ZKSync Aims to Boost TVL with Ignite Program Following Starknet

14 พ.ย. 2024

As decentralized finance (DeFi) continues to grow, the ZKSync network has introduced a significant proposal, the ZKSync Ignite Program, which could make substantial waves in the market. Designed to elevate Total Value Locked (TVL) and liquidity on the ZKSync Era network, this initiative looks to replicate successful strategies seen with Starknet, building on liquidity incentives to encourage DeFi adoption.

ZKSync Ignite Program and the Liquidity Hub
Recently endorsed by the ZK Nation community, the ZKSync Ignite Program is set to distribute 325 million ZK tokens over the next nine months, targeting DeFi users who actively engage in liquidity-enhancing activities on the ZKSync Era network. This token distribution aims to build a "liquidity hub" for ZKSync Era’s Elastic Chain, a crucial DeFi infrastructure that supports a broad ecosystem of assets.

The proposal outlines three core objectives:
1. Boosting DeFi liquidity (supply-side) by increasing the assets available for trading, with a goal of creating up to $410 million in added liquidity.
2. Optimizing price execution (demand-side) by reducing slippage on both stable and volatile pairs, such as stablecoin-ETH and stablecoin-ZK pairs, to promote efficient asset exchange.
3. Generating sustainable LP fees by targeting a $3 return for every $1 of incentive, creating an economically efficient DeFi marketplace that will continue to thrive post-incentives.

ZKSync’s program has also set specific benchmarks for price execution to minimize slippage across different trade sizes, aiming for a maximum of 5 basis points (bps) slippage on trades up to $1 million in stable-stable pairs and 120 bps for stable-volatile pairs up to $1 million.

Incentive and Oversight Structure
The Ignite Program is structured for optimal transparency and oversight, with the Token Assembly retaining authority to cancel the program at any point if it underperforms. The DeFi Steering Committee (DSC) will manage and review the allocations, adjusting them bi-weekly in response to performance metrics. Token allocations will be directed toward specific pools and assets within DeFi apps on ZKSync Era based on recommendations from OpenBlock Labs, allowing the program to adapt and evolve according to market needs.

User Experience Enhancements
To enhance the experience, the Ignite website will display available rewards in participating DeFi apps, with pending rewards updated every eight hours. Community feedback is encouraged on whether these rewards should be claimed weekly, adding a participatory dimension to the program.

Technical Outlook
On the technical front, ZK’s price is currently navigating a rising wedge pattern. Often considered a bearish indicator, a rising wedge typically hints at a potential price decline. However, in ZKSync’s case, this pattern may represent a consolidation phase rather than a bearish trend due to its trading above key moving averages (MA) and its relative strength index (RSI) maintaining a healthy level at 52. These signals suggest resilience and a potentially bullish outlook as the coin stabilizes within the broader market dynamics.

Despite these positive fundamentals, ZK has seen a slight dip of 1.52% recently. This price action reflects the broader market's cautious stance but does not detract from the robust infrastructure and community-led approach ZKSync is establishing.

Future Implications and Market Impact
The ZKSync Ignite Program holds promise to significantly enhance DeFi liquidity on the platform, building a self-sustaining liquidity ecosystem that supports both on-chain and off-chain assets. If ZKSync achieves its primary metrics, it may become a pivotal liquidity hub, encouraging wider adoption of the Elastic Chain and ZKSync Era as a whole. The upcoming metrics reports and public dashboards will offer clear visibility into the program’s success, giving stakeholders a tangible measure of its impact on the DeFi landscape.

With its innovative approach and strategic design, ZKSync’s Ignite Program is well-positioned to attract both liquidity providers and traders, adding considerable value to the network and potentially elevating ZK's position in the market as liquidity and adoption expand.