts a special token lock-up dividend mechanism similar to Camelot xGrail. In addition, it also has a launchpad function. As the project has not been online for long, attention should be paid to security risks.

Lending Market

Lending has always been the most important infrastructure in various public chains except for DEX. However, because chainlink has not yet been integrated into zkSync Era, users of Redstone Finance's oracle are currently hesitant to use it. In addition, there are only two major assets, ETH and USDC, in zkSync Era, so the real usage scenarios are not many. Therefore, the lending field is a lukewarm existence in zkSync Era, and most users may be bear hunters or DEFI farmers.

Eralend

Eralend, formerly known as Nexon Finance, is a compound fork protocol similar to ReactorFusion. In terms of mechanism, there is no significant innovation. The project was mentioned in a tweet introducing ecosystem projects by zkSync Era's official Twitter account. The governance token has not yet been issued, which may have attracted a large number of short sellers. Currently, the TVL is on par with ReactorFusion at $5 million, making it one of the top lending markets on zkSync Era.

ReactorFusion

ReactorFusion is the first project launched by Velocore Launchpad. The protocol itself is a compound fork with a unique bribe reward token mechanism. Its token ecosystem is highly tied to Velocore, with a current TVL of approximately 5 million US dollars.

CDP Overcollateralized Stablecoin 

Overnight USD+

Overnight is a multi-chain project that originated from Polygon and currently supports five public chains, including Polygon, BSC, OP, ARB, and zkSync Era. It is also one of the few protocols that quickly deployed cross-chain when it was launched on zkSync Era. Its main products are the stablecoin USD+ pegged to USDC and the delta-neutral yield generation strategy treasury ETS. The project has been online for about a year and the team is relatively reliable, making it suitable for DEFI farmers who pursue high stablecoin yields.

Derivatives

衍生品

Unidex

Unidex is also a multi-chain deployment project, with its main product being a decentralized perpetual contract exchange. Its feature is the ability to integrate the depth of other perpetual contract exchanges and provide functions such as limit order take profit and stop loss. In addition to trading cryptocurrencies, it also includes commodities such as US stocks and foreign exchange, making it an on-chain perpetual contract aggregator. Other products include spot trading aggregators, limit orders, and other functions.

Other Items

Kreatorland

Kreatorland is an Opensea Fork on the zkSync Era chain that provides a one-stop NFT project. It is one of the projects mentioned in the official zkSync Era Twitter post and offers users the service of minting and issuing NFTs, as well as having a launchpad and trading market. However, currently only one NFT, Poop Genesis, is available for sale.

Goal3

Goal3 is a gaming platform project on the zkSync Era chain, which was also shared by the zkSync Era official account. Its token, $ZKG Lockdrop, attracted a total of 2.8M USDC in participation, with nearly 50% of the addresses locking up for a year. The funds locked up in the Lockdrop activity are used for the depth of the gaming market. The beta version of the project has been launched, and users can place bets on various sports events on this platform.

Summary

zkSync has a rich development history and a promising future. With the continuous advancement of Ethereum technology, competition in the zk-rollup or zk-EVM fields is also intensifying. The zkSync Era has taken the lead and established its ecosystem. Currently, both the data and the ecosystem have proven that the overall public chain of zkSync Era is in a stable and upward phase.

From the number of protocols, it can be seen that the most mature development in the zkSync ecosystem is in the DEX track. Whether it is traditional Uni v2 fork, ve(3,3) solidly fork, or centralized liquidity DEX, they all have impressive achievements. However, there are currently no innovative applications in the lending, derivatives, NFT, or GameFi tracks that can attract users. It can be expected that with the deployment of more infrastructure projects including cross-chain protocols, oracles, and stablecoins, there will be more interesting Defi Lego projects emerging.

At the same time, it should be noted that while the ecosystem is flourishing, various Rug Pull incidents are also emerging, and there have been cases where user funds were locked due to code compatibility issues caused by the project party. Participants in the ecosystem need to pay attention to many considerations such as the background of the project party, but new things represent new opportunities as well, and participating more in the ecosystem may lead to the discovery of early high-quality projects.

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